Sri Lanka outlines budget boost but inflation nullifies gains

Sri Lanka's defence expenditure has been hit hard by economic pressures including inflation. (Janes Defence Budgets)

The government of Sri Lanka has proposed a defence budget of LKR410 billion (USD1.11 billion) for 2023. The figure represents a nominal year-on-year increase of 10% but any gains have been nullified by record-high levels of inflation.

The new military budget – allocated for the Ministry of Defence (MoD) – is contained in the 2023 Appropriation Bill, which was recently presented to parliament.

The proposed MoD allocation for 2023 includes LKR360 billion for ‘recurrent' expenditure for military operations, salaries, and maintenance activity. A total of LKR50 billion has been proposed for ‘capital' expenditure including procurement.

The allocation for recurrent expenditure represents a year-on-year increase of 10.3%, while the appropriation for capital expenditure is a rise of 7%.

The Appropriation Bill also lays out proposed 2023 funding for branches of the Sri Lanka Armed Forces (SAF). The Sri Lanka Army (SLA) will receive a total of LKR209.7 billion, an increase of 11.5% while the Sri Lanka Navy (SLN) and Sri Lanka Air Force (SLAF) have been allocated LKR75.7 billion and LKR66.6 billion, respective increases of 18.5% and 19%.

However, the SLAF and SLN will receive the bulk of capital expenditure. Contained in their 2023 appropriations, the SLAF and SLN have been allocated LKR19.7 billion and LKR11.9 billion respectively for capital expenditures, while the SLA will receive LKR4.7 billion.

Other recipients under the MoD budget include the office of the minister of defence, the departments of civil security and meteorology, a multi-purpose development task force set up in 2020 to boost social welfare and jobs, and the Sri Lanka Coast Guard. The latter receives LKR435.2 million, most of it for capital expenditure.