Imprudent and inefficient financial management of government in power till November 19th, 2019 has crippled the entire economy, the Government says. This has hampered the functioning of many vital sectors such as agriculture, free health services, construction industry, food supply, tea industry and paddy production.
Non-payment of dues for the services obtained is the main cause for this economic decline. All provisions of the budget estimates approved for the year 2019 had already been spent by November last year. Therefore, the Treasury was unable to issue money for most of the government’s expenses during the months of November and December. The approved government income for 2019 was Rs. 2400 billion. However, it has not increased beyond Rs. 1,800 billion even by December. This has result in a deficit of Rs. 600 billion in the total estimate. Many of the financial commitments have not been met for two months up to December.
The unsettled expenditure for Presidential Election held on November 16, 2019 is Rs. 1,188 million. Rs. 25,696 million has to be paid by the Ministry of Health for the supply of medicine and services in hospitals. The expenditure incurred by the Ministry of Finance which is to be paid to the banks for the senior citizens’ interest rate subsidy is Rs. 45,856 million. The amount to be paid to fertilizer suppliers for the fertilizer subsidy is Rs. 23,949 million. The unpaid amount of money for the highway constructors is Rs. 18,449 million. The amount in arrears which is to be paid for Gamperaliya, Northern Provincial Development and resettlement programmes is Rs. 3,126 million. Rs. 6,558 million is overdue for irrigation and rural development projects. These are only a few instances.
The Government points out that the outstanding payments have had serious negative consequences. Fertilizer companies are withdrawing from the importation and distribution of fertilizer. Despite the difficulties the State sector fertilizer companies are supplying fertilizer to the paddy cultivation. Nevertheless, the entire agriculture sector is faced with the threat of being downgraded due to lack of adequate fertilizer for other crops.
Failure to supply medicine to all hospitals including the Cancer Hospital, has crippled the entire free health care system. More than half out of the 700 small and medium sized rice mills have been closed. Of little over 400 tea factories a large number has grown out of operation.
The State banks too have suffered ill-effects of financial mismanagement of the previous government. Loans granted on the decision of the Board of Directors and Executives of the Bank of Ceylon and People’s Bank ignoring the accepted procedures and without required security have not yet been recovered. That amount stands at Rs. 72 billion. It is also reported that these loans were given to particular individuals.
Recruitment of employees by the previous government without following proper procedures and without required funds is another issue. The number of persons recruited to the Ceylon Petroleum Corporation in this manner is 167. The current loss of the Corporation is Rs. 10,000 million. Without eliminating such irresponsible recruitment and inefficiency, it is not fair to make a burden on the public while implementing the pricing formula, the Government points out. In the same manner 1,430 have been recruited to the Department of Archeology and the Cultural Fund. According to the Cultural Fund Act, funds can be used only for maintenance and preservation purposes.
The government under the leadership of President Gotabaya Rajapaksa is taking measures with firm resolution to salvage the economy from this crisis. The government is committed to implement a new fiscal policy to reduce the budget deficit to below 4 percent and public debt by 70 percent of GDP by 2025.
As the provision of employment opportunities to unemployed graduates is a responsibility of the government, steps will be taken to recruit them soon. Broadening opportunities for higher education is progressing. Within next five years the plantation industry is to be directed to cultivate high value tea, cinnamon and pepper and they will be promoted for export. Plantation workers will be paid a daily wage of Rs. 1000 with effect from March 01st. Steps are being taken to improve sugarcane cultivation and the purchase locally manufactured sugar and ethanol. Priority will be given for the rapid improvement of cashew cultivation.
Provision of 10 essential goods to low income families will come to effect from March 1st onwards. SriLankan Airlines which had been selected to be closed down or privatized will be transformed into an entity that can contribute to overall development of the country. The significant role that the national carrier can play was proven during the mission of repatriation of Sri Lankan students from coronavirus stricken Wuhan.
At this moment, the harvesting of highly successful Maha season 2019/20 has begun and the harvest will be purchased at a minimum price of Rs. 50 per kilo. The government states that proper mechanism is in place to overhaul the entire agriculture sector.