ECONOMYNEXT – Sri Lanka is targeting a budget deficit of 8.9 percent of gross domestic product in 2021, with a revenue recovery expected from a steep dip in 2020 and the economy would recover to 5.5 percent of GDP, Prime Minister and Finance Minister Mahinda Rajapaksa said.
Sri Lanka is expecting revenues of 2,019 billion rupees, including 69 billion rupees of provincial council revenues.
Current spending of 2,534 billion rupees is planned with no salary hikes or major subsidies given.
Capital expenditure is 1,070 billion rupees.
Rajapaksa said total spending is 3,525 billion rupees in total and the deficit is 1,564 billion rupees or around 9 percent of GDP.
While no major revenues proposals were made, neither were any significant expenditure measured announced. There were no salary hikes for state workers.
However over 100,000 new workers were expected to be hired in to the public service.
The 2020 deficit is listed as 7.9 percent, which is controversial as it departs from the previous basis of accounting for the deficit.
Sri Lanka is expecting to borrow 1,486 billion rupees from domestic markets at 99 billion rupees from foreign sources in 2020.
In 2020, a 225 billion rupee net payback is planned amid a repayment of a sovereign bond.
The budget presented no new revenue proposals, improving policy instability. Annual tax changes shows policy instability or regime uncertainty. The budget also did not have any major spending proposals.
Economic growth is expected to recover to 5.5 percent of GDP, Prime Minister Rajapaksa said.
The International Monetary Fund has projected a 5.3 percent recovery in 2021, after contracting 4.6 percent in 2020.