Government prepares to present a populist budget for 2019
The United National Front Government has its last chance to shore up the economy providing relief for the poor and middle class families in rural and urban areas when it presents a crucial budget in parliament on March 5, ahead of provincial, presidential or general elections.
Finance Minister Mangala Samaraweera has directed Treasury officials to prepare “a populist budget” setting a poser to officials who say there is falling government revenue, mounting public debt and severe balance of payment issues.
The government is compelled to dole out goodies and concessions to the people in an attempt to woo voters with fresh tax relief or increase social spending which are constrained by escalating fiscal deficit, a senior Treasury official said.
2019 budgetary allocations will be made to resurrect the ‘Enterprise Sri Lanka’ and ‘Gamperaliya’ programmes suspended by the 52-day regime inducted by the President.
The 2019 budget will allocate Rs 48 billion for the implementation of Project Gamperaliya in 2019 providing Rs.300 million for each electoral division to carry out development activities
The Government has allocated Rs. 60 billion for the ‘Enterprise Sri Lanka’ programme to create 100,000 new entrepreneurs countrywide.
In addition, soft loans amounting to Rs.10 billion will be provided for both small to medium enterprises in rural areas to develop their businesses.
These rural development-oriented transformation programmes will be initiated through the 2019 budget.
The budget will be prepared in accordance with the medium-term fiscal frame work (MTFF) by adopting a Performance-Based Budgeting (PBB) approach
The Government also plans to limit recurrent expenditure to 15 per cent of GDP amounting to Rs. 2.19 trillion while maintaining Government Public Investment at 5.5 per cent of GDP. The budget deficit will be brought down to 3.5 per cent of GDP, while limiting Government debt to below 70 per cent of GDP.
With Rs. 2.5 trillion in Government revenue, of which Rs. 2 trillion is to be allocated on debt-servicing in 2019, there would be limited space for public investment projects.
According to budget call-2019 circular issued by Treasury Secretary R.H.S. Samaratunga, the line ministries will be required to identify priority projects, where resources will be allocated within ceilings.
Further, the circular said, the Treasury cash releases would also be linked with the reported commitments and liabilities, requiring Ministry Secretaries and Department Heads to update their commitments and liabilities regularly to the Treasury.