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Sunday, 16 September 2012

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Budget deficit at reasonable level

The Government will be able to keep the budget deficit at a reasonable level due to the reduction of imports and exports caused by external factors, a top government official said.

“Government regulations on imports and the floating of the exchange rate during the past few months have impacted on imports considerably while major exports including the apparel sector and tea have come down due to the recession in the USA and the Euro Zone,” Deputy Secretary to the Treasury S.R. Attigala said.

He said that the removal of export taxes and subsidised water and electricity for the industrial sector has benefited the country immensely, which was a striking feature of the government’s fiscal policy.

Attigala said that due to the economic down turn in the USA and Euro Zone local apparel exports have dropped by five percent. Due to the prevailing drought, the tea industry has also impacted negatively.

According to statistics Sri Lanka has earned$ 4.96 b as export earnings during the first half of 2012, a two percent drop compared to what the country earned during the same period of last year. During the first half of 2011, the country’s export earnings stood at just over at $ 5 b. Apart from this, import expenditure during the first half of 2012 had increased by 4.2 percent year on year to incur a bill of $ 9.66 b from $ 9.28 b spent during the same period of last year.

The country recorded a trade deficit of $ 4.70 b during the first six months of this year, widening by 11.6 percent year on year. However, with the dropping of imports, the budget deficit will be narrow this year, he said. Sri Lanka has earned $ 2.94 b via worker remittances during the first half of this year; an increase of 17.4 percent while the country’s Foreign Direct Investments too has gone up by 14.6 percent to record a sum of $ 451 m.

 

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