Sri Lanka defence, subsidy costs overshoot ahead of next budget

Standing left to right – Mr. Dinesh Jebamani (Chief Manager Liability Product Management and New Age Media – Seylan Bank), Mr.Sudesh Peiris (Senior Manager – Digital Banking Channels – Seylan Bank), Ms. S.Senevirathne (Representative of the Revenue Department – Western Province), Mr. Tilan Wijeyesekera (Deputy General Manager – Retail Banking – Seylan Bank) and Mr. Malik Wickremanayaka (Deputy General Manager – Operations – Seylan Bank)

Nov 03, 2008 (LBO) – Sri Lanka’s budget for 2009 will focus on keeping a military campaign on track while also providing resources to build infrastructure, though expenses in the current budget have overshot targets, a government minister has said. Junior finance minister Ranjith Siyambalapitiya told ETV’s Lanka Business Report show that managing the 2008 budget has been tough.

“Generating the budgeted income has been a challenge this year,” Siyambalapitiya said.

“Expenses have risen. These will have an effect on the deficit this year.”

Overshooting

In the past few years Sri Lanka’s revenues have been routinely over-estimated, expenses under-estimated and the gap had been filled with printed money which drove inflation up or by foreign commercial borrowings, which put the national balance sheet at risk.

In the 2007 budget Sri Lanka’s parliament was told that revenues would be 599 billion rupees. In November 2008, parliament was told that revised revenues would be 605 billion rupees.

Later revenues turned out to be only 565 billion rupees. Inflation topped 20 percent and a 500 million dollar sovereign bond was also sold. The 8.25 percent dollar bond is now trading at more than 20 percent in foreign markets.