Friday Sep 20, 2024
Friday Sep 20, 2024
Saturday, 13 November 2021 00:22 - - {{hitsCtrl.values.hits}}
Finance Minister Basil Rajapaksa yesterday signalled that he was taking the crucial public sector and State-Owned Enterprises (SOEs) reforms head-on, with the Budget 2022 yesterday listing several progressive measures.
He told Parliament that there were approximately 300 SOEs and the Government had invested over Rs. 670 billion in them, apart from annually spending Rs. 75 billion to maintain those
entities.
“Most of these institutions do not provide returns on the investments made by the Government,” Basil revealed.
He also said that unproductive high expenditures and weaknesses in expenditure controls had resulted in governments often not being able to properly engage in expenditure management. As a result almost every government has increased tax rates and introduced various taxes considering the low Government revenue. Other than the government seizing a slice of the income of taxpayers, it has not resulted in any increase of the total private sector and government revenue.
“That is why national budgetary policies should be prepared in a way that will bring about a structural change that will enable the increase of total revenue of the country and thereby increase savings and investment,” Basil argued.
Government’s salaries and wages including Provincial Councils is estimated at Rs. 1 trillion in 2022 up from an estimated Rs. 887 billion in 2021.
Among proposals unveiled in the 2022 Budget were the issuance of quarterly warrants instead of the annual warrant by the Finance Minister in authorising the expenditure of Government institutions for the entire year after the passage of the annual Appropriation Bill in Parliament.
Basil said this would instil financial discipline in the utilisation of the allocations by requiring all Government institutions to prepare their plans relating to procurement, salaries and allowances, debt servicing, development, and maintenance well in advance.
Commitment control in accordance with the desired objectives and steering the procurement process accordingly are required by heads of institutions of all expenditure units.
The Finance Minister also said instead of providing recurrent expenditure, funds for capital expenditure would be made available by the Government for SOEs to enable them to generate income by undertaking public and private construction activities and providing other services.
To improve the business focus and financial discipline of SOEs that have become a drain on the national economy by way of losses or under-performance, a multi-disciplinary consultative committee will, within a specific time frame, propose a strategic way forward.
Basil said ministers, their secretaries and heads of departments should provide leadership to ensure maximum utilisation of SOE assets. Except for office buildings that are under construction at the moment, it was proposed to suspend the construction of new office premises for two years.
“It is necessary to utilise the allocated capital expenditure for development activities that directly benefit the public, while productively using the existing office facilities. I also propose to include amendments to the Appropriation Bill preventing requests for Supplementary Estimates for 2022 by all ministries,” he said.
Stressing that the public sector should also contribute to promoting national savings and reducing recurrent expenditure, Basil also proposed to reduce the fuel allowance provided to ministers and Government officers by five litres per month, cut down the telephone expenses by 25% and reduce the provisions for electricity by 10% in order to encourage the shift to electricity generated through solar power. Secretaries to ministries and heads of institutions are also required to take action to deploy those concentrated in urban areas into the peripheries.
To ensure the public service becomes more efficient, Budget 2022 requires every Government institution to come up with a ‘Client Charter’ and public display of the same.
As part of ensuring client-centric public service via digitisation, Basil said an in addition to the allocation of Rs. 3,500 million a further Rs.500 million will be provided.
Basil also proposed to introduce an appraisal system for the public service based on the satisfaction of clients and Key Performance Indicators (KPI) and thereby motivate them and enhance the efficiency and productivity of the public service to an optimal level.
The Budget 2022 also focused on salary anomalies in the public sector. Basil said it was the responsibility of the National Pay Commission to introduce amendments in relation to salaries and pensions of the public service, eliminate anomalies, and to establish salary structures.
“We must understand that unwanted salary scales and irregularities within the salary structures occur when such institutional structures are disregarded. Hence, I propose to establish a new salary structure for the public service by removing the anomalies in public service salaries with effect from the next financial year. Salary administrative procedures will be simplified by granting the salary increment on the due date without the need of appraisal reports for all Government employees, except for those who are subject to disciplinary action,” the Finance Minister added.
He also announced that the retirement age of public service would be increased to 65 years to strengthen the labour force. The basis for this proposal according to Basil is the increase in life expectancy and the elderly population.
“Sri Lanka is almost on par with developed countries as per the quality of life indices. As a result, elders have the capacity to remain in active service for much longer than before. It is very important to productively utilise their experience and skill set,” Basil added.
He also proposed a contributory pension scheme for senior citizens who do not currently receive pensions. “As per population projections, there is a need for a unique social safety program for safeguarding the rapidly-ageing population,” he said, adding the Government would contribute to starting this initiative.
