COLOMBO, Dec. 3 (Xinhua) -- Sri Lanka aims to narrow its fiscal deficit from 7 percent of GDP in 2019 to 4 percent of GDP in the medium term, a statement by the Ministry of Finance said here on Tuesday.
File photo: VCG
The Finance Ministry identified dips in government revenue due to slow growth and election-related expenditures as reasons for the higher than expected fiscal deficit of 7 percent of GDP in 2019. The statement said the government would pursue a sustainable reduction of the fiscal deficit to 4 percent of GDP in the medium term.
Newly elected President Gotabaya Rajapaksa on Tuesday suspended vehicle purchases for ministries and state institutions.
The Finance Ministry also pointed out that the government has introduced a selection process led by a six-member committee to screen appointments to key positions in State Owned Enterprises (SOEs) in a bid to make loss-making SOEs profitable and increase government revenue.
Last week the government announced wide ranging tax reliefs that State Minister of Investment Promotion, Keheliya Rambukwella said would provide a 3.025-billion-U.S.-dollar stimulus to the economy. The Finance Ministry said that it expects tax reductions to generate substantial savings for state institutions as well.
The statement by the Ministry of Finance identified low GDP growth at less than 2 percent, rising inflation, and the high budget deficit as key policy issues. "There is leeway to provide a substantial fiscal and credit stimulus to increase aggregate demand in the economy," the statement said.