Budget deficit at 6.9 percent:

Lanka achieves major development goals

Sri Lanka achieved a major development goal last year by restricting the budget deficit to 6.9 percent of the Gross Domestic Product (GDP).

Since independence the country’s budget deficit had remained at around eight percent of the GDP but this is the first time that the deficit had been brought down to such a low figure, said the Department of Government Information in a statement issued on Monday. The statement added the country’s budget deficit was around 8.3 percent of GDP from 1986 to 2010.

In 2010 it was eight percent of GDP. The reduction of the deficit to 6.9 percent of GDP in 2011 is a major economic victory achieved by the country.

The government has targeted to bring it down further to around 5.2 percent of GDP by 2014.

When the production approach is considered, the Industrial and services sector has made a major contribution towards economic growth in 2011.

The contribution made by the industrial sector was 10.3 percent and by the services sector 8.6 percent. The gross national expenditure including pubic and private sector consumption and import expenditure has recorded an expansion in 2011.

The statement further said the all round national demand had increased by 17.9 percent in 2010.

This was the existence of a favourable economic climate in the country for investment, building of investor confidence, development of infrastructure facilities, existence of a stable price and interest rate structure that helped to expand gross national expenditure.

According to market prices the gross national product in 2011 was Rs 6,542,663 million. Consumption expenditure was Rs 5,536,095 million and investments were Rs 1,958,833 million.

As a result the government was able to bring down the budget deficit notwithstanding heavy investments in the building of highways, ports, airports, schools and other development programmes including irrigation facilities.