Sunday, 05 July 2020 21:01

SL Government cautions against increasing budget deficit

Amid the need for higher public spending, the government has to guard against increasing fiscal deficit that may prompt rating downgrade resulting in other consequences for the economy, fiscal analysts said.

During the first four months of 2020, government revenue has come down to Rs478.7 billion as a percentage of estimated GDP declined to 3.0 per cent from 3.8 per cent recorded in the corresponding period of 2019, Central Bank data showed.

Total expenditure was ballooned up to Rs.930.9 billion as the expenditure and net lending as a percentage of estimated GDP declined to 5.9 per cent during the same period, from 6.2 per cent recorded in the corresponding period of 2019.

Overall budget deficit as a percentage of estimated GDP increased to 2.9 per cent during the first four months of 2020 from 2.3 per cent recorded in the corresponding period of the previous year.

In financing the budget deficit, domestic financing increased to 3.2 per cent of estimated GDP in first four months of 2020 compared to 2.4 per cent of GDP in the corresponding period of 2019, while foreign financing as a percentage of estimated GDP recorded a 0.3 per cent of net repayment during the first four months of 2020 compared to 0.1 per cent of net repayment recorded in the corresponding period of 2019.

In nominal terms, outstanding central government debt increased to Rs. 14,024.7 bn by end of April 2020 from Rs. 13,031.5 bn as at end 2019. Total outstanding domestic debt increased by 8.9 per cent to Rs. 7,217.7 bn, and the rupee value of total outstanding foreign debt increased by 6.3 per cent to Rs. 6,807.1 bn by end April 2020.

Workers' Remittances (Inflows) in June was US$ 431.8 million while the total number of international tourist arrivals to Sri Lanka from January to June 2020 was 507,311.

No tourist arrivals have been recorded for the months of April May and June 2020was zero due to the termination of all passenger flights and ship arrivals into Sri Lanka from 18th March 2020.

(LIN)

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