- Says economy struggling to recover from Easter attacks
- Budget deficit projected to exceed 5.5% this year
- Largest loss coming through decline in border control taxes collected by Customs
By Nishel Fernando
The Treasury fears revenue loss in excess of Rs.300 billion by the end of this year as the economy struggles to recover from the adverse impacts of the Easter Sunday attacks.
“So far, we have seen a Rs.215 billion loss in state revenue. If the revenue doesn’t improve during the next three months and the current trend continues, it will be in excess of Rs.300 billion,” Treasury Secretary Dr. R.H.S. Samaratunga told reporters on the sidelines of a press conference held in Colombo, yesterday.
Although the budget deficit was contained to certain extent with expenditure cuts, the Treasury estimates that it could shoot up to in the rage of 5.5-5.7 percent of GDP by the end of this year, from originally targeted 4.4 percent of GDP.
The government has slashed state expenditure by 15 percent in order to contain the budget deficit this year.
However, the Treasury officials stated that without an improvement on the revenue collection, it would be impossible to contain the budget deficit below 5.5 percent of GDP.
Dr. Samaratunga emphasised that the economic impacts of the Easter Sunday attacks were not limited to tourism but adversely impacted virtually all the sectors of the economy.
The Treasury expects Rs.20 billion from the VAT collection from the tourism sector as the government cut the VAT rates to support the recovery of the tourism industry, in the aftermath of the Easter Sunday attacks.
However, the largest loss to the state coffers is coming through a decline in border control taxes collected by the Sri Lanka Customs.
As the economic activities slowed down in the aftermath of the Easter Sunday attacks, Dr. Samaratunga noted that the demand for imported capital and intermediate goods has declined significantly, causing a major loss to the state coffers.
Despite the challenging environment, which is further fuelled by the upcoming elections, the Treasury plans to maintain a primary fiscal surplus for the year.