State revenue in shambles with mounting losses
View(s):Sri Lanka’s already fragile and shaky economic recovery is set to get a massive hit in the first half of this year as the fiscal performance during the past few months has gone anti clockwise, several high ranking state officials warned.
The third wave of COVID-19 has struck the country at an alarming rate leaving people helpless while exposing the under-preparedness of authorities to deal with the present health and economic crisis, they said.
Total government revenue has come down to Rs. 396.9 billion during the past 4 1/2 months from January to mid-May as a result of COVID-19 constraints from Rs. 478/2 billion during the same period last year, a provisional statement of the Treasury revealed.
The revenue loss was mainly due to a drop in tax collection and grants, poor performance in state institutions and a decline in manufacturing and service sectors, a senior Treasury official said.
The mobility restriction has deprived the Inland Revenue Department (IRD) of collecting more tax revenues, as COVID-19 has affected the economically dynamic months in the festive season.
Sri Lanka Custom’s revenue has also come down due to import restrictions and other unavoidable issues, he said adding that the impact of the latest COVID-19 wave has been unprecedented.
However, since certain sectors of the country, including insurance, were active and mitigated the loss to a certain extent he said. Sri Lanka was on a steady path to recovery from the beginning of the year, with increasing consumer demand and robust corporate earnings, before the third wave of COVID-19 since end March, he added.
At the same time, increased expenditure and lower revenue amid the pandemic contributed to a deterioration of the fiscal situation.
With the higher recurrent expenditure incurred during January to mid-May, the total government expenditure increased to Rs. 1266.4 compared to Rs.930.9 billion, in the same period year last year. (BS)