State agencies ordered to cut spending
All state agencies have been directed to confine spending to compulsory payments further curtailing their capital expenditure, one of the first post-election decisions by new Treasury Secretary S.R. Attygalle.
Ministries, provincial councils departments, corporations and statutory boards have been directed by the Treasury to utilise available cash account balances to pay for small and, routine expenses only.
The Treasury Operations Department has issued a circular under the signature of Mr. Attygalle directing heads of state agencies to use their cash account balances of the month of November to pay salaries, pensions and for Samurdhi and debt service payments.
The Treasury has released an ‘imprest’ (monetary advance) to all state agencies up to November 20 based on the commitments made and recorded in accordance with the expenditure plan for the three months period (October – December) of 2019.
Given the constraints on the government’s borrowing programme, the Treasury has directed all state agencies to enforce a compulsory savings of 10 per cent out of the capital expenditure, which was allocated for 2019.
This action has been taken due to the fact that the expected target of government revenue for 2019 cannot be achieved in the context of unfavourable economic conditions following the Easter Sunday attack in April.
Under these circumstances, a directive has been issued to identify the non-priority nature projects, the projects which have not yet been started including those associated with budget proposals and purchase of non-essential items such as, furniture, office equipment etc and then to postpone them for the next year.
Further, purchasing of vehicles under National Budget Circular No. 03/2018 dated 16.07.2018 has been temporarily terminated until further notice and those agreed procurement for which the process has not yet been initiated should also be suspended with immediate effect.
In the meantime, President Gotabaya Rajapaksa has said that a special committee will screen and make appointments to government agencies.
During the week a series of new appointments were also made by the President to key posts in the government.
Former Treasury Secretary Dr. P.B. Jayasundera was appointed Secretary to the President, Central Bank Deputy Governor S.R. Atygalle as Treasury Secretary and Retired Major General Kamal Gunaratne as Defence Secretary. Foreign Secretary Ravinatha Aryasinha was reappointed to the post.
All the heads of state agencies were expected to step down and replaced by nominees of the new President. Board of Investment Chairman Mangala P.B. Yapa, HDFC Bank Chairman Dr. R.H. Meewakkala, Export Development Board Chairman Indira Malwatte, Tourism Chief Johanne Jayaratne and Tea Board Chairman Lucille Wijewardene among others have tendered their resignations.