Wednesday, September 28, 2022

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Govt. issues stringent guidelines to curtail public-sector expenditure

Public sector officials have been advised to strictly adhere to a Treasury circular on limiting government expenses, and warned that those failing to follow the directive would be personally held liable.

On the instructions of President Ranil Wickremesinghe, the directive has gone out from Presidential Secretary Saman Ekanayake to ministry secretaries, department heads, provincial chief secretaries, heads of corporations, statutory boards and state-owned enterprises.

They have been told to curtail state expenses due to the current economic challenges the government faces.

It has been revealed that the directive comes in the wake of two provincial administrations planning to recruit 600 persons for new jobs, despite the directive to stop recruitment.

The circular on specific guidelines has been issued by Treasury Secretary K.M. Mahinda Siriwardana. The circular said the guidelines were issued in view of the “serious issues in the government fiscal operations and insufficient foreign exchange to finance essential imports and meet foreign debt service obligations.”

Accordingly, strictly control has been placed on the usage of utility services including fuel, electricity, water and communication facilities.

Entering into new rent or lease agreements with regard to new buildings is suspended until further notice while existing agreements can be extended based on a proper need assessment and a cost-benefit analysis with the approval of the board of directors of the respective institutions.

Prior approval from the General Treasury is a must before extending a lease or replacing existing agreements for vehicles while entering into fresh agreements to lease vehicles is suspended, the circular added.

The circular stressed that recruitment should be suspended immediately, and if there is recruitment necessary to maintain business continuity, it must have the approval of the Director General of the Department of Public Enterprises or the Director General of the Department of National Budget, but there should be no new allowances paid to employees, and the board should ensure that existing allowance schemes are not increased either.

All institutions are instructed to shift to electronic communication platforms and reduce paper usage as much as possible.

In addition, state-owned enterprises (SOEs) are directed to avoid expenditure-related ceremonials and to suspend all sponsorships, donations, Corporate Social Responsibility (CSR) expenses, and non-business-related promotional expenditures. Any such expenditure which is essential in nature can only be met with the approval of the relevant minister and concurrence of the Minister of Finance, the circular said.

Although foreign-funded training programmes are not restricted, domestic funds could not be used for foreign travel or training programmes, the circular said.

The government also encouraged SOEs to use underutilised or unused lands for agricultural purposes with in-house labour and inputs to ensure sustainable food security in the country by coming up with innovative approaches to producing value-added products focusing on alternative arrangements to imports.

A high-level Management Committee consisting of a Chief Executive Officer, Head of Finance, Head of Operations and Head of Human Resources is to be established in every institution to introduce effective controls over expenditure and monitoring purposes.

The committee is to report its recommendations to the board of directors at the end of each month and key initiatives accepted by the board based on those recommendations should be communicated to the secretary to the line ministry and the General Treasury on or before the tenth of the succeeding month through emails.

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