Oct 01, 2012 (LBO) – Sri Lanka has seen a sharp fiscal slippage in July 2012 after two months of improving state finances, as the state ratcheted up current expenditure ahead of the ability of citizens to pay up taxes, official data show. State revenues rose 12.6 percent to 556 billion rupees in the seven months to July from a year earlier, but current expenses raced ahead by 19.4 percent to 695.3 billion rupees, nearly twice the annual budgeted rate of 10.1 percent, fiscal data released by the Central Bank shows.
The revenue deficit or the gap between total revenues and current expenditure expanded 57.8 percent from a year earlier to 139.3 billion rupees. The deficit in the current account of the budget was also sharply higher than the 75.3 billion rupees recorded in June.
State capital expenditure also rose 41.6 percent from a year earlier to 286.4 billion rupees, driving the overall budget deficit (with grants) up 46.5 percent to 425.7 billion rupees.
The overall deficit has almost reached the annual target of 468.9 billion rupees promised in the budget for 2012. The overall deficit without grants at 417.3 billion rupees is already 5.56 percent of estimated gross domestic product for 2012, against a target of 6.2 percent