Tuesday, April 23, 2024
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Sri Lanka Budget deficit widens to Rs. 1 trillion in 5 months 2023

By: Staff Writer

Colombo (LNW): The Government exceeded the primary balance target for the first quarter of 2023 by achieving a surplus of Rs. 48.3 billion over the deficit target of Rs. 56 billion mainly due to the enhanced revenue collection.

Sri Lanka’s Budget deficit in the first five months of this year had crossed the Rs. 1 trillion mark whilst rise in expenditure outpaced that of revenue.

According to the latest data released by the Central Bank, during January to May Government revenue and grants increased by 38% to Rs. 1.12 trillion as against Rs. 812.7 billion in the corresponding period of last year.

Total expenditure and net lending increased by 47% to Rs. 2.13 trillion in comparison to Rs. 1.45 trillion a year ago.

The resultant overall budget deficit rose to Rs. 1.01 trillion as against Rs. 636.7 billion in the first five months of last year.

CBSL also said domestic financing increased to Rs. 1 trillion as against Rs. 742.7 billion. Foreign financing recorded a net repayment of Rs. 63.3 billion in comparison to Rs. 106 billion.

Outstanding central Government debt decreased to Rs. 26.8 trillion by end April from Rs. 27.5 trillion as at end 2022. Total outstanding domestic debt amounted to Rs. 15.6 trillion while the rupee value of total outstanding foreign debt amounted to Rs. 11.1 trillion.

However The Government exceeded the primary balance target for the first quarter of 2023 by achieving a surplus of Rs. 48.3 billion over the deficit target of Rs. 56 billion mainly due to the enhanced revenue collection.

A series of bold policy measures were introduced from June 2022 to make the tax structure progressive and broad-based.

Policy measures such as the removal of preferential Corporate Income Tax (CIT) rates andexemptions, re-introduction of mandatory Advanced Personal Income Tax (APIT),withholding taxes and increasing Personal Income Tax rates (PIT) and Value Added Tax (VAT) rates, mainly contributed to the improved revenue performance in the first four months of 2023

Total government revenue in the first four months of 2023 increased by 30.0 percent to Rs. 820.1 billion from Rs. 630.9 billion in the same period of 2022, realizing 24.1 percent of Rs. 3,408.0 billion annual estimate benefiting from the mobilization of tax revenue.

Tax revenue increased by a significant 36.6 percent to Rs. 742.6 billion in the first four months of 2023 achieving 23.7 percent of Rs. 3,130.0 billion annual estimate for 2023.

Government expenditure increased by 42.4 percent to Rs. 1,645.6 billion in the first four months of 2023, compared to Rs. 1,155.2 billion in the same period of 2022.

Recurrent expenditure increased by 46.0 percent to Rs. 1,485.0 billion, while capital expenditure and net lending increased by 16.0 percent to Rs. 160.6 billion.

The upswing in expenditure was mainly due to the increased spending on interest payments, pensions and welfare programs.

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