The Department of Census and Statistics (DCS) of Sri Lanka is planning to release the new series of National Accounts preliminary estimates revising the base year from 2010 to 2015 along with the estimates for the first quarter 2022, DCS Director General P.M.P. Anura Kumara told Finance Today.
“We are in the final stages of work in this regard. We hope to submit this to the Cabinet for approval as soon as it is completed,” he said.
The proposed figures rely on re-basing the country’s national accounts compilation undertaken by DCS.
The most current approximations were based on 2010 production and consumption patterns.
The IMF statistical division recommends a change of base year every fifth year. The re-basing uses 2015 as the new base year and includes expanded coverage of economic activities
“On average every five years we change the base year according to international recommendations. The international recommendation is to select a much recent and stable year in main economic indicators such as money supply, interest rates and price indices as the base year. Accordingly, we have decided to use 2015 as the new base year”, Additional Director General (Statistics) II K.M.D.S.D. Karunaratne said.
The rebasing of GDP brings some impacts on macro-economic indicators such as, increase in nominal GDP, which will lead to increase in per-capita income, change the production structure, change the macroeconomic indicators such as budget deficit, investment rate, savings’ rate and tax rate.
Accordingly, the Central Bank of Sri Lanka (CBSL) has also decided to revise this year’s economic growth forecast based on the first quarter GDP data of this year, a senior official said.
The CBSL, other top economists and equity analysts are now expecting lowest negative economic growth rate in history this year.
Inflation is likely to take a heavy toll on overall economic activities with industry and business experiencing a continuous economic struggle throughout the year.
Taking all these factors into consideration, the CBSL says it will consider presenting the expected new economic growth forecasts for this year by the middle of next month .
Meanwhile, the Governor of the CBSL Dr. Nandalal Weerasinghe on Tuesday urged the government to inform the public with regard to the current, precarious economic situation and to support policy decisions for long term economic stability without any party affiliation or narrow political interests.
He pointed out when a fuel price formula was introduced earlier, it could not be put into operation due opposition from various quarters. However, such a need has arisen once again to be introduced at this juncture.
This was highlighted by the Governor of the CBSL, Secretary to the Ministry of Finance Mahinda Siriwardena and other officials at the Committee on Public Finance on Tuesday under the chairmanship of MP Anura Priyadarshana Yapa.
He also pointed out that companies such as the Ceylon Electricity Board, the Ceylon Petroleum Corporation and Litro Gas do not have rupees to buy dollars due to huge losses incurred.
The Governor also pointed out that the Parliament had also been misled by the presentation of this year’s Budget with specific reference to estimated government revenue; an unrealistic revenue which went beyond the real situation.
He said owing to this, a large amount of money was allocated for expenditure including ministries based on the estimated government revenue and in the end a large budget deficit was created which could not cover the expenditure and this situation had led to a debt trap.
The Finance Committee also agreed to table a motion in Parliament to increase the borrowing limit to one trillion rupees more than previously allowed under the Local Treasury Bills Ordinance.
Earlier, the IMF had envisaged Sri Lanka to grow this year by 2.5 percent, while CBSL forecasted 5 percent growth.
By Ishara Gamage
No intention of returning to CBSL
Former Governor of the Central Bank Dr. Indrajit Coomaraswamy says that the current Governor of the Central Bank, Dr. Nandalal Weerasinghe, is doing an extremely good job in dire circumstances.
“I have absolutely no intention of returning to the CBSL. In my view, the present Governor, Dr Nandalal Weerasinghe, is doing an extremely good job in dire circumstances,” he told Finance Today.
He was commenting on reports that he was preparing to become the Governor of the Central Bank again.