Sri Lanka had collected record revenue of about Rs. 400 billion in May as revenue collection is starting to exceed the high inflation impact.

According to Central Bank data, during the five months ending May 2024, government revenue and grants increased to Rs. 1,619.2 billion compared to Rs. 1,122.4 billion in the corresponding period of 2023.

Frontier Research Senior Macroeconomist Thilina Panduwawala said that average monthly revenue collection since then has been above Rs. 300 billion and in May 2024 appears to have reached a record Rs. 400 billion. 

He said revenue collection is helped by May being one of the four months for quarterly income tax payments, which tend to see peaks in collection. 

“That is revenue collection is starting to exceed the high inflation impact, likely allowing revenue to GDP ratio to rise above 13% in 2024,”  said via his Linkedin.

Moreover, total expenditure and net lending decreased to Rs. 1,986.0 billion from January to May 2024 compared to Rs. 2,137.1 billion in the corresponding period of 2023.

Panduwawala said that the impact of the revenue collection is compounded by non-interest expenses being thoroughly contained, helping drive the primary surplus to Rs. 550 billion by May 2024, “very well ahead of the IMF June review expectation of Rs. 323 billion for the full year,” he added.

He noted that the overall revenue collection is more than twice the collection during and even before the crisis period in LKR terms and is now starting to exceed it even in USD terms. 

“This massive revenue increase is a significant part of the domestic adjustment that is driving the external surpluses,” he said.

The Central Bank said that during the period from January to May 2024, overall budget deficit decreased to Rs. 366.8 billion compared to Rs. 1,014.7 billion recorded in the corresponding period of 2023.