Public Finance Data and Analysis
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The revenue to the government, including grants, rose by a staggering 61.8 percent in January 2024, reaching Rs.283.19 billion. Of this amount, Rs.257.57 billion was raised via taxes, marking a 63.8 percent increase from the same period last year. This significant rise in tax revenues was primarily due to the recovering economy, further bolstered by a 3 percent increase in the value-added tax rate from January 1, 2024. Between then and now, no other taxes were imposed or raised, indicating that the bulk of the growth in tax income resulted from the normalizing foreign currency inflows and the economic recovery.
Meanwhile, in the January budget, recurring expenses rose by 33.3 percent to Rs.395.09 billion, while capital expenditure and lending minus repayments increased from a negative Rs.6.65 billion to Rs.54.97 billion. Consequently, the primary deficit of the budget, defined as revenue less expenses excluding interest payments, stood at Rs.70.68 billion, up from Rs.39.24 billion the previous year. The overall budget deficit was recorded at Rs.166.87 billion, an increase from Rs.114.70 billion. Despite these financial dynamics, some experts and free-market think tanks continued to attribute the decline in tax revenues from 2020 through 2022 to the December 2019 tax cuts, overlooking the pandemic's severe impact on economic activities.
