DailyMirror
The budget deficit for 2009 had increased to 9.7 percent despite initial plans by the government to keep it below 7.0 percent, the pre election budgetary position report compiled by the Finance Ministry says.
The government gave the International Monetary Fund (IMF) a commitment that it would reduce the budget deficit to at least 7.0 percent when it applied for the Stand by Arrangement of US $ 3.5 billion. It gave the ‘adverse impact’ of the global economic recession on the Sri Lanka economy and the slow progress in trade based activities as an explanation for its inability to achieve the planned target.
The project revenue for the past year has declined by Rs.23 billion while interest payments have risen by Rs.38 billion.
The government’s estimated revenue has come down from Rs.725 billion to Rs.702 billion while total expenditure has gone up from Rs. 1,091 billion to Rs.1, 197 billion.
There has been a deterioration in revenue collection from VAT and excise and import duties.
Meanwhile, Cabinet Spokesman Minister G.L. Peiris admitted at a news conference yesterday that certain matters that affected the country’s economy were beyond the control of Sri Lanka and as a result, he opined that there would be no reason for the IMF to withdraw the third tranch of funds promised in the Stand by Arrangement. He further said that Sri Lanka’s foreign reserves had reached a satisfactory level today.
Meanwhile, former UNP MP Ravi Karunanayake said that there is a heavy flow of foreign exchange out of the country now. Mr. Karunanayake said that a number of companies in the Colombo district alone had been forced to close down.
“The government wanted to reduce the budget deficit to seven percent so that it can obtain the IMF loan. Now, the IMF is putting forward new restrictions and new conditions. The actual budget deficit is 9.82 percent,” he said.
He also said that the public debt had increased to 91 percent of Gross Domestic Production (GDP).