Govt seeks Rs. 10,600 million Supplementary Estimate

Uditha KUMARASINGHE and Irangika RANGE

The Government yesterday presented a paper seeking Parliament approval for 9 Supplementary Estimates for a sum of Rs. 10,600 million towards payment of interest and loan floatation expenses saying Government revenue anticipated since January 2009 up to now has dropped by Rs. 132 billion.

In the explanation of the proposal for the Supplementary Estimate, the Government said it was difficult to control expenditure corresponding to the shortfall in revenue owing to an increase in defence expenditure during the first five months of the year, giving priority for tasks such as providing relief to Internally Displaced Persons, implementation of resettlement programs and inability to defer payments such as salaries, pensions, fertilizer subsidies, Samurdhi and loan repayments. Therefore, with the implementation of Budget - 2009, the overdraft balances of the two State banks that prevailed at the beginning of the year, have been gradually increasing during the year.

Accordingly the banks have charged and debited the Deputy Secretary to the Treasury (DST) account a sum of Rs. 5,145 million as overdraft interest for the period ended August 2009. Having a bank overdraft and the rate of interest prevailed at the time of preparation of draft estimates been taken into consideration, a sum of Rs. 3,500 million had been provided in the budget estimates for the year 2009, to pay interest out of domestic funds.

In the prevailing situation, it will be difficult to bring down the bank overdrafts since the anticipated tax revenue will not be increased considerably during the next few months of the year.

According to the computation which was based on the current overdraft balances, and prevailing rates of interest, Rs. 9,400 million will have to be paid to two State banks in settlement of interest on overdraft.

In addition, expenditure on payment of insurance premium and management fees had to be incurred in respect of the development projects such as the construction of the Colombo-Katunayake Expressway, construction of the Hambantota port, bunkering facilities and tank farm being implemented with financial assistance provided by the Exim Bank of China. Because of these expenditures, an additional provision of Rs. 4,700 million is required whereas provisions of Rs. 554 million has been made in the Budget estimates for 2009.

Therefore, it is expected to provide a sum of Rs. 10,600 million to meet expenditure on payment of interest and loan floatation expenses by way of this Supplementary Estimate.