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Wednesday October 20th, 2021
Economy

Sri Lanka 2021 budget deficit 4.7-pct of GDP up to June, debt grows faster

ECONOMYNEXT – Sri Lanka’s budget deficit for the six months to June 2021 was 781 billion rupees, up 6 percent from a year earlier, or 4.7 percent of projected gross domestic product, data shows, though outstanding debt was accelerating at a faster pace, partly due to monetary instability.

The deficit was broadly in line with 2020 gap of 4.9 percent of GDP in 2020.

Sri Lanka’s state revenues grew 8 percent from a year earlier to 714.5 billion rupees, though down 20 percent from 2019 before the ‘stimulus’ tax cut in 2019 December and the Coronavirus pandemic.

Current spending grew 6 percent to 1311 billion rupees (8.0 percent of GDP down from 8.3 percent) and 17 percent from 2019.

The current account deficit, or the gap between total revenues and recurrent spending was 596.5 billion rupees up 4 percent from a year earlier and up 157 percent from before the tax cuts.

Capital spending was cut to 184.5 billion rupees or down 36 percent from 2019, though up from 163.7 billion last year.

The central government debt however grew to 16,564.5 billion rupees or up 1,447 billion from the end of December 2020, which is very higher than the overall deficit of 781.7 billion rupees.

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Sri Lanka to freeze hiring, halt new projects, target subsidies

Sri Lanka is trying to control spending has has frozen new recruitements after hiring 50,000 graduates and 38,000 unskilled workers into a multi-task force.

Despite net repayment of debt currency weakness tends to bloat debt. The rupee value of debt fell about 180 billion rupee from December to June amid depreciation. In rupee terms however the economy could eventually inflate.

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