Sri Lanka Treasury faces a cash crunch amidst state employees pay hike

Sri Lanka Treasury faces a cash crunch amidst state employees pay hike

19 April 2019 03:28 am

Sri Lanka Treasury is grappling to find additional revenue to pay public sector salaries as 1.5 million employees going to receive a wage hike shortly, official sources said.

The country’s recurrent expenditure on public sector salaries and pensions will account for 45 percent of the government’s revenue this year.

The 2019 budget has allocated Rs.40 billion to pay the increased amount between Rs. 2500 and Rs. 10,000 from the lowest to higher grades of public sector employees with effect from January as the last tranche of Rs.10,000 salary hike granted in 2016.

Additional revenue is needed to meet the expenditure in paying Rs. 2500 allowance granted to public sector from 2019 budget starting July 1, a senior treasury official told the Business Times adding that it has become extreme difficult to find money towards this end.

The Government has to pay Rs.1 trillion of Rs.1.5 trillion recurrent expenditure this year as public sector salaries and pensions.

The Treasury has to manage the annual state expenditure of Rs.4.5 trillion with the targeted revenue of Rs. 2.4 trillion ; he said pointing out the payment of public sector salaries will become a daunting task within the next three months.

The government expenditure on public sector salaries is to further increase as plans are underway to recruit more unemployed graduates in addition to 20,000 unemployed graduates already recruited to the state sector.

Raising the present public employees aging issue, he noted that there will be dearth of first tier senior officials in the public sector institutions within the next two to three years as most of them are in retirement age or under extension of services.

The government should take a policy decision soon either to extend their services till they reach the age of 65 or 70 years or granting them contract employment without perks to prevent the sudden collapse of top level bureaucracy.

Young bureaucrats in public institutions should be given an opportunity to climb up the ladder to reach the top level without allowing them to wait in the same position for decades, he pointed out.

These young officials should be given proper training and learning placing them under study with top bureaucrats of retiring age enabling the young officers to take up the hierarchy of the bureaucracy when they reach the age of 40-45 years, he suggested.