Unprecedented budgetary moves provide relief to the people
With the unexpected and sudden political crisis along with the prorogation of Parliament till November 16, Treasury officials were in a quandary in considering the option of preparing a vote on account or interim Budget, instead of the calendar year Budget 2019.
Prof G.L .Pieris, Chairman of Sri Lanka Podujana Party of newly appointed Prime Minister Mahinda Rajapaksa told newsmen that they were planning a vote-on-account after Parliament was suspended until November 16. This was later confirmed by Minister Wijayadasa Rajapaksa but the situation remained unclear as a new date to convene Parliament (November 5) had been announced by the new PM.
As at Friday, Finance Ministry officials were waiting for a directive to go ahead with the preparation of a vote on account or full budget 2019, as it will depend on the outcome of the power struggle in Parliament, official sources said.
Vote-on-account will have to be submitted in place of an appropriation bill for expenditure for a period of four months commencing from the first day of January 2019 in the event of dissolution of parliament and declaration of general elections or a complete change in the status quo in parliament, a senior Presidential Secretariat official revealed.
An economic expert said it would be appropriate to present a mini budget rather than the annual one as the country is facing a political crisis and elections are around the corner.
He added that presenting a vote on account in view of an election is not new to Sri Lanka and previous governments have followed this procedure.
The proposed expenditure in the vote-on-account for maintaining of public services shall include recurrent expenditure, capital expenditure and the expenditure for advance accounts
One third of the funds passed by the parliament as Supplementary Estimates during the current year have been included in a prospective vote-on-account. It should be approved by the cabinet before presenting it in parliament.
According to the Appropriation Bill presented to Parliament on October 9l, the government’s total expenditure for 2019 is Rs.2.2815 billion or Rs.2.2 trillion while the borrowing limit will be Rs.1,944 billion.
A caretaker government typically opts for a vote-on-account, as it is regarded improper for an outgoing government to impose on its successor changes that may or may not be acceptable to the incoming government, he added.
In another move, the Ministry of Finance and Economic Affairs under the new PM announced several important economic policy changes and initiatives to provide relief to the masses and revive the economy.
Indicating the intension of presenting an interim budget for 2019, the government has reduced the telecommunication levy, special commodity levy for some essential commodities while providing relief for farmers bringing down fertilizer prices for paddy and writing off the interest of loans taken by them from commercial banks.
Tax relief has been offered to companies engaged in agricultural businesses individuals engaged agricultural undertakings and agricultural undertakings while simplifying VAT and NBT.
Withholding tax will be exempted on interest on any savings and fixed deposits maintained in any financial institution.