Sri Lanka Jan-Feb state revenues shrink 10.6-pct

May 11, 2009 (LBO) - Sri Lanka's state revenues have fallen 10.



6 percent in the two months to February 2009, amid a slowing economy and collapsing imports while expenses are still rising, the latest official data shows.

Inflation

It is unusual for Sri Lanka's revenues to fall on an absolute basis. Coupled with inflation, Sri Lanka's revenues usually climb at double digit rates.

In 2008 Sri Lanka gross domestic product expanded 23 percent nominally (with inflation) to 4,411 billion rupees from 3,579 billion according to official estimates.

Though state revenues increased 16 percent, it lagged behind nominal economic growth, and the tax take fell to 14.

9 percent down from 15.8 percent a year ago. Total revenues were also 95 billion rupee below target.

But now inflation is falling, and the government is finding it more difficult to inflate away debt and expenditure, forcing the state into real measures to fix the budget.

In the 12-months to April inflation slowed to 2.

9 percent.

Meanwhile visible contractions of economic activity, including falling imports (down 37.

3 percent in the first two months) is making it hard for the government to collect money from the people.

Excessi