Treasury to streamline cash flow
View(s):An action plan is to be implemented by the Department of State Accounts in the Treasury to record all non-financial assets of the government and strengthen the declaration of Sri Lanka’s financial position, official sources said.
The improved modified cash basis in the public sector which is followed now will be converted into the accounting system under accrual basis and further substantiate accountability and transparency.
The aim is to present a financial statement containing all the financial information without any missing data, a senior Treasury official told the Business Times.
The Treasury has recently released financial statement for the past 11 months sans the figures of December 2018 which period was under political instability.
Furthermore, Government cash flows were disrupted, as the plans to raise capital in the last quarter of 2018 could not materialise and without a budget presented in November, spending plans were also disturbed.
As a result the Treasury is still behind target on cash disbursements, which would have normally been settled in January, he added.
The Central Bank subscribed to Treasury bills (T-bills) amounting to Rs. 90 billion in January 2019 at the request of the Treasury to assist financing needs of the government.
This request has been made due to the delay in receiving expected foreign currency financing arrangements as envisaged in the Treasury’s cash flow for the month of January.
The Monetary Board has acceded to the Treasury’s request in the national interest and under exceptional circumstances.
Having reviewed the macroeconomic consequences of subscribing to T-bills by the Central Bank, the Government has agreed to reverse part of the transaction in February and the balance during the first quarter of 2019.
This arrangement has been made till the Government’s borrowing programme is brought back on track with realisation of expected financial arrangements.
During the first 11 months of 2018, cash inflows to the Treasury by way of revenue and other receipts increased by 10 per cent to Rs. 1,766 billion from Rs. 1,606 billion recorded in the same period of 2017, Finance Ministry data showed.
Increase in operational expense during the period has led to an increase in the overall closing cash and bank balance as at November 30, 2018 up to Rs. 225.3 billion, compared to the same period of 2017.
The Finance Ministry has already taken action to address the cash flow issue in the economy, by releasing Rs. 60 billion to settle outstanding payments to contractors. (Bandula)