Govt to slash deficit to 3.8 percent by 2016

Unveiling the government's mid-term strategy, Treasury Secretary Dr. P.B. Jayasundera said that the government intends to bring down the fiscal deficit by 3.8 percent in 2016, while increasing the country's per capita income by US$ 4,000 through a three-year plan which will be launched next year.

Addressing the annual budget seminar organised by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), Dr. Jayasundera told a gathering of accountants and accounting students that Budget 2014 was part of a three-year strategy.

"The budget has been framed as a medium term plan from 2014 to 2016 and should not be considered as a budget presented for a 365-day period," he said.

Accordingly, the government forecasts a 5.2 percent fiscal deficit by December 2014, followed by a 4.5 percent deficit in 2015 and finally a 3.8 percent deficit by 2016.

Dr. Jayasundera said the government presented a ten-year development framework in 2006, spelling out several targets including improving the country's economic status to a particular income level and economic status, and to navigate Sri Lanka to a middle income nation status with a US $ 4,000 per capita income status.

"In that context, by the time Sri Lanka reaches middle income economic status, that economy will have 3.8 percent or less than 4 percent fiscal deficit.

We should not only be statistically strong but also economically strong. Middle income countries are not run with deficits, they are run within a comfortable macro framework," he said.

Dr. Jayasundera said that in 2005 and 2006, Sri Lanka's per capita income was US $ 1,000, while the fiscal deficit was 9.9 percent.

CA Sri Lanka President, Sujeewa Rajapakse said that the 2014 Budget was a people friendly budget formulated to accelerate economic growth of 7.5 to 8 percent.

He said that the Budget will help address emerging aspirations and goals particularly among low and middle income people in rural and urban areas, focusing mainly on agriculture, higher education and road connectivity.