The World Bank lowered Sri Lanka’s 2017 growth forecast from 5.3% to 5.0% due to high fiscal deficit and an elevated public debt.
The report update added that one of the factors behind the grown remaining unchanged in 2016 was due to the postponement of Foreign Direct Investment by the government.
The World Bank further noted that though Sri Lanka’s macroeconomic performance had deteriorated in 2015, steps had been taken in 2016 to reduce the budget deficit., reports Colombo Page.
The report called for equality in Sri Lanka’s fiscal policy citing VAT benefits that benefited generally wealthier households.
“It is important that the fiscal consolidation is designed to minimize the impact on the poor. Removing VAT exemptions, which tend to disproportionately benefit wealthier households, would constitute a positive first step,” said the report.
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