Sri Lanka Government Targets Economic Growth Of 8% Next Three Years
Sri Lanka plans to achieve an economic growth beyond 8 percent in the next three years while keeping the budget deficit reduced to 5.5 percent of Gross National Production (GDP).
Sri Lanka’s Finance Minister has informed the Cabinet that the government plans to prepare the Budget for the year 2016 to achieve those economic goals.
In addition, the 2016 budget will aim to maintain the state investment level between 6 – 8percent of the GDP and encourage the private sector investment between 22 – 24percent of the GDP to maintain a total investment level of the economy at 30 percent of the GDP.
According to the Minister, the Ministry of Finance is in the process of formulation of the annual national budget for 2016 within the Medium Term Budgetary Framework for 2016-2018 in consultation with the relevant line Ministries.
Since it has been a practice for decades to settle a significant amount of carried forward liabilities at the following budget year, the targets of development programs have not been reached on time and as a result, allocated resources for the year are not sufficient to meet the requirement of the budget year.
Also with these developments, cash flow management of the Treasury has become extremely difficult. Therefore, the Ministry has decided to introduce Zero Based Budgeting method as a tool of budget preparation and implementation from 2016 onwards. With this method it is expected to manage the public expenditure prudently. Accordingly, the Department of National Budget will issue a Budget Call 2016 including guidelines of preparation of this year’s budget within the targets of Medium Term Budgetary Framework.
Further, all spending agencies are requested to prepare their estimate for 2016 under the Medium Term Budgetary Framework by using the zero based budgeting method in which reviewing missions, objectives and functions of Ministries/ departments/ institutions and assessing the relevance of all activities being carried out so far, in the current context are considered integral elements.
An Annual Budget will be prepared with a starting point of “0” and the expenditure will be limited to approve budgetary provisions so that any issue associated with carry forward expenditure should not arise. Resource allocation to the Ministries is based on the sectoral ceilings.
Accordingly, the consultation process with the spending agencies will commence in the 1st week of August 2015.