A crisis is looming in the health sector due to the Treasury not releasing more than Rs 20 billion to settle bills for essential items, including medicines, a senior official said, adding that it is the first time such a large amount has been outstanding. Of this, Rs 10 billion is owed to the Health [...]

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Health sector in crisis: Money not released to pay bills for medicines

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A crisis is looming in the health sector due to the Treasury not releasing more than Rs 20 billion to settle bills for essential items, including medicines, a senior official said, adding that it is the first time such a large amount has been outstanding.

Of this, Rs 10 billion is owed to the Health Ministry. Another Rs 10 billion is due to the State Pharmaceuticals Manufacturing Corporation (SPMC) which has not been paid up to five months for production of essential medicines. Arrears to the tune of Rs 450 million are owed to one supplier, the official said, requesting anonymity.

The SPMC takes out loans to manufacture close to 200 pharmaceuticals. When Treasury reimbursement is delayed, it is forced to reduce the quantity of drugs it produces or cease manufacturing completely. This is because it costs money to import the raw material required to make the medicines in Sri Lanka.

“All these medicines are for Government hospitals,” said the official. “If the outstanding amounts are not settled soon, manufacturers will refuse to provide medicines, plunging the free health service into crisis.” Meanwhile, the Health Ministry is building intensive care and scanning units, upgrading wards, expanding hospitals and purchasing essential medical and laboratory equipment. All these activities are in danger of slowing down or ceasing altogether for lack of funds to pay the contractors. There is also no money to advertise tenders, meaning those that are in the pipeline will be delayed.

Health Minister Secretary B.G.S. Gunatillake when asked about the delay in the infusing of cash by the Treasury said nine billion rupees was overdue by September and the Ministry was unable to settle such a big bill with its allocations. “One of our projects is to expand the SPMC but that too will be delayed without the adequate funds,” she said.

She said that talks were held with Finance Minister Mangala Samaraweera and he had promised to release some funds from the Treasury soon. “We have to work as the money comes in. We are hopeful this matter will be settled soon,” she said. A senior Treasury official admitted there was an issue regarding releasing funds to the health sector but that the bills must be properly scrutinised before the money was released.

“We will take at least three months to evaluate the claims and hence there is a delay,” he said. “By the end of December last year, Rs 85 billion was due from the Treasury and we are systematically settling this amount. We have explained to the Health Ministry during talks last week that steps would be taken to settle the outstanding amount soon.”
There were many doctors in administrative position in the Ministry and they were not all competent in dealing with financial aspects to settle this issue more promptly and smoothly, he said.

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