Sri Lanka targets 4.7 percent budget deficit for 2017: Fin Min

ECONOMYNEXT – Sri Lanka is targeting a deficit of 4.7 percent of gross domestic product for 2017, Finance Minister Ravi Karunanayake has told a visiting review team from the International Monetary Fund.

A Finance Ministry statement quoted Karunanayake as saying that Sri Lanka was on track to meet a 5.4 percent budget target for 2016.

A program which Sri Lanka is implementing with the IMF, after monetary printing in 2015 generated a balance of payments crisis, does no monitor the overall deficit, but the primary deficit (deficit before interest costs) and domestic borrowings.

The primary deficit target is about 0.8 percent of GDP, and by June data reported a primary deficit of 0.32 percent (about 38 billion rupees), less than half the annual target.

According to interim Treasury data, Sri Lanka was keeping the deficit target on track by June 2016, at 5.4 percent of GDP, despite rising interest rates and a delay in the hike of value added tax.

Activists went to court for the first time to block attempts by a government to impose the tax by minister’s prerogative without either cabinet or parliamentary approval.

Sri Lanka’s cabinet of ministers approved the tax hike last week raising the threshold to 50 million rupees, dropping many businesses from the tax net.

The 2017 deficit target of 4.7 percent is in line with the IMF program.

The Finance Ministry said Karunanayake and Treasury Secretary R H S Samaratunga met visiting IMF official Jaewoo Lee and Country Representative Eteri Kvintradze.

The Treasury said the review report would be submitted to the IMF’s board in November which will bring a second installment under a 1.1 billion dollar reform program.

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Sri Lanka’s central bank has said the country has met the June IMF targets, though inflation spiked close to the ceiling rate. The September targets in the program are indicative. (Colombo/Sept13/2016)
 

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