Sri Lanka budget on track in April

July 02, 2010 (LBO) – Sri Lanka’s budget deficit in the first four months of 2010, though high, is in line with the gap for the full-year estimates presented in parliament last week, official data show. In the first four months revenues rose 26.6 percent to 240.7 billion rupees from a year earlier.

But most of the revenues came from a jump in profits transfers mainly from the Central Bank and the telecommunications regulator, of 10 billion rupees each an interim fiscal report said.

Non-tax revenues to April 2010 were 36.6 billion rupees, up from 14.8 billion rupees a year earlier or a gain of 146 percent.

The report also said non-tax revenues had grown only slightly to 39.5 billion rupees in the five months to May.

But tax revenues were up 16.4 percent up to April. In the five months to May tax revenues were up 16.9 percent, the finance ministry said, though full expenditure data for the period was not made public.

In the budget presented to parliament last week the finance ministry estimated total revenues to grow 16.9 percent and 17.8 percent more tax revenues will be extracted from the people.

Data up to April show current expenditure to be up only 6.0 percent to 327 billion rupees. The government also held back a state sector salary hike till January 2011.

Up to April the revenue deficit was down to 86.4 billion rupees from last year’s 118.3 billion rupees but it was still high at 1.57 percent of gross domestic product.

The government is estimating full year revenue deficit of only 2.0 percent with eight months still go to.

The government was maintaining capital expenditure at over 80 billion rupees.

The overall deficit excluding grants was 167.5 billion rupees, with grant financing it was 170.2 billion rupees or about 3.1 percent of GDP. For the full year the government is expecting an 8.0 percent of GDP deficit.

Domestic borrowings were 36 percent lower from a year earlier at 125.2 billion rupees, helping keep interest rates lower.

The government is hoping to keep full year domestic borrowings at 315.3 billion rupees or around the level two years ago, by increasing net foreign borrowings to 123.3 billion rupees.