COLOMBO (EconomyNext) – Sri Lanka has posted a budget deficit of about 5.0 percent of gross domestic product for the first nine months of the year, amid slow revenue growth, but expenses have also been kept in check, according to official data.
Data released by the Central Bank showed that revenues rose 5.6 percent from a year earlier to 828.2 billion rupees up to the third quarter slower than a 21 percent expected in the budget for 2014 and 17.3 percent revised budget presented to parliament in October.
Current expenses also rose at a slow 4.5 percent to 962 billion rupees, giving a revenue deficit of 133.9 billion rupees, also down in absolute terms from a year earlier by 1.7 percent.
Capital expenditure rose by just 1.6 percent to 364 billion rupees.
The overall budget deficit without grants was down 0.4 percent in absolute from a year earlier to 489.8 billion rupees, which was about 5.0 percent of expected GDP.
Sri Lanka has originally expecting to post a budget deficit of about 5.2 percent of GDP for the full year.
Revenues increase in the last quarter and non-tax items such as Central Bank profit transfers.
In the past there has also been a tendency to delay payments to suppliers in the last few weeks of the year and carry the arrears forward in to the next year.
Data also shows that borrowings by state enterprises also tend to rise in the last two months.
The deficits have been maintained at last year’s levels with total revenues for the nine months growing by only 5.6 percent which was down to 8.4 percent of GDP from 9.0 percent a year earlier.
But current spending was down to 9.7 percent of GDP from 10.6 percent a year earlier.
Bringing down the deficit by cutting spending rather than collecting more taxes from ordinary citizens is the most optimum and beneficial way of managing state finances and expands the economic freedoms of ordinary citizens.
That leaves more spending power in the hands of the people, who can be expected to put it to the best use improving living standards.