Sri Lanka’s provincial administration on the brink of collapse
Sri Lanka’s provincial administration is on the brink of collapse as there is no legal authority for the currently dysfunctional Provincial Councils to collect revenue and make legitimate payments, official sources said.
Provincial Councils receive revenue from levying taxes, grants by the Government, loans advanced from the Consolidated Fund, and other receipts.
Fund raising provisions have been stipulated in Section 19 sub-section (1) of the Provincial Councils Act No 42 of 1987.
The average expenditure of these councils is in the region of Rs.220 billion per annum. The Provincial Fund provides finances for the maintenance functions and workings of the councils.
The required money for the expenditure can be withdrawn from the fund only under a warrant signed by the Chief Minister of the Province.
At present most of the Provincial Councils stand dissolved and the conduct of provincial polls is not in sight in the coming months.
The Supreme Court has determined that the provincial elections cannot be held under the existing or previous Provincial Council’s Elections Act without a delimitation report.
Therefore in the coming months, the provincial management will have to face severe difficulties in carrying out its normal functions, a senior official of the Local Government and Provincial Councils Ministry said.
He told the Business Times that the payment of salaries and expenditure for day-to-day functions of Provincial Councils are being met with loans from the Treasury and budgetary allocations of the ministry.
But at the moment the Treasury is grappling to avoid the impending collapse of the provincial management, he added.
The Treasury is facing an enormous challenge of meeting the recurrent expenditure of ministries and state institutions including Provincial Councils along with interest payments which is around 42 per cent of the 2019 budget revenue (35 per cent of GDP).
Recurrent expenditure is set to increase surpassing the budgetary estimate of Rs.1.4 trillion for 2019 as the government has already spent around Rs. 1.13 trillion so far making it difficult for the Treasury in the coming months, state financial analysts have said.
Total revenue continues its declining trend with first six months earnings of around Rs. 898 billion lower than expectations, provisional data of the Treasury showed.
Under this set up the Finance Ministry is taking every possible step to control public expenditure blocking unnecessary expenses and controlling overheads of ministries.
In an effort to curtail unnecessary expenses, Finance Minister Mangala Samaraweera has taken some bold decisions recently.
He has objected to a Cabinet memorandum by Minister Vajira Abeywardane to grant permits for 450 members of the currently defunct Provincial Councils to import vehicles valued at US$35,000 each sans duty through permits.