"Domestic savings increased to Rs 2,068 billion by 19.3 per cent in 2014 compared to 35.2 per cent growth in 2013. This lower growth was mainly attributable to the extensive increase in government
dis-savings, despite continuous expansion in private savings during 2014. The worsening in government dis-savings was mainly due to the lower growth in government revenue against the increased government recurrent expenditure during the year," the annual report stated. However, the domestic savings as a ratio of Gross Domestic Product (GDP) increased in 2014 to 21.1% compared to 20.0% in the previous year. Accordingly, national savings increased to Rs. 2,642 billion by 18.1 per cent during the year in comparison with 23.1 per cent growth in 2013. Private savings as a ration from the GDP stands at 22.4% from the GDP while the government dis saving is 1.3% from the GDP which reduces the total domestic savings to 21.1% from the GDP.
The reduction in national savings is not a positive sign and it had widen the saving – investment gap. At present, total investment ration is 29.7% from the GDP and national savings stands at the 27% from the GDP.
CBSL noted that the slowdown in deterioration of Net Factor Income of Abroad (NFIA) also positively contributed to the recorded growth in national savings. Accordingly, national savings as a ratio of GDP increased to 27.0 per cent from 25.8 per cent in 2013. These developments contributed to narrow down savings-investment gap to 2.7 per cent of GDP in 2014 from 3.7 per cent of GDP in 2013.
Courtesy: Ceylon Financial Times 18 May 2015