Monday, December 4, 2023

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Government to rationalize state expenses via review committees.

By: Staff Writer

Colombo (LNW): The Government has appointed 10 Public Expenditure Review Committees (PERC) comprising five or six members each with the aim of rationalizing state expenses through a systematic review to strengthen the country’s fiscal consolidation and economic recovery process, the Finance Ministry announced.

The Cabinet of Ministers at its meeting held on February 6, 2023 decided to appoint these committees with the participation of public and private sector experts to rationalize the government expenses of 10 key Ministries using the Zero-Based Budgeting Approach (ZBB).

The aim is to strengthen the fiscal consolidation process and support the economic recovery process, a senior official of the Ministry told the Business Times. There are several drawbacks in the long-standing budgeting practices adopted in Sri Lanka. Over the years, this has resulted in finances being allocated for redundant activities, duplications and unproductive functions.

As a result, there are often insufficient funds for core activities and functions of key line ministries. The prevailing fiscal crisis has made it all the more important to allocate scarce resources in the most efficient and productive way possible, the ministry statement highlighted.

In most cases, the annual budget is prepared on the basis of incremental adjustments to the previous year’s budget, without a rigorous review of the rationale and efficacy of past resource allocations.

With this major public finance reform to introduce Zero Based Budgeting, it will become necessary for line ministries to provide justifications for resource allocations regardless of previous years’ budgeted allocations the Ministry revealed.

Accordingly, finances will only be allocated following a clear evaluation of needs, costs, and associated benefits of such spending.

PERC will review all programmes/projects of each line Ministry and ascertain whether the core activities are in accordance with the mandate of the Ministry.

Moreover, PERC will identify duplications, wastage, and redundant expenditures, and prioritize all activities as per their potential for achieving objectives of the Ministry as well as national policies.

In addition to that, they will introduce short, medium, and long-term reforms to be implemented by each Ministry, with a view to optimizing productivity and cost effectiveness in their service delivery.

These committees have been appointed to oversee accounting procedure and control public expenditure in the Ministry of Transport and Highways, Ministry of Urban Development and Housing, Ministry of Public Administration, Home Affairs, Provincial Councils and Local Government, Ministry of Defence Ministry, of Public Security, Ministry of Education, Ministry of Health, Ministry of Agriculture, Ministry of Plantation Industries and Ministry of Irrigation.

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