Ministries, departments ordered to slash expenses by 10 percent

The cash-strapped Treasury has ordered ministries and departments to slash their expenses by 10 percent in the next three months.

In a circular, Treasury Secretary R. H. S. Samaratunga has ordered state institutions to stop non-essential projects and projects which have not begun, curtail expenses on purchase of furniture and stop purchase of vehicles during the period.

Ministries and departments have also been told to put on hold any proposed agreements.

In addition, state institutions have been told to curtail foreign trips of officials and stop making donations for religious and other events.

The circular has been issued in addition to the previous directive issued soon after the Easter Sunday attacks. The earlier directive ordered the state institutions to cut down expenses by 15 percent. The directive was given as the government was unable to achieve its economic targets in view of the attacks and the limitation in obtaining loans.

A senior Treasury official said one of the reasons for the cuts is due to the additional amounts required to pay state sector salaries by January next year. An estimated additional Rs 120 billion is required for the payments of the revised salaries.

The move comes amidst plans by the Treasury to look into other areas where there is a loss of revenue. Imposing of new taxes in the next year’s budget is under consideration.

Also under study is the loss of revenue from the PAYE tax of some 22 institutions, including state banks. The tax is being paid by the institutions, and not the employees.