Falling Short

Revenue projections for last year will be missed although total government revenue is 19 percent higher in the first 11 months of the last year. Revenue projections for last year will be missed although total government revenue is 19 percent higher in the first 11 months of the last year. However, cashflow difficulties were forcing the government to delay payments to key sectors in the economy.

Government was planning to raise Rs. 486 billion in revenue but is likely to miss that target by around Rs. 15 billion because of lower than budget collections in many taxes.

Governments here normally miss revenue targets but cash flow problems because of unplanned subsidies are difficult to overcome.

Government revenue grows when economic activity increases. It also grows if inflation is high.

Sri Lanka went through a period of high inflation last year.

Colombo Consumers’ Price Index annual average change was around 12 percent last year the point to point inflation figures were similarly high.

Inflation pushes up prices of goods and services consumed while also increasing the tax component on them.

It also pushes up c