Sri Lanka budget has reformist agenda: CT CLSA

Nov 23, 2015 (LBO) – The 2016 budget can be termed as a reformist agenda, that looks to address short-term risks to the economy while setting up Sri Lanka for the long run, CT CLSA Securities said in a report on the budget.

“Being used to budget speeches that were extremely populist, or included implausible or regressive proposals, the proposals presented on 20 November 2015, though falling short of being ‘revolutionary’ as promised in the lead up, look to adequately address the short term risks in the economy, whilst setting Sri Lanka up for the long run,” the report said.

The proposals look to instill confidence amongst the investment community, and overall, the proposals appear to have taken note of comments made by a range of stakeholders, whilst comprising a more medium to long term planning perspective, CT CLSA Securities said.

“Whilst state intervention is likely to remain, or return, in some industries, there seems to be better distinction being made between essential and non-essential involvement.”

The GoSL forecasts the fiscal deficit for 2016E to decline to 5.9 percent of GDP (740 billion rupees), against a deficit of 6.0 percent (675 billion rupeesn) targeted for 2015E (surpassing previous target of 4.4 percent, or 499 billion rupees)

Total revenue and grants is to rise at a staggering +39 percent YoY to 2,047 billion rupees in 2016E. GoSL estimates total expenditure to increase +29 percent YoY to 2,787 billion rupees in 2016E, with Public Investment to rise 68 percent YoY to 868 billion rupees.

CT CLSA said it should be noted that the proposals laid out in the budget are not officially finalized by the GoSL, with information also limited in some instances, until the release of gazettes, and thereby the details on some of the proposals could be altered in the weeks ahead.

The detailed report is below: