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By Charumini de Silva
With the Government grappling to manage its finances, the Cabinet of Ministers at its meeting on Monday approved delaying the monthly salaries of staff grade officers by a few days from the due date.
“For the first time in Sri Lanka’s history, the Cabinet has decided to delay the State-sector employees’ salaries and pension, given the dire financial situation at the Government coffers. We have now reached a level where there is no financial buffer or option left to overcome this situation; till the new tax policies to boost income realises in coming months,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said at the post-Cabinet meeting media briefing yesterday.
As per the Government’s decision, salaries of non-executive grades will be paid on the due date, whilst the executive level State-employees will be delayed by a short time.
“Previously, the recurrent expenses were always managed through borrowing and by printing money. Today, as a result of such poor financial management policies of successive Governments, the Treasury is unable to manage the essential expenses to run the country.
“Sri Lanka could not manage its recurrent expenditure after the economy was opened in 1977. Though Sri Lanka gained political independence 75 years ago, it failed to achieve economic independence,” he stressed.
Gunawardena however, assured that the salaries of non-executive grades will be paid as soon as the Government finds an alternative or make arrangements.
“As per Treasury Secretary, in December the Government collected through taxes and non-taxes a sum of Rs. 141 billion and from that we have to pay Rs. 88 billion for salaries, Rs. 30 billion for pension and Samurdhi welfare, Rs. 6.5 billion for fertiliser, Rs. 8.7 billion for medicine, and Rs. 154 billion for other administration costs including transport.
“In addition, there was an interest payment of Rs. 182 billion for State loans, which was managed by printing money. Against this backdrop, the Government has no option left and the Cabinet took this decision to delay monthly salaries of staff grade officers by a few days from the due date,” he said.
Cabinet Co-Spokesman also revealed that the State-sector salaries and pensions have increased by 633% from 2000 to 2021 as a result of the large number of recruitments by successive Governments. At present, there are over 1.5 million Government employees.
“Salaries and pensions in 2000 accounted for Rs. 152 billion, in 2005 it was Rs. 185 billion, and in 2010 it was Rs. 478 billion. Up until 2010, successive Governments were able to keep the salaries and pensions expenditure below Rs. 500 billion.
“However, in 2015 this increased to Rs. 716, in 2020 it crossed Rs. 1,000 billion to Rs. 1,050 and in 2021 it was Rs. 1,115. These are essential recurrent expenditures and there is no way we can avoid or cut them in an environment where the Government has taken a decision not to print money,” he added.
Gunawardena asserted that if the Government policy not to print money is violated to solve the payment of salaries and pensions, it would lead to worse situation.
“Other than for extremely important expenses, the Government has decided not to print money. It has also been recommended by the International Monetary Fund since 2003, and as a result, the then administration introduced Financial Management (Responsibility) too.
“Thus, the IMF is also on alert as to what measures Government will resort to overcome this financial crisis,” he explained, adding that the Government will be able to manage the situation with the boost in tax income after March.
