Fiscal deficit through November tops Rs.1.7tn 

The deficit in the budget hit an all-time high in January-November 2021 period, as the latest fiscal data showed revenue slippages and expenses over and above what was budgeted and what was spent a year ago. 

Treasury data published by the Central Bank for the period through November 2021 showed that the government’s budget deficit reached Rs.1, 709.3 billion compared to Rs.1, 576.4 billion in the same period in 2020.  This is just short of the Rs.1, 826 billion revised deficit forecast presented by the Treasury last November, which works out to 11.1 percent of the Gross Domestic Product (GDP). The original budget deficit for 2021 was estimated at Rs.1, 565 billion, which is 8.9 percent of the GDP, 

which was based on a resurgent economy in a virus-free world. 
But things went awry from April onwards when the new variants started emerging and vaccines not entirely keeping the virus from mutating, although they significantly reduced hospitalisations and fatalities. 

The forecast points to a slightly higher deficit in absolute terms for the entirety of 2021, which doesn’t however expect to surpass Rs.1.9 trillion. With the economic growth for 2021 re-estimated under 4.0 percent, Sri Lanka could deliver a stretched budget deficit for the second year running. 

Although the government is hopeful that it could contain the 2022 deficit at 8.8 percent of GDP, such efforts remain in limbo as two of the taxes proposed in the budget—Surcharge Tax and the Special Goods and Services Tax— slated to jointly bring in Rs.150 billion to the coffers, are facing legal hurdles. 

In the first eleven months in 2021, the government revenue increased to Rs. 1,322.0 billion compared to Rs. 1,259.1 billion recorded in the corresponding period of 2020. 

The total expenditure and net lending increased to Rs.3, 033.4 billion compared to Rs. 2,838.5 billion recorded in the corresponding period of 2020. 

During this period the domestic financing decreased to Rs. 1,812.3 billion compared to Rs. 1,822.8 billion in the corresponding period of 2020. Foreign financing recorded a net repayment of Rs. 103.1 billion compared to a net repayment of Rs. 246.2 billion recorded in the corresponding period of 2020. 

Outstanding central government debt increased to Rs. 17,413.7 billion by end November 2021 from Rs. 15,117.2 billion as at end 2020. Since 2020 end, total outstanding domestic debt increased by 20.4 percent to Rs. 10,914.9 billion, and the rupee value of total outstanding foreign debt increased by 7.4 percent to Rs. 6,498.8 billion by end November 2021.