Colombo, Nov 7: Sri Lanka President Mahinda Rajapakse today unveiled the budget for 2008 in the 225-member Parliament amidst tight security, declaring that the island nation has maintained seven per cent growth despite various challenges.

This is the third budget to be unveiled by President Rajapaksa after winning the presidential poll in November 2005 to become the fifth executive president of Sri Lanka.

''Apart from facing terrorist threats, we have also surprised the opponents, who predicted that the economy had collapsed, by sustaining a high average economic growth rate of seven per cent over the past two years,'' Mr Rajapaksa told parliament.

Claiming that this is the highest growth rate in the past 30 years, Mr Rajapaksa, who is the also the Finance Minister, said his government has prioritised "the infrastructure development" in his ten-year economic plan aiming to achieve the ambitious growth rate of over 8 per cent.

The Appropriation bill presented in parliament early October showed that the proposed defence spending in year 2008 would be to the tune of 166.44 billion rupees up from an estimated 139.4 billion rupees in 2007.

Highlighting his government's effort to defeat the LTTE militancy, Mr Rajapaksa, who is also the Minister of Defence and Commander-in-Chief of the Armed Forces, said defeating terrorism prerequisite for finding any political solution.

''With the attack launched on the Anuradhapura Air Force camp, the terrorists, who are desperate and confined to their camps after facing continued defeats, again demonstrated that they will never be ready to surrender arms and agree to a democratic political settlement,'' the President said.

''In this background, we have no alternative, but to completely eradicate terrorism, if an environment in which a political solution upholding human rights in the interest of those who are still in the grip of terrorists is to be created,'' he said.

22 Tamil parliamentarians of the LTTE-proxy Tamil National Alliance (TNA) reportedly boycotted the parliament in protest of what it called a defence budget.

Meanwhile, a pro-LTTE, Tamilnet.com website quoting to rebel sources reported that a major military advancement in Kilali and Muhamalai areas in the northern Jaffna peninsula have been thwarted by the fighting units of the LTTE.

There was no immediate reaction from the military regarding this fresh claim by the rebels.

The parliament is scheduled to meet again on Friday to start debating the budget proposals.


UNI