The 2022 Budget envisages strict expenditure controls for the state sector as a means to compensate for the lost revenue in the post Covid-19 phase.
Finance Minister Basil Rajapaksa presenting his maiden Budget as the subject Minister on Friday said, “Unproductive high expenditures and weaknesses in expenditure controls have resulted, in Governments often not being able to properly engage in expenditure management.”
He said that it has resulted in almost every Government increasing tax rates and introducing various taxes considering the low Government revenue. He said other than the Government seizing a slice of the income of taxpayers, it has not resulted in any increase of total private and Government revenue.”
The Minister said amendments will be included in the Appropriation Bill preventing requests for Supplementary Estimates for 2022 by all Ministries. Among the other restrictions are cuts in fuel allowances and telephone and electricity bills in the state sector.
The Finance Minister said that this is the reason why national Budgetary policies should be prepared in a way to bring about a structural change to increase the total revenue and thereby increase savings and investments.
Among a series of steps to achieve this objective he proposed, issue quarterly warrants instead of the annual warrant which is issued by the Minister of Finance authorising the expenditure of Government institutions for the entire year after the passage of the annual Appropriation Bill in Parliament.
It is expected to instil financial discipline in the use of the allocations by calling upon all Government institutions to prepare their plans relating to procurement, salaries and allowances, debt servicing, development and maintenance well in advance.
The second priority in this new fiscal policy is to inculcate a savings culture among the majority in the country.
This is to create a conducive environment that enables all citizens - working community, high income earners and entrepreneurs – to save as much as they can and thereby expand their investment capacity.
Instead of providing funds for recurrent expenditure, funds for capital expenditure will be made available by the Government for State Owned Enterprises (SOEs) to enable them to generate income by undertaking public and private construction and providing other services.
A multi-disciplinary consultative committee will be appointed to propose a strategic way forward, based on contemporary benchmarks and within a specific timeframe, for SOEs that have become a drain on the national economy. The focus will be on entities that have been incurring losses continuously and those under-utilised, the Minister said.
“I wish to state that the National Policy Framework “Vistas of Prosperity and Splendour” was considered in its entirety in preparing Budget 2022,” he said.
He called upon fellow Ministers and public officials to provide leadership to use state assets to the maximum. “Except for office buildings that are under construction at present, I propose to suspend the construction of new office premises for two years. It is necessary to use the allocated capital expenditure for development that directly benefits the public, while productively using office facilities.”