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Government decides to  restrict state expenses to tackle fiscal crisis   

The Government has decided to strictly restrict state expenses owing to the grave financial crisis the country’s treasury was facing, the finance ministry said. 

The Secretary to the Finance Ministry on Tuesday (April 26) issued a circular to control the expenditures in the public service amidst dwindling revenue and sky rocketing of 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 the most responsible and economical manner has become a foremost priority than ever before. 

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

Finance Ministry has already  informed the Cabinet that state revenue has decreased drastically as the economy faces a severe crisis. 

The revenue was not sufficient even for recurrent expenditure. The government has also decided to suspend all recruitment for state service”

Given the perilous state of the economy, the need to restrict and reduce state expenditure is mandatory. That it should have been done several decades ago by successive governments is to state the obvious. 

The salary cost of government employees and pensions is estimated to account for 80 per cent of government revenue. 

This expenditure at present is a fixed cost unless the government takes a bold step to enforce a pay cut on government servants. Although it might sound outrageous, many establishments struggling to survive have done it in the private sector. 

No doubt such a measure will be unpopular, particularly when the cost of living is increasing. For the government it is undoubtedly “The Hobson’s choice finance ministry claimed.

The ministry will examine every expense item and determine whether it belonged to the category of “Absolutely Necessary.” Any expenditure outside that definition will be eliminated.

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