Factors affected budget deficit in Sri Lanka 

• Reduction in tax revenue due to tax relef
• Increase in expenditure when paying Bank debts
• Increase in transfer costs of the government
• Increase in expenditure on public sections

Steps have taken to settle the budget deficit in Sri Lanka

• Foreign loans
• Foreign grants
• Use of local financial resources
• Borrowing from the market

Persistant budget deficit effects on the economy of a country

• Increase in state loans
• Increase in inflation
• Decrease in investment by private sectors
• Rise in interest rates
• Declining international credibility
• Reduction in foreign exchange rates/ values
• Decrease in laocal savings

Advantages of having a surplus in Current account 

• Reduction in burden of state loans
• Decreast in inflationary effects
• Increase in government investments
• Ability to maintain interest rates at a low level
• Reduction of tax burden on people
• Leading to macro – economic stability