January 03, Colombo (LNW): Sri Lanka government has improved the quality of the financial analytics supporting the development of the Medium-term Fiscal Framework (MTFF) establishing a new Macro Fiscal Unit (MFU), finance ministry sources revealed.
The new MFU will enhance technical capabilities and appropriate systems for revenue forecasting.
A change to fiscal rules could strengthen fiscal governance by avoiding an incentive to make unrealistic revenue forecasts and prevent changes to the size of the budget during the approval phase.
IMF has been working with the Government to review existing fiscal rules to better promote fiscal sustainability.
The fiscal rule should be applied in determining the MTFF with Parliamentary engagement regarding the fiscal envelope at the start of the budget process, thus limiting the need for adjustments at the end of the process.
There exists a range of funds outside of the Consolidated Fund which are not covered by the budget.
The risk of corruption is exacerbated as off-budget funds are typically not subject to standard internal control procedures, have limited transparency and do not receive the same level of external oversight as applied to budget entities.
New Macro Fiscal Unit (MFU) has made complete analytics on total revenue for the year 2023 and concluded its findings.
Amidst multiple taxes, the Government revealed that revenue in the just concluded 2023 had reached Rs. 3.1 trillion as against revised estimate of Rs. 2.85 trillion.
“Last year, the Government revenue reached Rs. 3.1 trillion, constituting 12% of our GDP. As part of our strategic vision, we aim to elevate the GDP to 15% by 2026.
In the year 2024, we have set a target of achieving Rs. 4.2 trillion in Government revenue, necessitating a revision of the Value Added Tax (VAT),” President Ranil Wickremesinghe said yesterday at the opening of the Sri Lanka Air Force Headquarters at Akuregoda.
The 2023 achievement was put in context by State Minister of Finance Shehan Semasinghe who told a media briefing that.
He said in terms of state income, it is anticipated to reach Rs. 3110 billion in 2023, surpassing the revised estimate of Rs. 2850 billion.
This would represent a state income of 11.2% compared to GDP. Ambitiously, there are plans to propel this figure to a 15% growth by 2026, he added.
Semasinghe also emphasised the country has witnessed a noteworthy upturn in the number of tax files, reflecting a positive trend in tax compliance.
According to him, in 2019, the total number of registered taxpayers stood at 1,705,233. However, owing to various policy decisions, this figure decreased to 677,613 in 2020 and further to 507,085 in 2021.
“Demonstrating a commendable success in policy implementation, the number of tax files rebounded from 437,547 in 2022 to a significant milestone of one million,” Semasinghe added.
