Sri Lanka state revenues improve in July; budget gap still wide

Sept 28, 2009 (LBO) – Sri Lanka’s state revenues picked up in July, with taxes in the first seven months only 1.47 percent behind last year, but the budget gap continues to be wide, with current expenses growing 24.7 percent, the latest official data showed. The implied annualized overall deficit narrowed to 10.4 percent of gross domestic product from 12.0 percent in April, and 10.8 percent in June.

The Treasury was also maintaining capital expenditure at just 2.7 percent behind last year’s level in rupee terms at 142.6 billion rupees.

But recurrent expenditure grew by a steep 24.7 percent in the seven months to July to 498.9 billion rupees, expanding the deficit in the current account of the budget (the gap between total revenues and day-to-day expenses) to a new high of 154.6 billion rupees.

The entire current account deficit for 2008 was 83.5 billion rupees.

The quality of expenditure in Sri Lanka is weak and is epitomized by more than 110 ministers and a bloated public sector which takes home more than 50 percent of taxes in the form of salaries and pensions.

The government said it had hired 43,981 persons into the state in 2009, up to July 31.