2016 fiscal deficit better than target

Reuters: Sri Lanka’s 2016 budget deficit is estimated to be better than the International Monetary Fund (IMF) approved target of 5.4% of gross domestic product (GDP), boosted by improved revenue, Finance Minister Ravi Karunanayake said on Monday.

The island nation has agreed with the IMF to reduce the budget deficit to 5.4% from the previous year’s 7.4% in return for the $ 1.5 billion three-year loan approved in June last year.

“Our budget deficit is even less than what was approved by the IMF,” Karunanayake told Reuters.

President Maithripala Sirisena’s Government faced legal battle in raising value added tax (VAT) to 15% from 11% last year until 1 November.

Finance ministry officials have told Reuters that the delay resulted in a loss of over Rs. 80 billion. 

Karunanayake said an increase in excise and customs duties along with taxes helped the rise in revenue.

The island nation has aimed to cut the fiscal deficit to 4.6% of GDP this year with revisions to corporate and withholding taxes to boost revenue.