Faced with the constant threat of rising public sector expenditure, the cash strapped Sri Lankan government is set to rationalise spending on capital expenditure projects, Finance Ministry sources said. The aim is to facilitate the treasury cash management and improve productivity by maintaining fiscal discipline, revenue-based fiscal consolidation and rationalising government expenditure. Cash inflows from [...]

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Government streamlines spending on capital expenditure projects

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Faced with the constant threat of rising public sector expenditure, the cash strapped Sri Lankan government is set to rationalise spending on capital expenditure projects, Finance Ministry sources said.

The aim is to facilitate the treasury cash management and improve productivity by maintaining fiscal discipline, revenue-based fiscal consolidation and rationalising government expenditure.

Cash inflows from revenue and other receipts to the Treasury were very much less than the outflow for recurrent and capital payments last year and during the first quarter of this year, a senior Treasury official said.

There was an increase in cash outflows to the capital expenditure which was more than the increase in cash inflows to the Treasury, he pointed out.

Therefore the cabinet decision has been taken recently to implement capital expenditure projects on priority basis to facilitate the treasury cash management.

Treasury Secretary Dr.R.H.S. Samaratunga has directed all secretaries and heads of departments to identify priority projects after ascertaining its necessity and the economic importance of the projects.

In a circular issued to all secretaries, heads of departments, district secretaries and government agents, he called on them to inform the Treasury after prioritising of the projects and the necessary finances for such projects will be released accordingly.

Any additional financial provisions for new project proposals or enhances the existing expenditure limits in 2018 will not be entertained by the Treasury, he warned.

The 2018 budget has been prepared by considering all the proposals of the line ministries, provincial ministries and the heads of departments and those proposals clearly indicated the details of the output of such projects accompanied with the Key Performance Indicators (KPI), on a directive issued by the finance ministry, a senior Treasury official noted.

Capital expenditure projects that have been earmarked for implementation by the National Planning Department for each ministry have been given priority by considering the plans of such projects with KPIs, he added.

The medium term macro –fiscal framework for 2018-2020 approved by the Cabinet of Ministers for the performance-based budget preparation for the year 2018 include the rationalisation of recurrent expenditure and prioritisation of capital expenditure, he disclosed.

The Treasury will take follow-up actions on reviewing the financial allocations for respective ministries and state institutions, he said adding that the time has come to critically analyse and evaluate the expenditure needs of the line ministries and departments to rationalise unnecessary expenditure and eliminate excessive administrative overheads.

The public sector expenditure is being made at the expense of the limited direct taxpayers and also the revenue from indirect taxes, including from the poorest of the poor segment of the society, he opined.

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