Public Finance
2017/18 at-a-glance
4.1% Estimated GDP growth rate
3.2% Estimated budget deficit
Allocation of expenditure (Rsbn)
Revenues
Public Debt
Budget Deficit
Actual budget deficit as a percentage of GDP was maintained at 3.5% but fell short of last year’s forecast of 3.3%.
Government now expects a lower rate of 3.2% for 2017/18, which would be mainly driven by GDP growth, whilst the budget deficit is expected to remain stable at circa. Rs15.5bn. This would be achieved with significant increases in Grants and Other revenues which are expected to account for 51% of the Rs18bn revenue increase.
Public Debt
Public debt has increased by 7.8% to reach Rs296bn for 2016/17, i.e. 66.1% of GDP vs. 65.0% in 2015/16. The marked increase is on account of a Rs28bn increase in domestic debt despite a contraction in foreign debt of Rs6.8bn.
For 2017/18, debt is still expected to rise further to Rs302bn but with Debt to GDP ratio falling to 63.0% on account of the faster GPD growth.
Government Revenue and Expenditure
Revenue
Expected 18.5% increase of Rs17.5bn to Rs112.2bn, with a marked increase from External Grants and Transfer from Special Funds.
Indirect taxes (VAT, Customs and Excise Duties) shall remain the main source of Government funding at Rs54.3bn with an expected increase of 12% over 2016/17.
Expenditure
Social Benefits are projected to increase by 7.7% highlighting the growing impact of an ageing population.
Compensation of Government employees also witnesses a 7.4% rise, with recruitment of circa 2,000 additional public servants.
Capital Expenditure is expected to increase by Rs8.8bn or +87.7% over 2016/17, driven by Rs6.0bn of increase in the Acquisition of Non-Financial assets.
