Budget Delay Could Handicap Fiscal Measures Required To Soften Covid-19 Impact: CB

1, Points out importance of strengthening revenue mobilisation to minimise adverse impact on fiscal policy and debt sustainability 2, Submission of budget for 2020 was delayed amidst the presidential election held in November 2019 3, Cautions govt. against plans to increase public sector recruitment 4,Calls for fiscal consolidation efforts through improved revenue mobilisation and prudent spending

- Nishel Fernando

The Central Bank (CB) has cautioned that the possible delays in presenting the government budget for 2020 would limit the space for implementing new fiscal measures for 2020, which are considered to be crucial to avert the adverse impact stemming from COVID-19 pandemic on fiscal policy and debt sustainability of the country.

In 2019, the overall State revenue declined to 12.6 percent of GDP from 13.4 percent of GDP in 2018 while the total State expenditure and net lending as a percentage of GDP increased to 19.4 percent in 2019 from 18.7 percent in 2018 due to the increase in recurrent expenditure despite the decline in public investment.

Consequently, the fiscal deficit rose to 6.8 percent of GDP in 2019 from 5.3 percent in 2018.