Sri Lanka may miss govt 2018 budget deficit target: central bank

ECONOMYNEXT – Sri Lanka’s government might miss its budget deficit target for 2018 given lower-than-expected revenue collection,  the central bank has warned.

The overall budget deficit declined to 3.5 per cent of the estimated Gross Domestic Product during the first eight months of 2018 from 4.0 per cent in the corresponding period of 2017, it said in its half yearly report on recent economic developments and prospects for 2019.

This was because the reduction in government expenditure was higher than the decline in government revenue.

“Although improved performance was seen in some fiscal indicators during the first eight months of the year, it will be challenging to achieve fiscal targets stipulated in the 2018 Budget, unless proactive measures are taken to maintain the envisaged trajectory,” the report said.

Sri Lanka is targeting a budget deficit of 4.8 percent of gross domestic product in 2018.

“The lower revenue collection from import duties and the Cess levy, together with delays in the implementation of some revenue enhancement measures such as amendments to the Finance Act, could lead to significant deviations in revenue collection compared to the stipulated revenue targets,” the report said.

On the expenditure front, the decline in public investment would negatively affect economic growth and development in the country.

“Accordingly, the government’s strong commitment towards achieving the envisaged fiscal path is paramount ahead of election cycles, as imbalances in the fiscal sector may adversely affect overall macroeconomic stability of the country.”
(COLOMBO, 01 November, 2018)

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