CB aims at reducing overall budget deficit by 5% in 2011
The thrust of the fiscal strategy of the Central Bank (CB) is to
reduce the overall budget deficit to five per cent by 2011 based on the
Government’s 10-year Horizon Development Framework 2006-2016.
Ajith Nivard Cabraal
Governor Central Bank Ajith Nivard Cabraal said that this is a
formidable task for the government, amidst the current domestic and
global economic development and the strong counter terrorism measures.
He said that the CB is encouraged by some improvements in the fiscal
operations. The government’s effort on the revenue front has produced
positive results and the total revenue during the first ten months in
2008 grew by 20 per cent over that of the corresponding period in the
previous year However, it is necessary to introduce further measures
mainly in the areas of broadening the tax base, revising tax rates and
improving tax administration to achieve the anticipated revenue in the
medium term and to generate a revenue surplus covering a part of the
capital expenditure after meeting all recurrent expenditure.
Welcoming the measures taken by the government to contain recurrent
expenditure Cabraal said that the government’s policy on pricing
petroleum products has virtually eliminated the cost of oil subsidies,
reducing the pressure on the recurrent budget. He said that such a
policy would complement the CB’s efforts to contain inflation in the
medium to long term.
Maintaining the recurrent expenditure programmed in the midst of the
range of issues is difficult, given the need to strengthen national
security, maintain welfare programs, incur relatively high domestic
interest rates, provide employment opportunities, rehabilitate and
reconstruct newly liberated areas, and resettle internally displaces
He said that recurrent expenditure has been contained at 13.7 per
cent of GDP during the first ten months of 2008 and the budget 2009 and
the recent stimulus package have both attempted to minimise the adverse
impact of the global recession, and to curtail some recurrent