Sri Lanka hopes to keep budget gap below 9%

Sumith Arangala, Chief Executive Officer, LVL Energy Fund (left) handing over the agreement to Nanda Fernando, Managing Director, Sampath Bank

The Sri Lankan government expects its budget deficit to be less than 9% of gross domestic product in 2005, helped by steady revenue growth, the country’s treasury secretary said Wednesday. The Sri Lankan government expects its budget deficit to be less than 9% of gross domestic product in 2005, helped by steady revenue growth, the country’s treasury secretary said Wednesday. “We want to keep the budget deficit 0.5-1.0 percentage point below 9% of GDP this year,” P.B. Jayasundera told a news conference.

He said a steady revenue collection will help the outlook .

Total revenue climbed 22% on year in the first half of this year, he said.

Jayasundera said spending is expected to be high this year due to expenses from post-tsunami reconstruction, but noted that those costs will be funded by foreign aid.

Foreign governments and international agencies have pledged Sri Lanka $2 billion in assistance, in line with government estimates on the total reconstruction cost.

Analysts have said that any additional spending – necessary if pledged aid doesn’t come through as promised – could widen this year’s budget deficit to around 9.4%-9.8% of GDP, compared wit