I would also like to inform the House, Mr. Speaker, that we are negotiating a commercial loan at six months LIBOR plus 2 per cent. Other countries are paying much more in comparable circumstances. The commercial spreads have widened all over the world and the financial markets have changed very much since Mr. Ronnie de MelÕs time.

The Hon. Ronnie de Mel, also asked a question with regard to the reduction of the allocation for the Ministry of Industrial Development. There is nothing sinister about that, Mr. Speaker. There is a very simple explanation and the simple explanation is that the completion of the Seethawaka project made it unnecessary for all those resources to be allocated to the Ministry of Industrial Development.

Mr. Speaker, in discussing the current Budget of the PeopleÕs Alliance administration, I would like to focus upon five principal themes. I would say that the Budget can be boiled down to five principal themes. The first of these is employment generation. We are trying to give young people in our country the advantage of modern technology and that that is why we are providing fiscal incentives for advanced technology.

We are providing for a five year tax holiday for training institutions. We are proposing to strengthen the Teritiary and Vocational Education Commission by making a grant of Rs.50 million. We are setting up a Skills Development Fund for which Seed capital to the tune of Rs.100 million has been allocated. We are exempting from income tax the profits earned from the operations of software training institutes with a minimum investment of Rs. 15 million provided that 300,000 persons are given training every year in theses institutes.

Mr. Speaker, the second basic theme of our budget is a focus on the construction industry. This is a very important segment of our economy. The construction sector counts today for approximately 7 percent of GDP. We have brought down the income tax from the level of 35 percent to 15 percent in respect of the construction industry. We have set up a construction industry guarantee under the Ministry of Housing and Urban Development and Rs. 100 million have been allocated under the budget as Seed Capital for this Project. Here again we are trying to help the small man because today the position with regard to bid bonds and performance bonds largely shuts out the small person. Commercial banks generally insist on high collateral values in issuing such securities and that is the reason for this innovative proposal which we have made in our Budget, Mr. Speaker.

The third theme has to do with re-housing in urban areas. I think that is certainly on an urgent national priority at the present time. There are no fewer than 150,000 shanty settlement units in the country, and about 55,000 of which are situated in the city of Colombo. What we are proposing, Mr. Speaker, is a joint venture company with an equity contribution by way of land by the National Housing Development Authority.

Speaker: Order, please! There is lot of noise in the House. Please (Interruption) No. Do not worry. I have not said Òin the HouseÓ. They are also a part of the House (Interruption). Will you please be quiet because the Minister is laboring to finish his speech in time.

G. L. Peiris: Mr Speaker, what we are proposing as a solution to this problem is a joint venture company with an equity contribution by way of land by the National Housing Development Authority and the Urban Development Authority and nobody can say that this is not a proposal which will entail very substantial benefit to urban dwellers in this country.

The fourth theme is connected with the agricultural sector and there the focus is on the improvement of basic seed production, the quality of the seed and for this purpose we have allocated Rs.100 million. We are also embarking upon an integrated scheme that would enable 100,000 acres of cultivable land in the dry zone to be placed on the disposal of farmers who will also have the advantage of capital at affordable rates of interests and the farmers will also be provided with adequate infrastructures facilities. These are the three pivots of the program that we are putting forward in respect of agriculture.

Mr. Speaker, we are also proud of the retirement benefits for which provision has been made in this budget. People on the verge of retirement will benefit very extensively from this proposal in two ways. We are raising the exemption limit and we are broadening the slabs and the cumulative impact of both those measure will be to enable persons on the verge of retirement to lead a more comfortable existence during the evening of their lives.

I think the public service will also enthusiastically welcome the proposal with regard to concessionary duty on vehicles at the level of 25 percent for petrol vehicles and 40 percent for diesel vehicles.

