Govt. expenditure within target, revenue falls short

The government has been successful in containing its expenditure within budgeted estimates in 2011, but revenue estimates proved to be overestimated with the actual revenue deficit expanding a marginal 2.77 percent from the original estimate.

The Treasury announced that the total actual government expenditure for 2011 amounted to Rs. 1,961,053 million in 2011, well within the original estimate of Rs. 1,968,031 million.

However, actual revenue receipts, including grants, for the year, amounting to Rs. 974,297 million was below the original estimate of Rs. 1,007,885 million.

The actual revenue deficit amounted to Rs. 986,756 million, expanding 2.77 percent from the original estimate of Rs. 960,146 million.

"The government Annual Accounts for the year 2011 was prepared and forwarded to the Auditor General by the General Treasury on April 03, 2012," the Ministry of Finance and Planning announced.

"According to the Department of State Accounts, the government was able to maintain the overall expenditure within the limits approved by Parliament.

"Accordingly, the total actual expenditure in terms of government accounts is Rs. 1,961,053 million which consist of Rs. 1,020,197 million recurrent expenditure and Rs. 398,519 million capital expenditure. The total debt repayment is Rs. 542,337 million under the period of review. The original total estimated expenditure for 2011, including debt repayments was Rs.1, 968,031 million. However the total receipt of revenue and grants in the year is 974,297 million, while the estimated revenue was Rs. 1,007,885 million," it said.

Treasury Secretary Dr. P. B. Jayasundera last month said the government was committed to containing budget deficits within limits set out in the budget, which also form part of the indicative targets under US$ 2.6 billion standby arrangement with the IMF.

Analyst said the recent policy measures taken by the government to arrest a balance of payments crisis could pressurise its revenue streams this year.

In the past, governments had always underestimated expenditure and overestimated revenue resulting in bloated budget deficits. This persistent fiscal indiscipline was called by the bane of macroeconomic stability. Since the end of the war, the government has begun to show more fiscal discipline.

IMF Resident Representative Dr. Koshy Mathai said last Tuesday that the budget deficit would slightly exceed the 6.8 percent of GDP target for 2011, but the IMF was more concerned about how the deficit was financed, with end-December targets being met.

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