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Sri Lanka plans to spend a record 1.57 billion dollars on defence in calendar 2008, up 20 percent from last year.
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In a report on the weekend fighting across northern Sri Lanka, the ministry updated its toll of 46 Tiger rebels killed on Saturday and Sunday to at least 69, and said a further 31 were "either killed or wounded.
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The ministry also lifted military losses from three soldiers to nine and 37 more wounded in the battles with the Liberation Tigers of Tamil Eelam (LTTE) guerrillas.
"The military reports received from the battle fronts...
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indicate that Sri Lanka security forces are moving towards LTTE territory, further inflicting damage to the enemy," the ministry said in a statement.
There was no immediate comment from the LTTE, which has been fighting for an independent homeland for minority Tamils since 1972.
However, the pro-rebel Tamilnet.com website reported that the Sri Lankan military had pulled back after suffering heavy casualties.
Since the beginning of the year,