ECONOMYNEXT – Sri Lanka’s tax revenues rose 23 percent to 697.8 billion rupees in the five months to May 2017, and current spending rose at a slower 10 percent to 769.3 billion rupees, sharply narrowing the revenue deficit from a year earlier, official data shows.
Finance Ministry data showed that the revenue or current account deficit fell to 26 billion rupees from 90.4 billion rupees a year earlier, and the overall deficit was kept at the same level despite higher capital expenditure.
Sri Lanka forecasted a revenue surplus of 64.3 billion rupees, a feat not achieved since 1987.
In 2016, the revenue deficit was brought down to 105.7 billion rupees, or 0.8 percent of gross domestic product, from 246.8 billion rupees (2.2 percent of GDP) in 2015, when the budget went haywire.
In 2017, revenue as a share of GDP was also rose to 5.5 percent from 5.2 percent a year earlier. Expenditure was 5.7 percent of estimated GDP, down from 5.9 percent a year earlier.
Capital expenditure during the first five months of the year rose 36 percent to 259.3 billion rupees (1.9 percent of GDP) up from 190.6 billion rupees (1.6 percent of GDP) last year, keeping the overall budget deficit at 284.6 billion rupees after grants of 700 million rupees.
The deficit in nominal terms is around the 280.5 billion rupees seen last year up to May, despite higher capital expenditure. As a share of GDP, the overall deficit fell to 2.1 percent from 2.37 percent.
This year, Sri Lanka is targeting a deficit of 4.6 percent of GDP or 625 billion rupees, which is down nominally from 640.3 billion rupees (5.4 percent of GDP) a year earlier.
Sri Lanka has a drought but changes to value added tax has brought more taxes. A threat to the budget and the credit system remains from the lack of a frequent pricing system for fuel and electricity. (Colombo/Aug07/2017)