21 December 2020 09:20 am
The government revenue declined in the nine months to September as the economic toll of COVID-19 took hold on businesses and consumption, which generate tax income, as economic activities contained to a greater degree in the period.
According to the latest fiscal data coming out from the Treasury Department and compiled by the Central Bank, the total revenue and grants during the nine months through September was recorded at Rs.1, 031.7 billion compared to Rs.1, 415.2 billion in the same period in 2019, making a gap of Rs.383.5 billion.
Tax income, which comprises nearly 90 percent of the total revenue, collapsed to Rs.914.1 billion from Rs.1, 300.8 billion collected in the same period in 2019.
The government of Gotabaya Rajapaksa delivered a much needed tax relief on the economy last December to stimulate the economy, of which the early results were seen during the first two and half months from higher consumer spending, corporate earnings and overall renaissance in business and consumer sentiments.
However, the momentum unexpectedly came to a grinding halt in the third week of March as country-wide lockdowns forced people to shelter-in-place and businesses to close, largely containing the ability to engage in economic activities, which generate tax income to the government.
The income from taxes came back strong since July and were flirting near its last year levels in August and September as the economy staged a strong rebound as seen from the 1.5 percent growth recorded for the July-September quarter.
Meanwhile, the government increased its non-tax revenue marginally to Rs.114.8 billion in the nine months from Rs.112.8 billion in the same period last year.
Grants, the third and minute source of State income for the nine months was Rs.2.8 billion, up from Rs.1.6 billion in the corresponding period in 2019.
Meanwhile, the total expenditure of the government, which includes lending minus repayments, was little changed at Rs.2, 185.4 billion in the nine months from Rs.2, 175.3 billion a year ago.
Despite the fiscal stimuli necessitated by the pandemic, the government showed much discipline in its recurrent expenditure as it only spent Rs.1, 938.8 billion in the nine months compared to Rs.1, 729.9 billion in 2019.
However, this made the government to pull back on its public investments for the year as capital expenditure and lending minus repayments fell to Rs.246.7 billion from Rs.445.4 billion in the same period in 2019.
All in all, the fiscal deficit increased to Rs.1, 153.8 billion in the nine months from Rs.760.0 billion in the same period in 2019.