Achieving the Sri Lankan government’s deficit and debt targets set out in last week’s budget for 2019 will be challenging without a big increase in fiscal policy effectiveness and faster economic growth, Central Bank report revealed.
During the first four months of 2019, government revenue as a percentage of estimated GDP declined to 3.8 per cent from 4.3 per cent recorded in the corresponding period of 2018, CB said.
Expenditure and net lending as a percentage of estimated GDP increased to 6.2 per cent during the same period, total from 6.0 per cent recorded in the corresponding period of 2018.
In financing the budget deficit, domestic financing increased to 2.4 per cent of estimated GDP compared to 1.7 per cent in the corresponding period in 2018.
Foreign financing recorded a net repayment of 0.1 per cent of estimated GDP compared to 0.1 per cent net borrowings recorded in the corresponding period of 2018, CB data showed.
In nominal terms, outstanding central government debt increased to Rs. 12,118.7 billion by end April 2019 from Rs. 11,977.5 billion at end 2018.
Total outstanding domestic debt increased by 3.2 per cent to Rs. 6,210.0 billion, and the rupee value of total outstanding foreign debt declined by 0.9 per cent to Rs. 5,908.7 billion by end April 2019.
The overall budget deficit as a percentage of estimated GDP increased to 2.3 per cent from 1.7 per cent recorded in the corresponding period of the previous year.
During the period, crude oil prices largely followed a decreasing trend. Prices decline was mainly caused by the expectations on weakening of global economy and higher U.S. crude production.
Overall, Brent and WTI prices fell by US$ 2.8 per barrel and US$ 3.0 per barrel, respectively, within the period.
The reserve money increased compared to the previous week mainly due to the increase in currency in circulation and deposits held by the commercial banks.
The total outstanding market liquidity was a surplus of Rs. 41.64 bn by end of the week, compared to a surplus of Rs. 44.73 bn by the end of last week.
(LI)