By Chandeepa Wettasinghe
The Treasury managed to collect Rs. 1.7 trillion in revenue from January to November 2017, recording a 11.4 percent increase compared to the corresponding last year, pushing the government finances further into a primary surplus, despite overall fiscal slippage.
The Central Bank attributed the government’s inability to meet last year’s target to the adverse weather experienced last year, which had led to less revenue collection and higher expenditure on recovering from the weather related damages.
Overall, the budget deficit for the 11 months was Rs. 633.7 billion worsening from Rs. 592.8 billion year-on-year (YoY). Revised budget estimates made last November are placing the budget deficit for 2017 at 5.2 percent of gross domestic product (GDP), compared to a 4.6 percent of GDP projection made at the start of last year.
The primary account, which ignores interest payments, was up to a surplus of Rs. 38.8 billion, from a deficit of Rs. 29.4 billion YoY. The primary surplus is an important metric for 2017 and 2018 for Sri Lanka’s US$ 1.5 billion balance of payment assistance and economic reform programme with the International Monetary Fund.
The current account balance, which measures the difference between revenue and recurrent expenditure, remained a deficit of Rs.85.1 billion, yet improving from a Rs.104 billion deficit YoY. The government is expecting both the primary and surplus accounts to register surpluses in 2018.
Government expenditure for the first 11 months of 2017 increased 10.2 percent YoY to Rs. 2.3 trillion.
Interest expenditure increased significantly by 19.6 percent to Rs. 672.5 billion due to a year where domestic debt repayment was elevated, while the two other major recurrent expenditure items, salaries & wages and pension too recorded increases.
Rs. 561.4 billion was utilized for public investments, increasing by 10.8 percent YoY.
The 11 months saw the Treasury obtaining Rs.533 billion in foreign borrowings, and repaying Rs. 186.9 billion, while it borrowed Rs. 994.2 billion from the domestic market and repaid Rs. 706.6 billion.
Overall, financing for the government from January to November 2017 was 1 percent less YoY at Rs.633.7 billion, with lower levels of net foreign financing, and more financing taken from domestic sources compared to the corresponding period last year.