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Sri Lanka’s budget gap improves in July 2016, but revenues falter

ECONOMYNEXT – Sri Lanka’s budget deficit improved to Rs432.7 billion in July 2016 or 3.6 percent of gross domestic product, down from Rs523.3 billion or 4.68 percent from last year, but revenue growth showed signs of faltering.

Revenues in eight months grew 20 percent from a year earlier to Rs863.7 billion, while current spending grew at a slower 6 percent to Rs1006.8 billion.

But monthly tax revenues, which grew steadily from Rs109.1 billion to Rs137.7 billion in May, fell to Rs131.8 billion in June. In July, monthly tax revenues slipped further to Rs121.8 billion.

Sri Lanka was expected to have value-added tax in place by April or May 2016, but it has been delayed until at least October.

Revenues were sharply rising last year over the import of cars.

The Treasury has slapped higher excise taxes on diesel in August (without a retail price increase) and sugar.

Finance Minister Ravi Karunanayake said revenues, which slowed after the floods, have started to pick up by September.

In July, the government posted a revenue deficit of Rs143.1 billion, sharply down from Rs232.7 billion.

Capital spending was maintained at Rs290.1 billion, or 2.4 percent of projected GDP.

The overall budget deficit at Rs433.2 billion was also nominally down from Rs523.6 billion. Measured against projected GDP, the deficit was down to 3.6 percent of GDP compared to 4.68 percent last year.

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Roughly annualised, the deficit is 6.7 percent for the full year, which is a deterioration from June. (Colombo/Oct06/2016)

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