Govt. revenue up 16% to Rs. 346 b in 1Q

Monday, 9 May 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters : Sri Lanka’s government revenue rose 16.1% on year to Rs. 346 billion ($2.38 billion) in the March quarter, a finance ministry official said on Friday, with the government expecting a growth in revenue after a tax hike early this week in line with an International Monetary Fund deal.

The island-nation’s finances are in a precarious state as it finds itself in a debt trap, partly due to heavy borrowing by the previous government during its nine-year tenure that ended in January 2015, while facing a balance of payments crisis with around $2 billion foreign outflows from government securities.

Total tax revenue jumped by a fifth to Rs. 325 billion in the March quarter year-on-year.

Total expenditure in the first quarter rose nearly 18% to Rs. 526 billion compared to a year ago, while the budget deficit stood at Rs. 181 billion compared to Rs. 148 billion in the same quarter a year ago, the official said.

“We are unable to say anything about the budget deficit at the moment as it depends on the full year economic growth,” the finance ministry official told Reuters, asking not to be named.

Finance Minister Ravi Karunanayake had originally estimated a reduction in the 2016 budget deficit to 5.9% of gross domestic product (GDP) or Rs. 740 billion, from 7.4% last year.

However, the government revised the budget deficit lower to 5.4% of GDP while the authorities were in talks for the IMF loan.

The government has targeted Rs. 1.82 trillion of revenue and Rs. 2.58 trillion in expenditure for this year.

The IMF last week reached agreement with Sri Lanka for a $1.5 billion bailout to help the island nation avert a balance of payments crisis, while emphasising stronger revenue proposals.

The $82 billion economy is seeking to raise Rs. 100 billion in revenue by increasing the value added tax (VAT) by 4% and new taxes effective Monday.