Budget deficit is trending down - state finance minister

By Steve A. Morrell

The budget deficit in 2015 when the new government came in was 7 per cent. However, in 2017 the reading was 5.5, and it is expected this would go down further in 2018. The risk environment is global. The Sri Lankan economy should be viewed in that context. There are also other vulnerabilities we should be aware of. Risk management will be there, and for us to contend with the future it might take as long as a decade, State Minister of Finance Eran Wickremeratne said.

These comments were made at the launch of the 2018 Sri Lanka Economic Summit at the Cinnamon Grand yesterday, organized by the Ceylon Chamber of Commerce. Wickremeratne was addressing a largely professional audience as guest speaker. He said we need to look at vulnerabilities and long term perspectives. Policy makers have to look at decades to come.

He added these are the issues the Finance Minister would be grappling with over the next few weeks. 'Sri Lanka, over time, unfortunately made the wrong decisions.'

Wickremeratne added: 'There are two exogenous factors that impact us greatly; one is the weather, the other fuel prices. Both phenomena we do not have much control over.

'In 2017 about 20 Districts were drought striken, and that impact was one of the reasons we deviated somewhat from our physical consolidation. The other was the fuel prices. But in 2017 we reached some degree of consolidation and the budget deficit was trending down. Inflation as well has been trending down.

'Reserves have increased, exports have increased, but these are small numbers in the larger global context and the global economy. Vulnerabilities do exist.

'Fuel price reforms have been undertaken which was a major step.

'It’s the nature of a coalition government. People tell us "you are to blame" but we are acting within the mandate given to us. It’s a coalition mandate. In Europe too there are coalition governments in power. Quite often we are taken out of context and the end result is that a negative mandate is created.

'Recently I commented on the exchange rate. The Reuter reporter has misinterpreted what I said.

'Unlike in the past, we have given the Central Bank the space, but that too was missreported.

'Erroneous reporting, on deficits by foreign media are not at all acceptable.

‘This is our economy, our country, we know where it’s going, and we would make sure it would go, in that direction.

'In Monaragala, when I was there about 10 days ago, I asked the people what it was they wanted. They said they wanted water. We would rehabilitate about 1100 tanks in the dry zone alone so that their farming would not be interrupted because of droughts.

‘The private sector, should increase exports. Our rubber products have found markets. Unless we compete there is no other way. We have to access large markets. We have to be the gateway to the South East Asian markets.

'Out tax reforms would be announced shortly, We will give you the impetus to produce commodities for export. Find such markets. We are going in that direction. Ease of doing business, we agree there is much to be done. But things are happening.

' Let me also say free trade agreements are in place. The Indo Lanka FTA is in place and a substantial number of exports are duty free into India.

'The Singapore agreement is misrepresented by the Opposition.'

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