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Vehicle import ban next year also; strict austerity measures
The Government has decided to continue the ban on imports of vehicles for next year also and issued strict guidelines to all ministries on the preparation of their allocations for the 2022 budget to be presented in November, a senior Treasury official said.
On the recurrent expenditure, a Treasury circular to all ministries and departments has declared that there will not be any new provisions allocated next year since new recruitment will be discouraged.
Salaries, wages and other allowances for next year to be calculated separately for each individual based on cadre details at July 1, 2021. “Other than the provisions for rates already approved, overtime and allowances should not be included in the estimates for any other type of overtime or allowances,” said the circular issued by Treasury Secretary S.R. Attygalle.
On capital expenditure, the state institutions have been instructed to give more priority to development expenditure which delivers a quick return on investment to the economy.
The decision taken by the Government to suspend the construction of new buildings has been extended to forthcoming years as well. Accordingly, state institutions are requested to fulfil their needs by renovating economically viable buildings that require minor repairs.
In support of the Government’s decision to limit imports and considering the requirement of curtailing expenditure, purchase of new furniture, office equipment and vehicles for government agencies will be suspended next year also. “The vehicle requirements should be fulfilled by repairing vehicles already available with the government agencies,” the circular said.
With the ongoing COVID-19 pandemic disrupting government initiatives and development plans approved in the last Budget, the General Treasury issued a fresh Budget Call – 2022 from all state departments seeking proposals with a two-year window (2022-2024) Medium-Term budgetary framework.
Pointing out that the management of the government budget has been challenging this year due to the re-emergence of the pandemic situation in the first quarter of 2021, the Treasury acknowledged that “collecting revenue was hampered and government expenditure increased unexpectedly due to additional expenditure for providing relief for affected people”.
The government expected to be back on track soon by vaccinating a majority of the population rapidly and move forward in 2022 with a new approach, the circular noted, while detailing guidelines to be followed when preparing budget estimates for next year and the medium-term of 2022-2024.
Stressing that government debts remain at higher level of 95 percent of the Gross Domestic Product (GDP), the Treasury Secretary indicated that respective Line Ministers and Chief Accounting Officers were expected to authorise only “essential and productive expenditure” after reviewing the requirement in a rational and prudent manner.
Accordingly, the Treasury directive identified priority sectors such as controlling pandemic situation and restoring livelihood of people, manufacture of organic fertilisers, steps to revive the tourism sector, continuing ongoing rural and urban development initiatives including ‘Waari Saubhagya’ project of developing 100,000 km of roads.
The government bodies are instructed to submit the expenditure estimates before August 16.
Meanwhile, a Treasury official explained that through the ban on vehicle imports, the Government was able to save an estimated US$ one billion and the decision to continue the restrictions would be helpful to boost the reserves.
He said the decision had also been taken in view of the debt and bond payments to the tune of up to US$ 1.5 billion by August next year.
“A revenue loss of around US$ five billion from the tourism sector due to the COVID-19 situation is widening the gap on the revenue,” he said.
However, the Government is expecting to boost foreign reserves through two different currency swaps from India for US$ 400 million and US$ one billion and US$ 250 million swap from Bangladesh.