Budget Trend

Sri Lanka budget deficit 3.5-pct of GDP up to April July 02, 2014 (LBO) - Sri Lanka's has recorded a budget deficit of 3.5 percent of gross domestic product up to April 2014, and the Treasury said it was expecting to meet a full-year target of 5.2 percent.The state extracted 8.5 percent more taxes from the people to 310.5 billion rupees in the first four months from a year earlier, and total revenues rose 11.5 percent to 345.0 billion rupees, the finance ministry said in a mid-year report.

Non-tax revenues picked up 48 percent to 34.4 billion rupees from 23.1 billion rupees, despite lower central bank transfers.

Current spending rose 6.5 percent to 498.9 billion rupees, leaving a revenue deficit of 153.9 billion rupees, lower than the 159.0 billion rupees last year

Capital and lend lending was higher by 4.5 percent to 193.8 billion rupees and the overall deficit was 347.7 billion rupees 01 percent higher from a year earlier. After deducting grants it was 347 billion rupees.

With higher estimated economic expansion that gap was estimated at 3.5 percent of GDP down from 3.9 percent a year earlier.

With a continuing recovery in economic activity, tax revenues are expected to pick up faster in the second half of the year, the report said.

"This improvement together with a closer monitoring of public expenditure management within the overall budgetary ceilings is expected to be conducive to maintaining annual budget deficit at 5.2 percent of GDP as announced in Budget 2014," the finance ministry said.

The first four months saw an increase in income tax by 9.2 percent helped by completion of tax holidays and Pay as you earn taxes from individuals also rose 1.6 percent, despite a reduction in rates.

Tax on interest fell 20 percent as interest rates fell in the economy.

The tax revenues were also below projections.

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