Sri Lanka’s budget deficit saw a significant reduction of 52% in the first half of 2024, dropping to 515.7 billion rupees. During the same period, government revenues surged by 42% to 1,860.6 billion rupees, driven largely by a 43% increase in tax revenues, totaling 1,709.3 billion rupees, according to interim budget data.
The budget’s current account, which measures total revenues against current spending, declined to 357.8 billion rupees, down from 1,010 billion rupees in the previous year. Meanwhile, capital spending increased by 5% to 344 billion rupees, slightly higher than the 234.1 billion rupees reported last year.
Interest costs also dropped by 10% to 1,142.1 billion rupees, contributing to a surplus in the primary account of 543 billion rupees. This improvement was achieved through stable monetary policies and reduced domestic borrowing.
Despite these positive developments, challenges loom, such as potential state worker wage hikes that could increase current spending. Additionally, Sri Lanka’s chronic high interest rates and historical issues with monetary policy remain points of concern for future fiscal stability.