Sri Lanka budget deficit hit 8.5-pct of GDP for 10-months

Feb 15, 2010 (LBO) – Sri Lanka’s budget deficit has hit an estimated 8.5 percent of gross domestic product (GDP) in the first ten months of the year, despite a recovery in revenues as expenses grew at a faster pace, the latest data showed. Up to October the government was able to borrow domestically without disrupting the domestic economy too much amid ‘flight to treasuries’ behaviour among banks, but in the past few week, the central bank has started to monetize debt.

In the first four months of 2010, the government is running a temporary budget, broadly extrapolating the 2009 budget, with parliamentary polls due on April 08.

Revenues from January to October grew 8.1 percent to 506.1 billion rupees, while expenditure rocketed at a much faster 27.1 percent driving the overall deficit to 416.3 billion rupees.

The deficit is about 8.5 percent of the 4,900 billion rupee GDP estimated at the time a deal with the International Monetary Fund was signed in July.

The overall deficit was expected to be 346 billion rupees for 2009, or about 7.0 percent of g