Sri Lanka’s budget deficit to April 2016 narrows
ECONOMYNEXT – Sri Lanka’s budget deficit fell 14 percent in the first four months of the year to 233.4 billion rupees, down from 271.6 billion rupees a year earlier, with tax revenues rising faster than spending amid an effective wage freeze.
Revenues rose 20 percent to 472.7 billion rupees, with tax revenues up 22 percent to 441.2 billion rupees and non-tax revenues down 9 percent to 31.5 billion rupees, data from the finance ministry showed.
Current spending rose 7 percent to 559.7 billion rupees.
The revenue deficit or the gap in the current account of the budget fell to 87 billion rupees in the first four months of the year, down from 127.4 billion rupees.
Capital spending rose only 2 percent to 146.2 billion rupees.
The overall budget deficit was down 14 percent in nominal terms to 233.4 billion rupees from 271.6 billion rupees a year earlier.
Sri Lanka’s state finances were hit in 2015, by a revised budget in January 2015 and the central bank added fuel to the fire by cutting rates and releasing liquidity to money markets, generating balance of payments trouble and a currency collapse.
However this year started with higher interest rates which allowed consumption to be curbed and more savings generated to finance private and state credit. With the rupee down, inflation and output higher, more taxes could also be collected from the people to pay state worker salaries.
Some tax rates are also higher.
In the first four months, foreign borrowings were still a net repayment of 17.1 billion rupees, but down from 68.1 billion rupees a year earlier. (Colombo/July01/2016)