Reuters/Colombo

Sri Lanka’s budget deficit will reach 6.5 to 6.8% of gross domestic product in 2015, the country’s finance minister said  yesterday, up from the government’s original target of 4.4%.
The government has originally estimated the deficit would be 4.4%, using an earlier base year of 2002 in calculating GDP. But it later said the estimates may have to be revised because of a change in the base year to 2010.
It was not immediately clear whether the government had officially revised the budget deficit using the new base year.
“My feeling is that budget deficit will be 6.5 to 6.8%,” Ravi Karunanayake told a public forum in Colombo. He also said the original budget deficit projection was 5.8%, without elaborating.
The International Monetary Fund (IMF) said last month that Sri Lanka’s fiscal deficit was likely to range from 5.5% to 6% in 2015, pushed beyond the original estimate by falling government revenues.
Karunanayake said in fact revenue has risen, but spending had grown more than expected. He said he would offer a bill in parliament today to raise limits on treasury-bill borrowing by 47%, or 400bn rupees ($2.84bn), to 1.25tn rupees from the current 850bn rupees.
The government has already borrowed around 845bn rupees, near the current threshold.
“This is to make sure we have a short-term tool to control liquidity and money supply to control inflation,” a finance ministry official told Reuters on condition of anonymity.
Karunanayake also told Reuters the government would raise its foreign borrowing limit from an estimated gross 453bn rupees.