Mixed bag in Sri Lanka’s amended 2015 Budget
Sri Lanka’s 2015 Budget has become a mixed bag with the second time amendment or adjustment made this week under the new Maithri regime in its 100 day revolution budget presented in parliament by Finance Minister Ravi Karunanayake on Thursday.
The previous government on November 5 altered the estimated expenditure of 2015 appropriation bill presented on September 26th and the budget on October 24 for the first time. The new Finance Minister has fulfilled the task of finding necessary financial provisions to implement most of the pledges given to the common man through the government’s 100 day programme by introducing revenue proposals with the able assistance of Treasury officials, government sources said.
Under this amendment, of the 77 proposals/allocations, changes were made to 27 proposals/allocations when the then Prime Minister D.M. Jayaratne presented an amendment, increasing expenditure to Rs. 2.168 trillion from the estimate of Rs. 1.812 trillion, up by Rs. 356 billion.
The supplementary estimate presented to parliament had also increased the government’s borrowing to Rs. 440 billion.
Official sources said this was the first time in recent budget history that a supplementary estimate was moved in parliament to amend the budgetary allocation in less than two weeks after the budget had been presented in parliament.
The new government which came into power on January 8 had to resort to the same procedure as the appropriation bill 2015 was passed in parliament by a majority vote, a senior official said.
He added that this was the second time that adjustments or amendments were made to estimated revenue, expenditure, and budget proposals within a period of around three months after presentation of the appropriation bill in parliament.
The allocation of financial provisions for ministries and government projects will have to be re-adjusted and new circulars should be issued to clarify and implement budget proposals, he revealed.
Even after the parliamentary elections scheduled in June 2015, a similar procedure will have to be followed, he said adding that this budget will go into history for making amendments under different governments.
This situation has arisen as a result of the decision taken by the then Treasury secretary Dr. P.B. Jayasundera on the direction of the former President Mahinda Rajapaksa to present the budget instead of a mini budget or vote on account for four months on the eve of presidential elections, he pointed out.The total revenue expected by the government for 2015 would be reduced to Rs. 1.62 trillion as compared to the former government’s estimate of Rs. 1.68 trillion and the reason for this was the concessions provided for 13 consumer items, he disclosed.
The recurrent expenditure has risen from Rs. 1.52 trillion to Rs. 1.61 trillion due to the salary hike of government employees and pensioners.
But the capital expenditure has been reduced to Rs. 499 billion through this budgetfrom Rs. 521 billion in the previous budget maintaining the 4.4 per cent budget deficit proposed by the previous government, he added.
Accordingly the total expenditure has come down to Rs.2.12 trillion from Rs. 2.21 trillion in the previous budget. The budget deficit has also been lowered to Rs. 499 billion from Rs.521 billion in the previous budget. An economic expert told the Business Times that there is a revenue deficit of Rs. 67 billion between the present and previous budgets and it is related to monthly payment of government sector employees and pensioners.
This will cause a negative impact on economic stability and foreign exchange rates and foreign reserves, he warned.
This deficit should be bridged soon with bank borrowings without increasing interest rates to tackle this urgent financial problem, he added