Budget deficit at reasonable level
by H.D.H Senewiratne
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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