Mr. Speaker, I need also to emphasis that there has been a continuity with regard to Budgetary policies. We must not forget that last year we placed before the house more fewer than 30 different revenue proposals. In agriculture, these proposals related to marketing to tractors, and refrigerated drugs we made very extensive proposals with regard to fisheries, boats, fishing gear, the development of fishing villages. Fiscal incentives were granted for this purpose. Thrust industries were identified and many programs which enabled a pension to be paid for self-employed persons were also initiated under the Ministry of Social Services. Hon. Ronnie de Mel made a point of the fact some of the targets had not been met. I would like to remind the House that the budgetary performance in the early eighties, even without a war went out of control and sharp cuts in Capital Expenditures have to be made. At that time even the Fund Programme was temporarily suspended. For example in 1980, the expected Budget deficit was 13.1 percent of GDP. The actual outcome was 22.4 percent of GDP. In absolute terms the overall deficit was Rs.15,270 million as against the original target of Rs.8,920 million. The inflation measured according to the Colombo ConsumersÕ Price Index was 26 percent in that year, making life extremely difficult for the vulnerable Ñ the poor, the elderly and fixed income earners and making the export non-competitive and widening the trade deficit. Similarly in 1981, the overall Budget deficit increased from a target level of 13.9 percent of GDP to 17.4 percent of GDP. In absolute terms the overall Budget deficit increased to Rs. 14,873 million compared to the target of Rs. 11,846 million.

Mr. Speaker, during the last two years some of these targets could not be achieved because of the military expenditure and that is a reality that the country well understands.

Mr. Speaker, there is a word that I would like to say about Non-Resident Foreign Currency Accounts. Non-Resident Foreign Currency Accounts were introduced with a view to catering to the specific needs of the Sri Lankans working abroad. Under this scheme, Sri Lankan nationals who are or who had been employed abroad are allowed to maintain NRFC accounts in designated currencies.

That is US dollars, Swiss frank, Australian dollar, French frank, Canadian dollar, Sterling pound, Deutsche mark, Japanese yen and Singapore dollar with Sri Lankan Banks. Credits to the accounts are from the proceeds of remittances received from abroad and money brought into the country by individuals at the time of arrival. Interest payments on such NRFC balances are also permitted to be made in foreign currency and credited to these accounts.

* These accounts are allowed to be freely debited without exchange control approval for payments abroad or payments within Sri Lanka after conversion to Sri Lanka Rupees.

* Rupee loan facilities against NRFC balances are permitted.

* Interest earnings on NRFC balances are exempted from income tax.

The government reconfirms the position mentioned in the Central BankÕs press release that the government has no intention of withdrawing the current facilities to NRFC holders of full and free convertibility of NRFC funds and the income tax exemption that has been granted to them.

Mr. Speaker, I would like to say a word with regard to export growth. I do not think that the position in Sri Lanka is unsatisfactory at all, when it is compared with the positions in other countries. We have been able to maintain an export growth rate of 6 percent. Consider what is the record in other countries. The details are published in the far eastern economic revenue of November, 1998 whereas Sri Lanka is showing an export growth of 6 percent. China is showing an export growth only of 0.8 percent. Honkong a negative position of 10.3 percent, Taiwan Ñ 9.6 percent, India - Indonesia Ñ 3.7 percent , Malaysia Ñ 12.6 percent, Philippines + 18.2 percent, Singapore -13.7 percent, Thailand -7.7 percent, Japan - 10.9 percent, India - 12.8 percent and Australia -20.6 percent.

So, that is the position elsewhere and contrasted with the position in those countries is the export growth of 6 percent which has been shown in Sri Lanka.

Speaker: Order, please!

Hon. Minister, you will have to give me five minutes. Order, please! will the Hon Members please be seated. This has become a hive of activity. Please sit down!

G. L. Peiris: Sir, I would like to make just one point in conclusion, and the concluding point is this Sir, In presenting this Budget we did not have an eye on elections. We do not think that the people of this country can be deluded by an Election Budget in that narrow sense. Mr Speaker, the advantage of this Budget is continuity with the policies that have been applied through out the last four years. We have always taken the people of this country into our confidence. We have structured and implemented policies that are designed for the well being of our people. We have explained our problems to them and in the preparation of our proposals we have struck a balance. As I said, among macro economic fundamentals, development expenditure and welfare expenditure. We have no intention of deceiving anybody and although we have the opportunity of presenting a budget which may have seen superficially attractive but not sustainable in the long run. Her Excellency the President Chandrika Bandaranaike Kumaratunga deliberately decided not to do that because as she was determined to keep faith with the people.

We have no doubt, Mr. Speaker, that the people of our country would reciprocate and that the budget lays the foundation for a very stable economy to be developed and fostered in this country in the years to come.

Thank you very much.

(Concluded)