Budget 2016 considers austerity measures to cut deficit to 5.5% of GDP
View(s):Sri Lanka’s Treasury has taken up the challenge of preparing Budget 2016 to achieve an economic growth of over 8 per cent while reducing the budget deficit to 5.5 per cent of Gross Domestic Product (GDP), officials said. The Budget is being devised in accordance with the Medium Term Budgetary Framework for 2016-2018 in consultation with the relevant line ministries.
A Finance Ministry budget circular says that the budget aims to encourage the private sector to account for an investment ratio of between 23 – 24 per cent of the GDP to maintain the total investment level of the economy at 30 per cent of the GDP.
The introduction of a series of measures proposed by the International Monetary Fund (IMF) including cutting state spending and raising some taxes is also under consideration if the current economic situation gets worse, informed sources said. Another immediate priority would be to restructure loss-making, state-owned enterprises (SOEs), so that they become self-financed without depending on the Treasury, a senior government official said, adding that the ruling party’s election manifesto called for the establishment of a holding company to manage the SOEs.
Treasury officials have been directed to improve the modified programme budgeting to ensure scarce public resources are efficiently and effectively utilized. Necessary measures will be taken to introduce institutional and revenue sector reforms and re-structuring to achieve the government revenue of 17 percent of GDP.