Recent News

Govt. revenue up by Rs. 32,940 mn in first quarter

Government revenue grew by Rs 32,940 million in the first quarter of this year compared to the same period last year mainly due to higher revenue collection from income tax and excise tax, the ‘Mid-Year Fiscal Position Report 2018’ of the Finance and Mass Media Ministry indicates.

“The report was issued on June 30. Government revenue increased by 5.6 percent to Rs. 622,379 million in the first four months this year compared to Rs. 589,439 million in the same period last year,” the report stated.

The revenue from income tax increased by 12.3 percent to Rs. 95,128 million in January-April 2018 compared to Rs. 84,721 million recorded in the same period of 2017, it added.

“Tax revenue from PAYE increased by 20.3 percent to Rs.14,711 million in the first four months period of 2018. Also, Economic Service Charge (ESC) increased significantly by 25 percent to Rs.24,320 million in the review period. Revenue from excise tax on cigarette including tobacco increased by 25.2 percent to Rs. 29,843 million and excise tax on motor vehicle increased by 15.3 percent to Rs. 73,774 million in the review period,” the report observed.

The Government introduced new Inland Revenue Act effective from April 1, 2018 to increase direct tax collection. It implemented a series of tax reforms recently by broadening the tax base, simplifying the tax system, rationalizing the tax exemptions and strengthening the tax administration process.

However, this revenue is Rs 67,821 million short of Government’s estimated revenue for the first quarter. Meanwhile, Government expenditure had increased by 6.1 percent to Rs.873,350 million in the first quarter this year compared to Rs.823,260 million in the same period of 2017. Sri Lanka’s economy expanded by 3.2 percent in the first quarter of this year compared to 3.8 percent in the same period of 2017. The agriculture sector grew by 4.8 percent from a 3.2 percent negative growth, while the Industry and Services sectors expanded by 1 percent and 4.4 percent respectively. “Gross official reserves marked the highest-ever level of USD 9.9 billion as at end April 2018 with the proceeds of International Sovereign Bond (ISB) issuance and increased foreign inflows to the Colombo Stock Exchange (CSE) and Government Securities Market,” the report noted.

“Earnings from exports increased by 6 percent to USD 3,784 million in the first four months of 2018 mainly driven by earnings from industrial exports. Expenditure on imports increased by 12.8 percent to USD 7,765 million in the review period where intermediate and consumer goods categories were the major contributors. Import expenditure on fuel became the largest contributor to the overall import expenditure. Expenditure on motor vehicles increased significantly by 108.2 percent to USD 516.6 million in the review period mainly due to the higher imports of less than 1000cc motor cars,” the report added. Meanwhile, expenditure on gold imports increased significantly by 126.5 percent to USD 437.3 million during the period. The Government imposed Customs duty of 15 percent on gold imports effective from April 18. The increase in import expenditure on fertilizer by 291 percent also contributed to scale up the import bill of the country. Detailing on the Government borrowing the report states, “The total gross borrowing of the Government was Rs. 670.9 billion during the first four months of 2018, of which domestic borrowing was Rs. 534.9 billion and foreign borrowing amounted to Rs. 136.0 billion. By the end of April this year, total outstanding external debt of the Government was USD 31.6 billion. Total debt service payments from January 1 to April 30 amounted to USD 715.6 million. Out of which, USD 390.2 million was in lieu of principal repayments and the balance USD 325.4 million for the payment of interest. Total estimated debt service for this year is USD 2,900.9 million, of which, 25 percent has already been made by April 30.”