Expenditure cuts extended to SOE’s not financed by Govt budget

In a further tightening of state finances, the Finance Ministry has issued a fresh circular ordering all State-Owned Enterprises (SOEs) which are not financed through the Government Budget to cut down recurrent expenditure in the approved annual Budget 2023 by 6%.

The circular will apply to all “Commercial Corporations, Statutory Boards, and Government Owned Companies.”

The cuts to recurrent expenditure will apply across all areas except for four categories – salaries and wages, taxes, interest payments for borrowings and statutory or contractual commitments.

“Board of Directors and the Senior Management of all SOEs are responsible to follow these directions strictly with immediate effect to respond to the current adverse economic conditions of the country,” states the circular issued by Treasury Secretary Mahinda Siriwardana.

The instructions stem from a decision by Cabinet earlier this year to cut down a minimum of 6% of the recurrent provisions allocated by Budget 2023.

In a circular issued in January instructing state institutions to cut down at least 6% of total recurrent expenditure allocated by Budget 2023, the Treasury had noted that the Department of Public Enterprises will separately issue necessary instructions to freeze 6% of recurrent expenditure of Statutory Institutions which are not financed through the Government Budget.

Those instructions will apply to “State Banks, Corporations, Statutory Boards, Government Companies and other State Owned Enterprises,” in order to minimise expenditure.

The newly issued circular however, has dropped State Banks from the requirement to curtail recurrent expenditure by 6%.