Sri Lanka will be making a budgetary review in the second half of this year as the government expenditure is expected to rise with payments for compensation and concessions and moratoriums granted mainly to tourism and other sectors affected by Easter terror attacks.
The Treasury has directed all ministries to cut down 30% of the capital expenditure allocated from the Budget 2019 for development activities of the country and its expenditure should be limited for development activities only.
According to the Budget 2019 estimate, a sum of Rs.. 756 billion had been set apart for capital expenditures.
Finance Ministry will be taking austerity measures to strengthen financial sector stability in the wake of economic instability inflicted in the aftermath of the Easter Sunday terror, official sources said.
The Treasury has already tightened fiscal policy controlling government expenditure while diverting the cash flow towards meeting out defence expenses.
A sum of around Rs.4.12 billion has been set apart for current defence spending in addition to Rs.393 billion allocated from the 2019 budget, a senior Finance Ministry official said
“Government will have to re-prioritize expenditure while during the second half of 2019 budget in the face of anticipated slowing down in tax revenue in the aftermath of the unfortunate incident; Central Bank Governor Dr. Indrajit Coomaraswamy told a media conference in Colombo on Friday 31.
He expressed the confidence that the country will wither the storm as the country’s economy is untouched except the tourism and retail sectors as the country quickly recovers from the Easter terror.
Only the confidence and sentiment of investors and foreign travelers had been affected but there was no damage caused to agriculture or industry, he said.
He noted that tax revenues and other financial receipts were on track broadly but there was need of a review of the budget at the end of the second quarter.
Dr .Coomaraswamy expressed the belief that the country will be able manage its external debt obligations while maintaining foreign reserves at a sufficient level of 3 to 4 weeks of imports.
The foreign exchange outflows have been $ 77 million up to now making the rupee appreciation by 3.6 percent compared to statistics in December last year, he disclosed.
(LI)