• President says Rs. 1 t salaries and wages in public sector pose challenge to allocate resources for developmental purpose
• State bearing cost of 420 Govt. institutions and enterprises; loss of major 52 SOEs is Rs. 966 b
• Daily transfer of all revenue and receipt collections by ministries and departments directly to the General Treasury with effect from January 2023
• Moots setting up National Operations Centre for tracking implementation issues of all development interventions
• President assures considerable relief can be given to public servants and pensioners at the latter part of year 2023
• Voluntary retirement scheme for select personnel in armed forces after 18 years of service
• Mandatory for all Government payments to be made electronically from March 2023

The Government is to appoint a Presidential Commission to achieve reforms in the public sector.

The move was announced by President and Finance Minister Ranil Wickremesinghe in his presentation of the 2023 Budget yesterday in Parliament.

The President revealed that there are 1.45 million public servants currently working in the various Government agencies, hence, a large portion of the Government revenue has to be spent on their salaries and wages. It has become a challenge to allocate resources for other public purposes, including developmental purposes.

Wickremesinghe said the proposed Presidential Commission will review all the aspects of public service in line with current requirements and make recommendations including necessary reforms.

In 2023 Budget Salaries and wages account for Rs. 1 trillion apart from Rs. 375 billion for pensions.

“I am well aware that public servants and pensioners are in a difficult situation to manage their expenditure on monthly pay due to increase in transport cost, electricity and water tariffs and high food inflation,” the President said, but added that the Government revenue will be increased in about a year due to the economic recovery as a result of the measures taken.  

“At the same time, it will be possible to implement the proposed reforms to make the public sector to optimum level. Hence, I believe that considerable relief can be given to the public servants and pensioners at the latter part of the year 2023,” the President assured.

However he revealed that at present the State is bearing the cost of 420 Government institutions and enterprises. The annual loss of these major 52 SOEs is Rs. 966 billion in the first half of 2022.

 “I hope to table these lists of institutions in Parliament in two or three days. Has the country benefited from these institutions for many years? Or has the country suffered,” the President queried during his Budget speech.

He also proposed to stop those SOEs paying PAYE/APIT tax liability of its employees from 1 January 2023.

Another proposal is the daily transfer of all revenue and receipt collections by Ministries and Departments, directly to the General Treasury with effect from January 2023 to reduce the substantial cost of finance due to delay in remitting revenue collection to the Consolidated Fund.

The President referred to the Interim Budget introducing several proposals, including the introduction of new Public Financial Management (PFM) Act incorporating binding fiscal rules and appointment of an Inspector General to keep the expenditures in check, which will be implemented in the near future. In addition, a number of circular instructions have already been issued to ensure strict control of Government expenditure.

Yesterday he proposed the establishment of a National Operations Centre (NOC) under the Department of Project Management and Monitoring of the Ministry of Finance for tracking implementation issues of all development interventions of the country and resolving emerging issues on a priority basis. 

In support of the efficient and effective functionality of the NOC, it is also proposed to establish a comprehensive Web-based National Development Information System within the NOC as the supportive tool for obtaining updated data and information for decision-making. 

President also announced a proposal to make it mandatory for all Government payments to be made electronically (online) with effect from 1 March 2024 including cash grants to the respective recipients as well as the payments for obtaining services from various Government agencies by the public. All Government agencies should also take action to prepare a program enabling online payments for those services and introduce the necessary legal changes as well.

He also announced a voluntary retirement scheme for select personnel in armed forces after 18 years of service. President said measures will be taken to provide them with necessary training, enabling them to engage in productive economic activities. Defence expenditure for 2023 is estimated Rs. 500 billion or 10% of Government expenditure.

Budget 2023 moots new institutions