Tuesday, February 23, 2016

Sri Lanka must cut budget deficit, raise revenue: ADB president

ECONOMYNEXT – Sri Lanka needs to work on fiscal consolidation and reduce the budget deficit and raise revenue, visiting Asian Development Bank President Takehiko Nakao said.

Nakoa, who is on a two day visit to Sri Lanka from 23 – 24 February 2016, said he hopes the island’s talks with the International Monetary Fund on a new loan would be fruitful and expressed hope that measures to improve the budget would result from the talks.

He said the ADB sees the need for Sri Lanka to increase revenue collection, which is low by international and regional standards.
Analsyts however had warned that Sri Lanka's gross domestic product is inflated and state enteprises also do not pay taxes like in other Asian countries while visible taxes on theordinary people is high partly due to protectionism. In the 2016 payroll tax for the relatively well off was cut again.

The ADB has decided to increase annual lending to Sri Lanka from 2016 to 700 million US dollars from 500 million dollars previously, Nakao told a news conference.

The bank has lent the island around 1.5 billion dollars over the last three years and will lend about another two billion dollars in the next three years, he said.

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