Budget deficit has reduced from Rs 521 B to Rs 494 B - Finance Minister Karunanayake tells CCC budget seminar

By Ravi Ladduwahetty- 2015-02-01

Ceylon Finance Today: Finance Minister Ravi Karunanayake, said that the slashing of wasteful capital expenditure by the present government had reduced the 2015 Budget deficit from the Rs 521 billion to Rs 494 billion.

Addressing a post mini budget seminar hosted by the Ceylon Chamber of Commerce at the Hilton Residencies on Friday night, he said that the 2015 Budget which was presented by former President Mahinda Rajapaksa and passed in Parliament last November which had a Rs 521 billion deficit, which was 4.6% of GDP, had been slashed to Rs 494 billion, which was 4.4% of GDP.
The slashing of such wasteful expenditure and capital costs has even stunned the Opposition members of Parliament, Karunanayake told a packed audience of private sector luminaries.
He also said that the contingent liabilities which were government projects which were done on Treasury Guarantees by the previous UPFA administration, had risen from Rs 6.9 trillion which was 72% of GDP which had risen to
Rs. 8.8 trillion.

He also explained that the new interim budget was prepared in a record time of around 8-10 days. We won the elections on 9 January and took around another eight days to settle down and the remaining eight days were taken to prepare the interim budget which was prepared by Deputy Minister of Policy Planning Economic Affairs
Dr. Harsha de Silva, Deputy Minister of Highways and Investment Promotion Eran Wickremaratne and Central Bank Governor Arjuna Mahendran.

He also invited the private sector to bring in their own proposals for the betterment of economic development. "We will invite and evaluate all proposals which will benefit all segments of the economy and we will not entertain crony capitalism, he said.
Deputy Minister Dr. Harsha de Silva, in an obvious broadside at the previous regime said: "What we mean by development is not mere ad hoc infrastructure development, but by the general improvement of all the lives of people, across the board.

This would mean the development of the lifestyles of the people not only among the middle class in Colombo, but also those of suburban towns and also the rural community at areas such as Tissamaharama which means that the household incomes have to improve," he said
He also stressed that though the previous administration boasted of a 7.5% GDP growth, the growth of the household income was a mere 0.5%.

Central Bank Governor Arjuna Mahendran also stressed on the need for the simplification of the tax regime. He said that Sri Lanka has now 20 taxes and another 15 pages of tax exemptions. This is a real paradox where most of the taxes which were installed by the previous regime were on food items, which were extremely regressive, he said.
He also cited the example of Georgia which simplified its tax regime which resulted in their revenue collections increasing from 10% to 25% within three years.

Retired Director General of Economic Affairs of the Commonwealth Secretariat Dr. Indrajit Coomaraswamy said that Sri Lanka had an aspirational society, but it was important to meet revenue targets.

He also stressed the need for the trickling of wealth from the rich to the less well off. However, if the economy gets overheated with consumption exceeding demand, then measures will have to be taken like in 2011/2012, he said