Sri Lanka budget gap narrows in 1Q 2010

June 14, 2010 (LBO) – Sri Lanka’s budget gap has narrowed in the first quarter of 2010, with revenues picking up and the government also keeping a lid on current expenses from a year earlier, official data show. Total revenues were up 26.3 percent to 182.7 billion rupees in the three months to March and current expenses were up only 1.6 percent to 247.5 billion rupees.

The government resisted a temptation to go for an ‘election budget’ in November 2009 and has so far held back a public sector salary hike which is the largest expenditure and cashflow item in the budget.

Last year 58 percent of taxes extracted from the people was given as salaries and pensions to state workers. Instead of simply raising salaries, which is needed, the state in recent years has also expanded an already bloated public sector.

Last year Sri Lanka’s budget deficit hit 9.8 percent without grants and 10.2 percent including grant funding.

The high spending Sri Lanka state has been identified as the major reason for economic instability, inflation and low growth in the island which creates poverty among ordinary people outside the state.

The current account or revenue deficit of the budget, which is the gap bet