"The price of fertilizer has increased in the last few months due to the increase of the oil price," agriculture minister Maithripala Sirisena said.

"So the estimated provision in the last year’s budget was not sufficient for this year’s fertilizer subsidy."

The extra money will push total spending on the fertilizer subsidy to 40 billion rupees (368 million US dollars) underscoring the political priorities of using national resources in an island where infrastructure is weak and people are poor.

Minister Sirisena announced no new measures to raise the extra money needed for the subsidy, also a chronic fiscal problem in the island.

Though politicians oppose even small increases in sales taxes - only last month President Mahinda Rajapaksa persuaded a provincial government to remove a 5 percent sales tax - the population has been impoverished with 20 percent inflation for more than three years.

Commercial borrowing for much needed infrastructure has been a growing trend, with the government getting money from export-import banks in India and China for power and rail financing.

Borrowings from international capital markets have also been increasing in recent years, with low cost budgetary financing from multi-lateral institutions being denied to the island in the wake high inflationary economic policies and an ever expanding state sector that is now eating up 55 cents of every tax rupee collected in salaries and pensions.

But the World Bank, Asian Development Bank and Japan has kept the funding tap open for road building and education.

The 40 billion rupee budget for a fertilizer subsidy contrasts with this year's 25 billion rupee allocation for education, 20 billion rupees for higher education, 31 billion for power and 57 billion for health.

Maintaining the fertilizer subsidy is a priority for the government as it heads for local polls in the North Central province, which is one of the most important agricultural areas.

Sri Lanka gives a 50 kilogram bag of fertilizer at 350 rupees under a pledge given by current President Rajapaksa during his election campaign in late 2005.

But the finance ministry said the cost of a 50 kilo bag of triple super phosphate (TSP) fertilizer now is 6,337 rupees, Muriate of potash (MOP) 6,150 and urea cost 4,200 rupees.

Policymakers attached to the current administration have claimed that fertilizer subsidies were an 'investment'. The cash-strapped government has managed to reduce some of the most damaging subsidies especially in energy.

Most of the policies that are now backfiring on the country were devised by the Marxist-nationalist Janatha Vimukthi Peramnua, a former coalition ally of the government.

The fertilizer subsidy is one of the most blatant vote-buying gimmicks in the high inflation economic framework followed by the country since 2004, when fiscal policy reversed, and fiscal dominance of monetary policy sent inflation rocketing.

In July inflation was 26.2 percent measured by the most widely watched Colombo Consumer Price Index, down from the historical high of 29.9 percent in April.

But the central bank has kept monetary policy tight in 2008, despite some slippages, and inflation is showing signs of edging down.