Infrastructure development on hold as fund flow dries up
Many ongoing infrastructure development projects have been temporarily suspended in a latest move by the Treasury to curtail public spending as the budgetary allocations to several such projects are already exhausted, official sources said.
Efforts of the Treasury to improve the quality of public spending and curtailment of unproductive expenditures will be strengthened under these circumstances.
In order to avoid cash flow problems and smooth functioning of utilisation of budgetary provisions, close cooperation and monitoring mechanisms with devolved agencies and line ministries are now enforced, a senior Finance Ministry official said.
When implementing development activities, commitment control mechanisms will be implemented for fiscal and cash flow management of foreign borrowings.
Paying contractors and subcontractors of major water and road projects for the work done has been curtailed and this has compelled them to temporary suspend the work.
The Treasury has issued a directive to relevant officials to present supplementary estimates of relevant ministries which are to be submitted to parliament as the money allocated for certain ministries had been fully utilised, he disclosed.
The Road Development Authority (RDA) has requested the Treasury for additional urgent funds, amounting to Rs. 60 billion, for road projects claiming that the work on most of those could come to a standstill, he said.
Only a sum of Rs.120 billion had been allocated to the Ministry of Highways for the year and it was expected to manage its budget within the allocation, he added.
The budgetary allocation of Rs.40 for the laying of pipelines under the ADB-funded Colombo Water Supply Service Improvement Project of 960 km of pipe network has already been exhausted.
The Cabinet has already given the approval to present a supplementary in parliament to continue this project which is currently on hold, he revealed, adding that other than that no other supplementary estimates will be allowed.
According to official sources, the government follows a practice of presenting supplementary estimates amounting to billions of rupees to parliament for approval especially prior to the election period causing budgetary constraints.
The Cabinet should be cautious in approving such public spending as the Treasury is grappling to meet recurrent expenditure including the payment of public sector employees’ salaries amidst heavy debt servicing, he said.