Sri Lanka 2014 budget gets broad IMF backing

Dec 04, 2013 (LBO) – Sri Lanka’s 2014 budget which expanded a value added tax net though next year’s revenue estimates may be too optimistic requiring further spending cuts, an International Monetary Fund official said. “That means the revenue forecasts are likely to be too optimistic, and if we are basing a budget on that we may find that once again in the course of the year having to cut expenditures in order to meet deficit targets,” Mathai said.

“But that may mean that the capital expenditures proposed in the budget may not be fully executed.”

The IMF has been pushing that the state extract more taxes from the people along with some other Sri Lankan policy advocates.

Parkinson’s Law

But economists have pointed out that controlling expenditure is highest quality deficit reduction possible and raising more revenues to cut the deficit and keep the state and rulers afloat is a second best option at best and an unfortunate and dangerous economic myth at worst.

“Those people who are properly worried about the deficit unfortunately offer an unacceptable solution: increasing taxes,” US economist Murray Rothbard wrote.

“Curing deficits by raising taxes is equivalent to curing someone’s