COLOMBO: Sri Lanka has begun preparations for the 2018 budget on a performance-based framework according to the government’s medium-term strategy that aims to raise public income to 16.5% of Gross Domestic Product by 2020. The Cabinet of Ministers this week approved a proposal by Finance Minister Mangala Samaraweera to prepare the 2018 budget and to determine budget limits for line ministries, Gayantha Karunathilleka, cabinet spokesman and Minister of Land and Parliamentary Reforms, said. Enhancement of revenue has been identified as a priority in the fiscal consolidation process of the government, according to the finance ministry. Total government revenue and grants fell to 13.5% of GDP in 2016 from 13.8% of GDP in 2015 and the government has been trying to reverse a declining trend in tax revenue to GDP observed since 2011.
The ratio had remained at about 11 percent of GDP for about five years but reversed in 2015 after imposition of several tax measures and upward revisions of excise duty rates on motor vehicle imports. Karunathilleka said that under the finance ministry’s medium-term 2018-20 fiscal strategy, recurrent expenditure is to be 14.8% of GDP by 2018 and public investment to be raised to 5.3% of GDP from 4.1% in 2016. The government aims to reduce the budget deficit to 3.5% of GDP and reduce public debt to 70% of GDP/ by 2020. According to Finance Minister Mangala Samaraweera’s proposal, Sri Lanka aims to achieve growth of 6-7% in the medium term. It will also give priority to investment on build, operate and transfer terms and for public-private partnerships.
