SRI LANKA ORDERS BUDGET CUTS AS DEFENCE COSTS RISE
Sri Lanka's cabinet has ordered a 12
pct cut in budget spending by ministries this year to offset
the rising cost of the fight against Tamil guerrillas, Finance
Ministry officials said.
    A senior economist at the Ministry, who declined to be
named, told Reuters the cuts would not apply to defence-related
Ministries and those involved in health and education.
    Defence expenditure, projected at 10 billion rupees this
year, is now forecast at 12 billion and is expected to exceed
this by the year-end.
    The economist said the cuts were part of a government plan
to reduce spending to satisfy the International Monetary Fund
(IMF) which has promised to lend Sri Lanka 6.5 billion rupees
to help its balance of payments.
    The IMF has said previously Sri Lanaka must reduce its
budget and balance of payments deficits to satisfy loan
conditions.
    He said World Bank and IMF teams were expected here next
month. "If approved the loan would be available only after
November and would be part of the 1988 budget," he said.
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