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Govt. decides to strictly cut state expenses to tackle fiscal crisis

The Government has decided to strictly curb state expenses owing to the grave financial crisis the country’s Treasury was facing, the Finance Ministry announced this week.

The Finance Ministry will be taking the crucial public sector and state institutions’ high unnecessary spending head-on by strictly restricting its expenses through several progressive measures. The Budget 2022 has allocated a total of Rs.2.51 trillion to be spent by ministries and departments.

The expected revenue of Rs 1.8 trillion was not sufficient even for recurrent expenditure as salaries of public sector employees alone amounted to Rs. 1 trillion, a senior Treasury official said.

The ministry has already informed the Cabinet that state revenue has decreased drastically as the economy faces a severe crisis with revenue not sufficient to meet even recurrent expenditure. The government has also decided to suspend all recruitment to the state service.

Public expenditure has to be strictly controlled so that it can only be used for the most essential services, he added.

The Treasury Secretary on Tuesday issued a circular to control expenditure in the public service amidst dwindling revenue and sky- rocketing public spending.

The circular has called for a project expenditure control system and the reduction of fuel usage and communication expenses, and suspending public sector recruitment.

The circular stated that the Sri Lankan economy has approached a highly critical juncture and with that, the requirement of providing an efficient and productive service for the public while using the public finance in a most responsible and economical manner has become a foremost priority than ever before.

Enhancing the government revenue is a crucial requirement to control this challenging situation. However, as it takes time, public expenditure needs to be well-tightened, making it available only for the most essential services for a certain period, the ministry said.

“Therefore, the restrictions already have been introduced by several circulars controlling the payment of fuel and communication allowances, restrictions of water and electricity expenditure, suspending the construction and hiring buildings”.

Measures will be taken to stop foreign study tours and trainings conducted using local funds, suspending the payment of various allowances made at ministry or institution level without the approval of the Cabinet of Ministers and avoiding any new commitments for various welfare/subsidy programmes and development programmes.

In addition, the circular says the stringent methods of controlling expenditure should be followed when incurring expenditure and implementing projects using domestic funds as well.

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