SL’s Rs.5 bln contingency for COVID-19
Sri Lanka is now maintaining a Rs.5 billion financial backup to meet basic costs in dealing with any eventuality arising from the new coronavirus, official sources said, adding that more funds would be made available as and when the need arose.
President Gotabaya Rajapaksa has used his constitutional power in sanctioning the Treasury to allocate this money from the Contingencies Fund to deal with emergency situations, a senior Treasury official told the Business Times.
The aim is to improve financial security by allocating funds to meet emergency expenses as well as to reduce the need of using high-interest debt as a final resort.
A sum of Rs. 200 million has already been granted from this financial backup to provide basic facilities at quarantine centres for the benefit of persons undergoing quarantine process, he added.
2258 people are currently housed at 16 quarantine centres across the country.
In addition a sum of Rs.500 million will be released for corona-virus eradication immediately under the economic stimulus package introduced by the government with the aim of minimising the economic impact, Cabinet spokesman Minister Bandula Gunawardena told the Business Times.
He noted that the government is taking every possible precautionary measure for the prevention of the epidemic, maintain services and supplies as well as mitigate the damage caused to tourism, exports, foreign employment, IT and micro, small and medium scale industries.
A six month moratorium on loan repayment has been announced with effect from March 20, he said. Minister Gunawrdena added that banks have been directed to grant loans for working capital at 4 per cent interest under this package.
Meanwhile for other matters, the country is running on financial allocations amounting to Rs.1224.9 billion made from the Consolidated Fund in accordance with the warrant issued by the President.
According to the Financial Reserves Act, a contingencies fund is being maintained for urgent and unforeseen expenditure of the state. If the Minister of Finance is satisfied that there are no funds already allocated to meet the emergency, he may with the consent of the President first obtain and authorise an advance payment to be made from this fund.
As soon as possible thereafter, a supplementary estimate has to be presented in Parliament and its approval obtained, to replace the amount so advanced.
Without a proper budget, the Treasury has no powers to spend money, raise new taxes or borrow money to meet any shortfall in the revenue as it has to stick to the allocations made from the Consolidated Fund and the Contingencies Fund, the official revealed.
Developments this week
• Central Bank cuts interest rates
• President orders debt moratorium. This applies to sectors like apparel exports, tourism, IT, foreign employment and small enterprises.
• China provides concessionary loan of US$ 500 million to help Sri Lanka tackle COVID–19 pandemic.
• World Bank, IFC approve $14 billion financing package to help companies and countries counter virus.
• Facebook takes steps to prevent misinformation.
• Moody’s (rating agency) revises forecasts of Asia-Pacific countries
• IT/tech and other companies urged to allow staff to work from home (whenever possible)
• Losses to Sri Lanka economy and business seen as exponential.
• ADB announces $6.5 billion initial package to address the immediate needs of its developing member countries
• Sri Lanka’s trade chambers offers support, solutions to government effort.
• Uncertainty whether stock market will open next week.
• Central Bank suspends imports of non-essential goods, motor vehicles and restricts issue of foreign currency for overseas travel to a maximum of $5,000 per person. This is largely due to pressure on the US dollar with the rupee weakening during the week.