Budget deficit
The Government is planning to reduce the Budget deficit to 6.8 percent of the Gross Domestic Product (GDP) in 2023, Cabinet Spokesman and Mass Media Minister Dr. Bandula Gunawardane said.
Speaking at this week’s Cabinet media briefing held on Tuesday (23) at the Government Information Department, Minister Gunawardane said that the Government is planning to cut the budget deficit to 6.8 percent of Gross Domestic Product in 2023 from an expected 9.9 percent in 2022.
“The decision has been taken due to the prevailing economic crisis. The Cabinet of Ministers has approved a fiscal framework for 2023-2025. Sri Lanka is facing the worst fiscal crisis in its history,” he said.
State finance imbalance resulting from the decline of Government revenue in the long run and the escalation of Government expenditure has now developed into an extreme economic crisis. Amid the economic challenges in relation to the above, preparation of the budget for the year 2023 within the median budget framework of 2023 - 2025 should be performed with prudent and strategic means while measures should be taken to prevent more intensity and lay the foundation to future sustainability.
Accordingly, based on the State financial targets expected to be accomplished within the median budget framework of 2023 – 2025, it is expected to accomplish the target of escalating the present 9 percent State revenue which is a percentage of the gross domestic product up to 11.3 percent. Furthermore, it has been planned to prepare the budget estimations for 2023 based on zero – based budgeting.
The Cabinet of Ministers granted approval to the proposal furnished by the President as the Finance, Economic Stabilisation and National Policies Minister in relation to the preparation of budget estimations for 2023.
The Government is targeting to reduce the budget deficit from 9.9 percent to 6.8 percent of the GDP. Furthermore, the 2023 Budget will propose to increase the State revenue per GDP from 9 percent to 12.3 percent.
The President has also proposed to reduce the State expenditure from 18.9 percent to 18.1 percent of the GDP through the 2023 Budget.
The Government is also targeting to achieve a primary budget surplus in the medium term. Meanwhile, the Government says the 2023 Budget estimate will be based on zero-based budgeting. The Government is also hoping to pass an interim budget for the remainder of the year 2022, next month.
The Minister said that the Budget 2023 should prevent further worsening of the current economic crisis and lay the foundation for future sustainability.
The Minister said that the President discussed at length in this week’s Cabinet meeting that the government’s revenues should be increased to recover from the severe economic crisis and the areas that should be given priority for that.
He said that the State enterprises should be reformed and certain businesses that are losing money should be closed or remedied through the reorganisation of loss-making Government institutions and statutory boards. If this is not done, the country will become unsustainable.
“We will reduce the deficit by increasing revenues and cutting spending.” Sri Lanka expects to increase State revenues to 11.3 percent of GDP in 2023 from 9.1 percent this year. Government spending will be cut to 18.1 percent of GDP from 18.9 percent. Sri Lanka will also have to shut down loss making State enterprises and reform them to improve State enterprises, said the Minister.
Student loan facility
The Cabinet of Ministers has granted its consent to two proposals forwarded by Education Minister Susil Premajayantha.
Accordingly Cabinet approval has been granted to set up a student loan facility on subsidised interest basis for students undergoing training in national colleges of education.
National colleges of education offer teacher training with 2 years of institutional training and one year of internship for those who passed the G.C.E. (A /L) examination.
A teacher trainee is paid Rs. 5,000 during the training period in the national college of education which is not enough.
Colleges of education do not provide accommodation for this one-year internship hence trainees have to bear all expenses such as accommodation and travelling.
Ministers approved the proposal presented by the Education Minister to provide a financial provision of a maximum Rs.10,000 per month to a trainee, in addition to the allowance currently being paid, through a State bank on a subsidised interest basis.
Approval has also been granted to supply School uniform materials for 2023.Uniform material for 2023 must be provided to students before the end of the 2022 academic year.
According to a request made by the Government to the People’s Republic of China, it has agreed to provide a part of the uniform requirements for 2023 as a grant.
The Cabinet of Ministers approved the proposal presented by the Minister to purchase the requirement of school uniform materials in addition to the grant to be provided by the Chinese Government, from local textile manufacturers and thus to meet the requirement of school uniform materials for 2023.
Amnesty to deposit foreign currency
Sri Lankan citizens and residents have been given a one month amnesty from August 15 to deposit or sell foreign currency in possession without questioning, Cabinet Spokesperson Gunawardena said. Accordingly, persons, in or resident in Sri Lanka who hold foreign currency notes in possession can deposit those currency into a personal foreign currency account or into a business currency account or sell to an authorised dealer.
The Minister said that the Central Bank of Sri Lanka had previously issued an announcement in this regard and further information can be obtained from the website www.dfe.lk or contacting Foreign Exchange Department through 01124772555, 0112398511.
The Minister said that it is possible to open an account in a commercial or savings bank and give money to the bank without questioning the foreign currency and it is a one-time solution.
The Minister said that if a resident is staying in the country and has foreign currency in his hand, he can exchange money during this season. Regardless of the amount, he said that if he has foreign exchange, he can make money or account during this season.
More trains on Kelaniya Valley Line
Minister Gunawardena said that measures will be taken to run a train every eight minutes on the Kelani Valley (KV) railway line.
According to the existing signalling system, a train must be entered 28 minutes before entering the route at certain places in the Kelani Valley Line and one train can enter the route after travelling to one station.
The Minister said that he has given instructions to complete within three months to improve the signalling system in the Kelani Valley Line so that a train can run every eight minutes.
Also, this work has already started and due to this, in the future, it will be possible to run trains every eight minutes on the Kelani Valley railway system, and for that, we are going to award a contract to a public sector organisation to employ trained labour required for the upgrade. He further said that the Cabinet approved the proposal on Monday.
Excess employees of State media institutions
Minister Gunawardena said that excess employees of State media institutions will not be removed without compensation.
The Minister also said that the Government will resort to a compensation formula when deciding about the compensation after a careful study by an appointed committee.
He said the compensation formula will compatible with those offered to the State corporations and administrative boards. The Minister said such restructuring has happened in the past as well.
But the Minister said some ministers have recruited employees to those institutions again and added this will not happen this time.
Earlier, money was given from the Treasury to pay the salaries of the Government media institutions, but there is no possibility of providing such money at present, he added.
Following such a strategy, the Cabinet of Ministers approved the implementation of a solar power project on the land located in the Trincomalee Kuchchaveli Regional Secretariat of the Sri Lanka Broadcasting Corporation, he added.