Mon, 06 Feb 2023 Today's Paper

Deficit bungle!

1 January 2013 07:46 am - 0     - {{hitsCtrl.values.hits}}

A A A

The Sri Lankan government is likely to overshoot yet another overambitious fiscal deficit target of 5.8 percent of the GDP, set out in the 2013 Budget to reach not below 6.5 percent, due to the overly optimistic revenue assumptions, according to a German global banking and financial service company.

“Given that economic growth has slowed substantially in 2Q12 and the future outlook also not indicating any sharp recovery, it will be indeed an uphill task for the authorities to achieve next year’s fiscal targets in our view,” Deutsche Bank AG (Deutsche) said in a report.

The last and the only time the country managed to contain its fiscal deficit below the 6.0 percent level was way back in 1977, just before the economy was liberalized.

“The 2013 Budget assumed revenue collection to pick up by 50 basis points to 14.7 percent of the GDP, from a likely 14.2 percent of the GDP outturn in 2012, contrary to the current trend of revenue/GDP ratio falling steadily each year. Given our growth projection, we expect revenue collection/ GDP ratio to be 14 percent of the GDP in 2013, along with our expenditure estimates of 20.5 percent of the GDP,” Deutsche Bank noted.

Meanwhile, in the first nine months of 2012, the fiscal deficit reached 6.44 percent of the GDP, exceeding the full year target of 6.2 percent. The 2011 budget deficit (excluding grants) target was also missed slightly to reach 7.0 percent of the GDP from the planned 6.8 percent.

“Of course, the government could cut back on capital expenditure aggressively to meet the headline budget deficit target (as it has done this year) but then such a development would most likely have negative implications for public investment and consequently overall GDP growth,” Deutsche Bank stated.

Further, the Sri Lankan government has a much more ambitious target in 2014 to cut the fiscal deficit to 4.7 percent of the GDP and to bring public debt to 65 percent of the GDP by 2015, from the existing 78 percent.

The Global Markets Research team at Deutsche also forecasted in their ‘Asian Economic Special’ under Sri Lankan Chapter the economy to grow not above 6.2 percent and 7.0 percent for 2012 and 2013, respectively.

Order Gifts to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Vegetables, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Sending Money,Online Books, Delivery Service, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop Sri Lanka

  Comments - 0

Order Gifts to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Vegetables, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Sending Money,Online Books, Delivery Service, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop Sri Lanka

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




Order Gifts to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Vegetables, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Sending Money,Online Books, Delivery Service, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop Sri Lanka

Pain and punishment

Should we spare the rod and spoil the child? Does it really happen? Children

Health System in the emergency room

Sandya Kumari from Kotahena has been experiencing chest pains since 2015 and

Canada’s targeted sanctioning of Gota and Mahinda

History was made last week when two former executive presidents of Sri Lanka

SC judgement on Easter attack: Court rules negligence stood in the way of avoiding most heinous crime

“On the ill-fated day of 21st of April 2019, this island home was awoken ru