Sri Lanka borrowing limit increased by Rs. 400 b
- Decision increases overall borrowing limit to Rs. 3.3 t
The Cabinet of Ministers yesterday (22) increased the credit limit for the year 2021 by a further Rs. 400 billion, bringing the overall borrowing limit to Rs. 3.3 trillion.
Further, the Cabinet has given the nod to take necessary steps to amend the Appropriation Act No. 7 of 2020. Minister of Finance Basil Rajapaksa pointed out that Rs. 2,997 billion is not sufficient and more funds are needed due to the declining government revenue with the prevailing pandemic.
Exacerbating existing financial issues, the prevailing pandemic is costing the Government significantly, as a large portion of its revenue is now being diverted towards healthcare and social security protection of those who have lost income.
Further, the Government has to provide additional provisions for salaries and other expenses in order to cover the loss of income of institutions that pay salaries from the income of those institutions.
It should also be noted that despite the pandemic, the declined revenue could also be attributed to the tax cut galore President Gotabaya Rajapaksa announced in 2019, soon after he came into power. Further, according to economists, current import restrictions imposed on vehicles too deprived the Government from a colossal sum of tax revenue, which otherwise amounts for a considerable amount of the country’s tax revenue generation.