The fiscal operations of Government are framed by the Fiscal Management (Responsibility) Act, No. 3 of 2003 and subsequent amendments to the Act, which provide a legal framework to phase out fiscal deficits and associated debt to support the broad-based development objectives in the Medium-Term Macro Fiscal Framework (MTMFF). The Government’s major medium-term fiscal objectives, among others, are to contain the fiscal deficit to 4.8 percent of GDP by 2025 while reducing the debt to GDP ratio to 89.2 percent by 2025.
The Government provided an unprecedented level of monetary and fiscal support to revive businesses and protect vulnerable people despite the limited fiscal space. The fiscal position will be further strengthened while managing expenditure responsibly in the medium term on a path to recovery from the pandemic. Economic support provided to households and businesses continued and it will be targeted with the successive drive of vaccination. The fiscal space will be expanded in the medium term enabling more public investment to increase economic growth, reduce unemployment, and maintain inflation at a mid-single-digit level while reducing the debt to a sustainable level.