Sri Lanka budget deficit of 4.7-pct of GDP for 2017 gets cabinet nod

ECONOMYNEXT – Sri Lanka’s cabinet of ministers had approved a budget deficit of 4.7 percent of gross domestic product for 2017, down from a targeted 5.4 percent this year, in line with targets agreed with the International Monetary Fund.

Finance Minister Ravi Karunanayake had proposed capital expenditure to 5.0 percent for 2017.

Under a program agreed with the IMF, Sri Lanka is expecting to increase revenue and grants to 14 percent of GDP in 2017 from 13.0 percent in 2016.

A planned value added tax hike imposed in May 2016 as part of measures to increase revenues, has been suspended by courts after the Finance Ministry engaged in prerogative taxation, despite the existence of a parliament.

Sri Lanka’s parliament, made up of an increasingly hereditary ruling class who give themselves tax free cars, has been rubber-stamping taxes imposed by mid-night gazette for decades, violating the principle of ‘taxation by consent’ of representative democracy for decades.

Total expenditure is expected to grow to 18.8 percent of GDP in 2017 under the IMF program from 18.4 percent in 2016.

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