Govt to reduce budget deficit to 4.5%

The budget to be presented in parliament at 2 pm today by Finance Minister Mangala Samaraweera is aimed at reducing the budget deficit to 4.5 percent of gross domestic product (GDP) from 5.3% in 2018.

The present government’s fifth budget which comes under the theme ‘Empowering the people, nurturing the poor’ will focus on increasing the number of entrepreneurs in the country and eliminating all obstacles to achieve this objective, according to State Minister of Finance Eran Wickramaratne.

Priority will also be given to increase the quality of education and to promote vocational training through the budget which will help creating an entrepreneurship culture in the country.

The Finance Ministry plans to bring down the budget deficit to 3.5 percent by 2020 and the trade deficit will be narrowed through export promotion, the Ministry said in a press release.

The budget deficit in 2015 was 7.6% and improved to 5.3% in 2018. The government is also currently running a primary surplus.

Minister Samaraweera was to present budget proposals for 2019 in early November. However, political setback occurred with the removal of Prime Minister Ranil Wickremesinghe on October 26 two weeks before the budget 2019 was to be presented to parliament.

The vote on account will have allocations for Rs. 480 billion of current spending and Rs. 310 billion of capital spending. The vote-on-account will also have provisions for Rs. 970 billion in debt service, the Finance Ministry said.

According to the Appropriation Bill for 2019 Rs.2.2 trillion has been allocated by the government for repayment of debt. The State expenditure will be Rs.4.4 trillion and State revenue Rs.2.4 trillion. The State revenue which was 11.5% of GDP in 2014 has been increased to 15.12% of GDP in 2019.

Economic growth this year according to the Central Bank is projected to be around 4 percent marginally up from a subdued growth last year.

The budget coincides with IMF agreement on the fifth review of Sri Lanka’s extended fund facility (EFF). The IMF last week agreed to extend its US$ 1.5 billion EFF with Sri Lanka by one year.

The budgetary debate will be held from March 6 to 12. There have been 19 days allotted for the committee stage debate on the budget. The proposed budget follows a vote of account that took place in December last year. Political developments derailed the presenting of the budget in the traditional last few months of a given calendar year.