Sri Lanka’s budget deficit for the first half of 2016 improved to Rs.328.29 billion from a Rs.401.67 billion deficit year-on-year (YoY), according to the provisional figures released by the Finance Ministry.
The current deficit was Rs.93.70 billion compared to a Rs.163.69 billion deficit YoY.
Revenue rose to Rs.741.84 billion from Rs.605.65 billion YoY, with the Treasury targeting Rs.1.55 trillion in revenue for 2016, compared to the parliamentary approved estimates of Rs.1.82 trillion.
The tax component made up Rs.684.91 billion of the total revenue, improving from Rs.557.58 billion YoY.
Taxes on tobacco and alcohol are expected to increase drastically this year under the guise of helping citizens become healthy following historically set precedents, but in reality pushing individuals into illegal substitutes from tax levied products.
The relief funding given by the International Monetary Fund is tied to the reforms on the country’s Inland Revenue Act, VAT Bill and Customs Code in order to push revenue from 13 percent of gross domestic product (GDP) in 2015 to nearly 15.8 percent of GDP in 2020.
Meanwhile, expenditure increased to Rs.1.07 trillion from Rs.1.01 trillion YoY. The Treasury is estimating expenditure for this year to be Rs.2.22 trillion as opposed to the parliamentary approved estimates of Rs.2.58 trillion.
Total expenditure had been Rs.2.29 trillion YoY against the approved estimates of Rs.2.03 trillion.
Recurrent expenditure comprised Rs.835.54 billion of the total, increasing from Rs.769.34 billion YoY.
Interest payments on loans edged out salaries and wages as the highest expenditure. Interest payments increased to Rs.289.71 billion from Rs.254.53 billion YoY.
Salary and wage payments increased to Rs.288.69 billion from Rs.270.76 billion YoY. Pension payments increased to Rs.84.65 billion from Rs.73.89 billion YoY.
Capital spending declined to Rs.235.05 billion from Rs.238.17 billion.
Meanwhile, foreign borrowings decreased to Rs.76.52 billion from Rs.81.30 billion YoY while the repayments slowed down to Rs.69.84 billion from Rs.123.17 billion YoY.
Domestic borrowings surged up to Rs.722.79 billion from Rs.699.39 billion YoY, while the repayments increased to Rs.401.18 billion from Rs.255.84 billion YoY.