Sri Lanka meets IMF budget deficit target for 2017: Finance Minister
ECONOMYNEXT – Sri Lanka has met the key budget deficit target for 2016 under an agreement with the International Monetary Fund with revenues also slightly higher than targeted, Finance Minister Ravi Karunanayake said.
Provisional budget data released by the Finance Ministry show that the overall deficit is also better than numbers originally presented to parliament in a budget for 2016.
Sri Lanka has posted a primary deficit (budget deficit before interest costs) of Rs84 billion by December 2016, better than the Rs97 billion listed in an IMF programme.
"We have kept the budget deficit target as promised though there were doubts expressed," Karunanayake said.
Sri Lanka’s overall budget deficit for December has reached Rs687 billion with interest costs, much better than the Rs740 billion originally projected in a budget to parliament.
It is in line with a Rs670 billion projected out-turn presented parliament in November 2016.
Tax revenues had risen to Rs1,458 billion in 2016, from Rs1,356 billion and expenditure, according to data released by the finance ministry.
Sri Lanka has reached the target despite a delay in enacting value-added tax.
Sri Lanka got into a balance of payments crisis in 2015 and 2016, as spending rose sharply due to a state salary hike and the Central Bank kept interest rates down by printing money.
In January 2017, however, the finance ministry repaid part of a maturing bond and coupons with tens of billions of rupees of printed money raising concerns, which can potentially nullify fiscal gains, drive private credit, raise inflationary pressure and put renewed pressure on the rupee.
A country can have balance of payments pressure despite having a budget surplus if the central bank is forced to print money to repay debt or finance the deficit. (Colombo/Jan13/2016)