* Overshoots full year target as expenditure grows almost twice as fast as revenue
* Borrowing targets exceeded
December 9, 2012, 7:02 pm
The budget deficit as a percentage of GDP for the first nine months of this year reached 6.44 percent, exceeding the full year’s target of 6.2 percent, as government expenditure grew nearly twice as fast as revenue growth, latest data released by the Central Bank showed.
Tax revenue grew 6.55 percent year-on-year to Rs. 629.5 billion during the first nine months of this year. Non tax revenue reached Rs. 81.8 billion growing 16.19 billion while grants surged 48.48 percent to Rs. 14.4 billion.
Total revenue and grants reached Rs. 725.7 billion during the nine months period, up 8.16 percent from a year earlier.
Recurrent expenditure grew 9.07 percent to Rs. 851.8 billion while capital expenditure increased by 31.84 percent to Rs. 356.9 billion.
Total government expenditure was up 14.93 percent to Rs. 1,208.7 billion.
The budget deficit for the period January to September 2012 reached Rs. 483 billion, a 26.87 percent increase from the previous year. As a percentage of GDP, this deficit stood at 6.44 percent, as against 5.81 percent a year ago.
The government has assured that it would stick to the 6.2 percent of GDP budget deficit target this year, but analysts are sceptical.
"This year we are struggling to keep fiscal policy on track," Deputy Secretary of the Ministry of Finance and Planning Dr. B.M.S. Batagoda told a group of leading economists and other professionals last month. "We have already taken steps to increase tax revenue and cut down on expenditure because we want to meet the budget deficit target for this year".
He said the government would make an effort to collect levies and dividends from state owned enterprises and limit expenditure by differing infrastructure development projects that were to commence towards the latter stages of this year.
The government’s total outstanding debt stock as at end September reached Rs. 6,262 billion, an increase of 23.52 percent from a year earlier. Domestic debt grew 16.15 percent to Rs. 3,280.4 billion while foreign debt grew 32.79 percent to Rs. 2,981.5 billion.
Total outstanding government debt grew by Rs. 1,128.6 billion during the first nine months of this year. According to the 2012 budget, the government’s borrowing limit for the full year is Rs. 1,104 billion.
According to the 2012 budget, the government’s debt requirement for 2012 was Rs. 776.2 billion from domestic sources and Rs. 327.8 billion from external sources. However, by end September 2012, the domestic debt component grew by Rs. 476.2 billion from end December 2011 while foreign debt increased by Rs. 652.2 billion.