July 11, 2008 (LBO) – Sri Lanka’s finance ministry had to rely on bank overdrafts and additional domestic borrowing to bridge cash gaps in the first five months of 2008 as revenues were below target, a government report said. The finance ministry said the cash deficit forecast for its operations by the end of May was only 4.7 billion rupees but the actual was 23.4 billion rupees.
“The main reason for the deviation was the shortfall of revenue receipts,” the mid-year fiscal report of the finance ministry said.
When outlays for investment were added the total cash deficit went to 76.9 billion rupees though the investment outflows were 5.9 billion less than original estimates.
The finance ministry said overdraft with state banks was at 44.1 billion rupees by end-May, up from 37.2 billion in January. The overdraft usually peaks in April, when the government has to meet public sector salary advances.
In recent months Sri Lanka’s fiscal stance has been improving, with policy makers and politicians no longer glorifying the virtues of budget deficits, unchecked government spending or subsidies.
In recent months subsidies have been trimmed as inflation rose to the highest level in the island’s history of c