Tuesday, 19 November 2013 00:39
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First half Govt. revenue down 8.6%; expenditure up 3.5%
Public debt tops Rs. 6.5 trillion mark
With commitment to reduce fiscal deficit, presentation of 2014 Budget on Thursday likely to give improved updated assessment
Rebound in economy in second half seen as a redeemer
Management of finance remains challenging for the Government with first half performance reflecting mixed results whilst the country’s debt has topped the Rs. 6.5 trillion mark.
With latest data up to June being released by the Central Bank on Friday, after a delay of many months (See Daily FT story on 4 November http://www.ft.lk/2013/11/04/data-delay-dilemma/), the total revenue and grants of the Government amounted to Rs. 484.1 billion in the first half ended in June, down 8.6% from Rs. 529.4 billion a year earlier.
Tax revenue had dipped by Rs. 23 billion or 5% to Rs. 435.4 billion whilst non-tax revenue was down by Rs. 16 billion or 26%. Grants were down Rs. 6 billion to Rs. 2.3 billion.
Expenditure and lending minus repayments had increased by 3.5% to Rs. 862.4 billion. Current expenditure was up Rs. 6 billion to Rs. 595.2 billion, whilst capital and lending minus repayment was Rs. 267.2 billion, up by over Rs. 20 billion from June 2012 figure. The revenue effort appears to be challenging. For example, in the first four months of 2013, the dip was 4.2%, as opposed to 8.6% in the first half. Nevertheless, analysts noted, revenue collection gains momentum in the second half in tandem with a pickup in the economy. The Department of Census and Statistics last week announced that the economy in the third quarter bounced back to post a high 7.8%.
The Government estimates full year GDP growth to be around 7.5% level, above 7% in 2012.
Expenditure is being contained though the Government remains under pressure. In the first four months, growth in expenditure was 7.2%, whereas by the first half the pace has slackened to 3.5%. The former was attributed to the frontloading on expenditure in the early part of the year.
Despite seemingly apparent overruns in the Budget by the first half, official sources said that the Government remains committed to achieving the 5.8% budget deficit target for 2013 as in the case of a past few years, which even agencies such as the International Monetary Fund have commended.
The presentation of Budget 2014 by President and Finance Minister Mahinda Rajapaksa on Thursday is likely to give an improved and updated assessment on the fiscal management of the Government.
The Government debt by June had crossed the Rs. 6.5 trillion mark up from Rs. 6.35 trillion in April and Rs. 5.95 trillion in June 2012. By June first half, the increase was 8.6% from December 2012, whereas it was up 5.9% up to April.
Foreign debt component is nearing the Rs. 3 trillion mark with the figure being Rs. 2.88 trillion by end June, up from Rs. 2.79 trillion a year ago.
Though the Opposition has been critical of rising debt, monetary authorities opine debt sustainability of Sri Lanka remains satisfactory though lower ratio of debt to GDP from the present 80% has been pointed to as being healthier.
In 2012, revenue and grants rose by 5.7% and expenditure by 6% whilst Government debt rose by 17% to Rs. 6 trillion.
