Sri Lanka budget deficit projected at 6.5-pct of economy

Nov 06, 2008 (LBO) – Sri Lanka raised trade barriers and cut neutral value added taxes in its 2009 budget which is projected to have a deficit of 336 billion rupees or 6.5 percent of gross domestic product. Revenues were estimated at an optimistic 855 billion rupees, though the island failed to meet the original 2008 target of 750 billion rupees with revised estimates presented to parliament of only 709 billion rupees.

But the revised numbers themselves can be off target. In 2007 November parliament was told that the revised revenue numbers were 605 billion rupees, but eventually revenues were reported at only 565 billion rupees.

Current expenditure is projected at 823 billion rupees, causing a revenue surplus of 31.5 billion rupees. The country has not reported a revenue surplus for decades and it is not known why the finance ministry continues to project large revenue surpluses.

Last year the government projected a revenue surplus of 37.8 billion rupees, but revised numbers show a deficit of 34 billion rupees for 2008.

Even that is uncertain. In 2007, a 3 billion rupee projected surplus turned into a revised 24 billion