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Sri Lanka leader keeps key posts, budget seen delayed

[Reuters, Friday, 23 April 2010 14:25 No Comment]

Sri Lankan President Mahinda Rajapaksa on Friday appointed his brother to oversee the island nation’s post-war economic development in a slightly smaller cabinet but kept other key ministries himself.

Rajapaksa retained the defence, finance, ports, aviation and highways portfolios in a cabinet cut to 37 from 51. The total number of ministers in Rajapaksa’s new government fell to 76 from 109 in his previous administration.

He won an April 8 legislative poll with a 144-seat majority — Sri Lanka’s strongest government in more than a decade. He rode victory in a three-decade war with Tamil Tiger separatists last May to a landslide re-election in January.

Officials at the president’s office said Rajapaksa’s government could grow even bigger after an investigation into poll violence in the district of Kandy. A re-vote was held there on Tuesday before the final result of the election was released.

Economists and analysts have criticised running such a large government amid high state spending and increasing budget deficit pressure.

Government officials, speaking on condition of anonymity, said Rajapaksa will direct state spending until a proper budget is brought down in either June or July.

"There is a provision in the constitution which allows the president to give a direction in money matters before a proper budget," one official said.

The government has presented an interim budget for the first four months of 2010. [ID:nCOL434876].

Economists said further delay in the budget could postpone the third tranche of a $2.6 billion loan International Monetary Fund (IMF) loan. The IMF has said the loan will be delayed until it sees concrete plans for fiscal consolidation. [ID:nSGE62G0EF]

Rajapaksa’s younger brother Basil was appointed economic development minister a day after his elder brother, former ports minister Chamal Rajapaksa, was named speaker.

Basil Rajapaksa’s portfolio will be one of the most powerful, overseeing post-war investments and development for Sri Lanka’s $42 billion economy.

The president’s eldest son, Namal, also took his parliamentary oath on Thursday, confirming the Rajapaksa family as the latest of Sri Lanka’s political dynasties.

Diplomats expect Rajapaksa to improve relationships with the West by appointing former export development and international trade minister, G.L. Peiris, as foreign minister.

[Full Coverage]

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