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Sri Lanka to miss budget revenue target for 33rd year running in 2024: Verité Research

21 April 2024 12:55 pm - 8     - {{hitsCtrl.values.hits}}

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Colombo, April 21 (Daily Mirror)- Sri Lanka is projected to fall short of its budget target on revenue to GDP (gross domestic product) for the 33rd consecutive year in 2024, according to the recently released ‘State of the Budget Report 2024’ compiled by Verité Research.

The State of the Budget Report is compiled annually by Verité Research and published on PublicFinance.lk, Sri Lanka’s premier platform for economic insights.

"The report provides a robust analysis and objective assessment of the fiscal, financial and economic estimates in Sri Lanka’s annual budget. It mirrors the scope of a budget report that is expected to be published by the Parliamentary Committee on Public Finance (COPF), with the same aim, of helping improve informed engagement with the budget, both in public and in parliament.

The State of the Budget Report by Verité Research has consistently been more accurate on budget outcomes than projections of the government, which are approved by Parliament. It thereby forms an important additional input for professional economic analysis and decision making in Sri Lanka.

Over-estimated tax revenue by Sri Lanka has not met a revenue to GDP target set in a budget since 1991. Most recently, the Parliamentary Committee on Ways and Means reported that tax revenue fell 13% short of the budgeted target in 2023.

For 2024, the government is expecting a revenue of LKR 4,164 billion, a 42% increase from its revised projections for 2023. However, the State of the Budget Report projects a 14% shortfall, with revenue of only LKR 3,570 billion.

In the report, 61% of the projected shortfall is attributed to over-estimation of revenue from the Value Added Tax (VAT). The remaining 39% is attributed to the over-estimation of revenue from corporate income tax, personal income tax, Social Security Contribution Levy (SSCL) and Customs import duty.

In Interest-to-revenue ratio Sri Lanka has the highest interest-cost-to-revenue ratio in the world and reducing this ratio is critical for macroeconomic stability and sustainability. The budget for 2024 expects to lower this ratio to 64%. However, the revenue projections in the State of the Budget Report, together with the government calculation of interest costs, suggests this ratio will exceed 70%, as it has in the last few years. 

Sri Lanka will, thereby, fall short of the economic recovery plan agreed with the IMF, on what economists consider a critical indicator of debt sustainability, the statement issued by Verité Research said.


  Comments - 8

  • Wake Up You Bunch of Fools Sunday, 21 April 2024 03:04 PM

    Minister of Finance is in dreamland that all’s well and can start importing vehicles. Stupidity at its best from a freak who doesn’t understand the gravity of the situation. People are feedup and need urgent relief.

    Anil Fernando Sunday, 21 April 2024 03:17 PM

    Not big news if it is 33 years.

    Gabriella Sunday, 21 April 2024 04:00 PM

    Yes, but Sri Lanka is batting well. I am sure she will make a hundred plus.

    As usual workers and farmers to sacrifice Sunday, 21 April 2024 08:57 PM

    Even in this difficult situation, our greedy community has not changed. Car importers want their business, MPs want luxury new cars, unions and politicians are not ready to concede even an inch of their demand. Then, who will sacrifice? Is it the same old story of workers, both public and private and farmers?

    Kevin Monday, 22 April 2024 03:28 AM

    Over estimation of state revenues for the past 33 years! That is an endemic problem that will not go away. IMF was impressed with these rosy numbers. The 17th time SL failed an IMF program half way through. More election sweeteners please!

    Bandu Monday, 22 April 2024 08:55 AM

    Finance minister is clueless on finance. They will steal money from retirement funds to pay for the deficit. Like it happened year ago, with local debt restructuring. Sad for retirees...

    Governors Club Monday, 22 April 2024 10:08 AM

    And the economic advisors of the ivory tower raise their salaries by 80% including the treasury secretary. Thats how they fight inflationary spirals

    P Kunchithapathan Monday, 22 April 2024 02:52 PM

    State Minister of Finance is deliberately trying ti hide figures to enable the culprits to allow the imports of vehicles. What is the mighty hurry to import vehicles without taking measures to stregnthen public transport infrastructure. This is utterly a betrayal. The State of the Budget Report by Verité Research has consistently been more accurate on budget outcomes than projections of the government, which are approved by Parliament. Ministers and the government officials are trying to mislead the public to please the cabinet and the president.


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