By Chandra Jayaratne –
In terms of the section 16 (1) of the Fiscal Management (Responsibility) Act No. 2 of 2003 as amended, “The Secretary to the Ministry of the Minister, shall within three weeks of the publication our Proclamation or Order requiring the holding of a general election for the election of members of Parliament, cause to be released to the public a Pre-election Budgetary Position Report containing information on the fiscal position of the country”.
The citizens eagerly await such release; and trust that the media will give it top priority publicity; and arrange analytical and professional talk shows around its disclosures; whilst the academia, business and activists will critique it and signal the derivative socio & macro-economic consequences in the short to medium term.
Section 17 (1) of the Fiscal Management (Responsibility) Act No. 2 of 2003 as amended, specifies that “Every Pre-election Budgetary Position Report shall contain the following information for the current financial year :—
(a) estimates of revenue and expenditure;
(b) estimates of the Government borrowings;
(c) the economic and other assumptions that have been used in preparing such estimates;
(d) a statement of the risks, quantified where practicable, that may have material effect on the fiscal position, such as —
(i) contingent liabilities including guarantees and indemnities given by the Government under any Act;
(ii) publicly announced proposals for spending by the Government that have not been included in the estimates referred to in paragraph (a); and
(iii) Government negotiations in progress and not finalized; and
(e) such other information as may be necessary to reflect fairly the financial position of the Government, as at the date of the said Report.
Whereas, Section 17 (2) specifies that “The information in the Pre-election Budgetary Position Report, shall, subject to the provisions of subsection (3) take into account to the fullest possible extent any decision of the Government having a material effect on the fiscal position, and
Section 17 (3) Nothing in this section shall be read or construed as requiring the inclusion in a Pre-election Budgetary Position Report, of any information, the disclosure of which would, in the opinion of the Minister given in writing —
(a) be prejudicial to national security;
(b) compromise Sri Lanka in a material way in negotiation, litigation or commercial activity.
(4) Where information on any matter required to be included in a Pre-election Budgetary Position Report remains unchanged from the information on that matter included in a previous Budget Economic and Fiscal Position Report or a Mid-Year Budget Fiscal Position Report, the Pre-election Budgetary Position Report shall state that such information remains unchanged from the information included in either or both of these previous reports.
It is important to recognize that Section 18 of the aforesaid Act stipulates that “1 For the purpose of enabling the Secretary to prepare a Pre-Election Budgetary Position Report under section 16, the Minister shall, within one week of the publication of the Proclamation or Order requiring the holding of a General Election for the election of Members of Parliament, disclose to the Secretary, details of all Government decisions and other circumstances —
(a) within the knowledge of the Minister ; and
(b) which have, or could have, material fiscal or economic implications; and
further that Section 19 clarifies that “Every Pre-election Budgetary Position Report shall be accompanied by —
(a) statement signed by the Minister to the effect that the Minister has complied with the requirements of section 18 ;
(b) a statement by the Secretary to the effect that the information in the report, to the fullest extent possible —
(i) reflects the best professional judgement of the officer’s of the Ministry of the Minister ;
(ii) takes into account all economic and fiscal information available to the Ministry;
(iii) incorporates the fiscal implications of the Government decisions and circumstances disclosed to him or her by the Minister under section 18.
Arising from the Central Bank’s Policy Announcement on 5th March 2020, citizens also await the Pre-election Budgetary Position Report, to further clarify the 2020 financial year related position of the Ministry of Finance on the following:
1. Cumulative impact of last year’s Easter Sunday attacks, Presidential Elections and Current years General Elections and COVID 19 crisis, on the Growth, Fiscal Deficit, Inflation and Exchange Rates, Foreign Direct Investments and External Borrowings
2. 2020 revised Targets for Growth, Per Capita GDP, Fiscal Deficit, Inflation and Exchange Rate targets, Foreign Direct Investments and Savings and Investments Gap
3. Outcomes of Government’s discussions with China Development Bank and the relevant term sheet agreed upon to obtain a Loan up to USD 2 billion
4. Expected outcomes from initiatives to secure external debt moratorium on bi-lateral and multi-lateral debt obligations
5. Whether remaining tranche of the IMF funding and MCC Grant are likely to be received and what additional IMF and multilateral and bi-lateral assistance, aid and grants are expected
6. Year 2020 planned for further external borrowing within and outside the previously approved borrowing limits, showing the expected term sheets and timing
7. Plans for meeting external debt service obligations of 2020
8. Expected changes in international risk ratings of Sri Lanka in 2020
9. Expected Foreign Direct Investments
10. Expected Worker remittances
11. Estimated tourist arrivals and expected revenue
12. Assumptions on Energy prices and expected outflows on energy supplies
13. Expected State Sector and Private Sector Credit Growth
14. Expected sector performances
15. Whether the assumptions used in developing the 2020 report has taken cognizance of
* Other elections due in 2020 related costs and likely economic slowdown
* Availability of uninterrupted power supplies
* Ethno- religious harmony driving the economy
* GSP + benefits remaining to be available
* Contingencies on environmental related calamities and natural disasters
* Stability of the Banking and Finance and Plantations Sectors