Primary and Budget Balances move in opposite directions as interest payments increase!

Abstract

The Fiscal Management Report 2024 published by the Ministry of Finance, shows that the Primary Balance improved from LKR -317 Bn in 3rd quarter 2022 to a positive LKR 124 Bn in 3rd quarter 2023. The Budget Deficit, however, worsened from LKR -1,244 Bn to LKR -1,614 Bn, this can be explained by rising interest costs. Interest costs alone increased significantly from LKR 927 Bn in 3rd quarter 2022 to LKR 1,737 Bn in 3rd quarter 2023.