The Treasury has issued a stern warning to chief accounting officers within the government, emphasizing their “personal liability” for any unanticipated expenditures in the upcoming election year of 2024. With the mandate to achieve a primary surplus of 0.8 per cent of GDP, the directive underscores the importance of adhering to fiscal targets set under the International Monetary Fund program.
In a comprehensive circular addressed to key government officials, Treasury Secretary Mahinda Siriwardana outlines the prioritization of expenditures for the year. Settlement of outstanding bills takes precedence, followed by the completion of foreign-funded projects in their final stages, high-priority domestic projects, and expenses related to pre-approved budget estimates for new commitments.
The circular emphasizes the necessity of managing expenditures within the confines of the 2024 budget estimates, with a forthcoming update featuring enhanced expenditure control measures. The importance of maintaining fiscal discipline and prudent financial management is stressed, given the target of achieving a primary surplus aligned with fiscal goals.
Officials are cautioned against seeking supplementary funds beyond allocated provisions, with a strong emphasis on managing expenses through prioritization. The circular highlights the need for verifying imprest availability before making commitments to prevent complications for the government, contractors, and service providers due to unsettled liabilities.
Capital expenditure, particularly funds allocated for physical assets, faces reductions, requiring Department of Treasury Operations (DTO) concurrence for commitments exceeding Rs. 500 million or with a total cost surpassing Rs. 1 billion payable over multiple years. The DTO’s approval process is outlined based on a waiting list, considering financial circumstances and priorities.
Amid Sri Lanka’s commitment to achieving a central government primary surplus of 2.3 per cent of GDP by the following year, deemed an “ambitious” target by the IMF, the circular reflects the unprecedented fiscal adjustments necessitated by the country’s low revenue-to-GDP ratio. The IMF acknowledges the challenges but deems them essential following the previous fiscal reforms’ reversal.
Source: based on a Sunday Times story