Sri Lanka posts Fiscal Surplus Amid Spending Crunch

Sri Lanka posted an overall budget surplus of 9.5 billion rupees for the first half of the year. This marks a major reversal from the steep 405.6 billion rupee deficit recorded during the same period last year.

The fiscal turnaround was driven by a massive surge in vehicle tax collections. Total government revenue and grants climbed 27.1 percent to hit 2,956.0 billion rupees.

However, the primary surplus was also heavily aided by an ultra-low execution of capital development spending. Capital expenditure and net lending achieved just 16.1 percent of the full-year target due to bidding delays.

While the Treasury noted that high cash balances provide a strong buffer for future debt services, critics voice concern. Economists warn that under-spending on infrastructure slows down the real economic multiplier effect on the ground.

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