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Sri Lankan economy bounces back with revenue up by 25 % in January

By: Staff Writer

February 11, Colombo (LNW): The Sri Lankan economy has bounced back form the set back in 2022 faced with a complex interplay of economic and political challenges, finance ministry sources said.

Although fuel and food queues have disappeared, but the dire impact of the economic crisis was inescapable in 2023 which also saw a series of key political developments. initial improvements in political rights and civil liberties compared to 2022.

The state treasury was almost  zero at that time officials said adding that now the country has  reserves of US$4.4 billion.

The World Bank later revised its forecasts, noting Sri Lanka’s progress in reducing inflation and benefits accruing from tourism revenue and currency appreciation.

 The Bank now expects a 1.7 per cent economic expansion in 2024, up from its earlier 1 per cent forecast. In the last six months of 2023, Sri Lanka experienced reduced inflation, a 12 per cent currency appreciation, improved foreign reserves and increased remittances

State revenue has increased by 25 percent in January after the VAT increase, where Rs. 274 billion was recorded in January 2024, whereas the estimated state revenue was Rs. 219 billion, State Minister of Finance Ranjith Siyambalapitiya said.

The Minister said the Customs Department was set a target of Rs. 114 billion for January and it had recorded Rs. 121 billion, which is 11 percent more than the estimated revenue.

“The Excise Department recorded Rs. 14 billion exceeding the revenue target of Rs. 12 billion. The Inland Revenue Department has recorded Rs. 114 billion more than the set target of Rs. 88.9 billion,” the Minister said.

He noted that inflation was recorded as 6.4 percent while the food inflation was only 3.3 percent.

“Some people claimed that the prices of goods will go up excessively in January after the VAT increase.

However, the inflation in January was recorded as 6.4 percent. Food inflation was only 3.3 percent. We managed to keep the food inflation low as essential commodities were exempted from the VAT. The non-food inflation was also recorded as 7.9 percent,” he said.

The government set a budget deficit target of 2.85 trillion Sri Lankan rupees ($8.73 billion) in 2024, or 9.1% of gross domestic product, higher than the revised 8.5% of GDP in the current year. The original target for this year was 7.9%.

The government also projected total tax revenue at 4.1 trillion rupees for next year, sharply higher than 2.85 trillion rupees in the current year, with the biggest jump coming from the goods and services tax receipts, the budget document showed.

The Minister said the increase in state revenue will ultimately benefit all the people in the country.

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