Sri Lanka’s local borrowing through government bonds has surged, surpassing the total figure for all of last year, data showed on Friday, as the new government struggles to pass crucial tax bills announced in January to finance some populist measures.
The government has borrowed 378.3 billion rupees ($2.28 billion) through treasury bills and bonds so far this year until Wednesday, higher than the 259.8 billion rupees it borrowed in 2014, the latest central bank data showed.
President Maithripala Sirisena’s government, after coming to power following a Jan. 8 presidential election, revised down this year’s budget deficit to 4.4 percent of the gross domestic product in 2015 from an original 4.6 percent by reducing spending on infrastructure projects.
However, the government in the budget also announced a raft of populist policy measures as promised in the election campaign at an additional cost of 95.5 billion rupees.
It also announced plans to impose new taxes worth 80.3 billion to finance the concessions promised in the run up to the election including salary hikes to state-sector employees and pensioners.