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Treasury Secretary unveils 3.8 percent fiscal deficit target by 2016 at CA Sri Lanka’s annual budget seminar

Unveiling the government’s mid-term strategy, Secretary to the Treasury; Dr. P.B. Jayasundera declared that the government was hoping to bring down the fiscal deficit by 3.8 percent in 2016, while increasing the country’s per capita income by US$ 4000 through a three year plan which will kick off next year.

Addressing the annual budget seminar organized by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), Dr. Jayasundera told a large gathering of accountants and accounting students that the budget unveiled by President Mahinda Rajapaksa on November 21st for the year 2014 was part of a three year strategy.

“The budget has been framed as a medium term plan from 2014 to 2016 and should not be considered as a budget presented for a 365 day period,” he said.

Accordingly, the government forecasts a 5.2 percent reduction in fiscal deficit by December 2014, followed by a 4.5 percent deficit in 2015 and finally a 3.8 percent deficit by 2016.
Emphasizing as to why the government chose 2016 specifically, Dr. Jayasundera said the government presented a ten year development framework in 2006, spelling out several targets including improving the country’s economic status to a particular income level and economic status, and to navigate Sri Lanka to a middle income nation status with a US $ 4000 per capita income status.

“In that context, by the time Sri Lanka reach middle income economic status, that economy will have 3.8 percent or less than 4 percent fiscal deficit. We should not only be statistically strong but also be economically strong. Middle income countries are not run with deficits, they are run with comfortable macros framework,” he stressed.

He noted that in 2005/2006, Sri Lanka’s per capita income was US $ 1000, while the fiscal deficit was 9.9 percent.

CA Sri Lanka President, Mr. Sujeewa Rajapakse addressing the gathering noted that the 2014 budget was a people friendly budget formulated with a view to accelerate economic growth of between 7.5 to 8 percent.

He also noted that the budget will help address emerging aspirations and goals particularly in low and middle income people in rural and urban areas, focusing mainly on agriculture, higher education and road connectivity.