COLOMBO: Sri Lanka’s budget deficit may slightly overshoot the budget deficit target of 4.6 percent of gross domestic product with drought related spending of around 0.3 percent of GDP, Deputy Treasury Secretary S R Attygalle said. Last year Sri Lanka posted a deficit of 5.4 percent of GDP and even a 0.3 percent overshoot will shrink the budget deficit from a year earlier Revenues up to July 2017 was up 20 percent from a year earlier, though there were some weaknesses in alcohol and tobacco revenues from expected numbers, he said. Sri Lanka upped taxes several times on alcohol and tobacco over the last two years, making the price too steep for many consumers.
Sri Lanka was expecting to push tax revenues up by an ambitious 24.8 percent this year. A new draft Inland Revenue law is to be presented to parliament this month, which will remove exemptions. A 53 billion rupee, supplementary estimate for road building will not affect the deficit target as it was expected to be contained within other savings, he said. Sri Lanka is expected to get 400 million US dollars (about 0.45 percent of GDP) from lease of Hambantota port, which will technically boost non-tax revenues. However the money will be used to reduce borrowings, Attygalle said. The central government is expected to take on additional debt along with the cash reserve.