Sri Lanka government revenue has taken a massive fiscal hit in two fronts one from revue generation and the other from public expenditure following the Easter terror attack, official sources said.
An initial estimate on the impact of the Easter Sunday attacks on the government revenue in the short term indicates that the direct contribution to the government revenue by affected sectors like finance, tourism, trade and construction, will come down by Rs. 50 billion approximately, Finance Ministry revealed.
This estimated loss of government revenue could further increase due to the slowdown of economic activities during the remaining months in the year 2019.
The economic slowdown has already hindered collection of internal taxes namely Value Added Tax (VAT) and Nation Building Tax, in addition to the other taxes collected on importation of goods.
The loss of government revenue has been observed from the collection of fees and charges as well.
This tendency will affect the revenue targets in the 2019 including primary balance,
budget deficit, debt financing etc.
The government expenditure is recording an increasing trend due to the implementation of relief package to facilitate the recovery of affected people, strengthening of security
measures to restore normalcy.
Public expenditure experienced an increasing trend also due to providing interest subsidy on soft loans to the affected sectors and reconstruction of the affected public infrastructure including places of worship.
The Easter Sunday attacks has directly disturbed the government revenue generation by drying up the tax base as well as provision of tax concession to the directly affected sectors including tourism industry.
(LI)