Sri Lanka aims for budget deficit of 4.7% of GDP next year: FinMin

REUTERS: Sri Lanka will cut its budget deficit to 4.7 percent of gross domestic product (GDP) in 2017 from 5.4 percent this year, Finance Minister Ravi Karunanayake has told the International Monetary Fund (IMF), his ministry said yesterday. The government has performed better than expected, going by fiscal numbers for the first half of 2016 that were released this week, although economists have said achieving this year’s target will still be challenging. An IMF mission is in Colombo to review a loan of US $ 1.5 billion approved in June to support Sri Lanka’s economic reform agenda.

“This year ’s target will be 5.4 percent. It will be further reduced to 4.7 percent in 2017,” Karunanayake told the IMF mission, the ministry said in a statement. President Maithripala Sirisena’s coalition government faces a delay in implementing value-added-tax (VAT) hikes after two court rulings forced a temporary suspension of the move. But the Cabinet has approved the increase of the VAT to 15 percent from 11 percent now, with some amendments, government spokesman Gayantha Karunathilake said yesterday. The amended tax bill will also impose tax on telecoms services, tobacco products, air ticketing, and housing projects, a Cabinet document showed.