Unused funds, revenue delays hurt Govt. performance

Unused budget allocations, delays in collecting revenue and other bottlenecks in government institutions have affected the performance of ministries and state institutions in 2016 and 2017, economic analysts said.

"There had been several instances where balances remained for a long period in the Treasury’s General Deposit Account,” one analyst said adding that the Treasury is expected to ensure this is not repeated in future.

Around 80 expenditure proposals out of 159 made in the 2017 budget are yet to be implemented although necessary finances had been allocated in the budget, an independent inquiry made by these analysts revealed.

This delay was due to bureaucratic red tape and reluctance in decision- making, they said adding that a sum of Rs. 139 billion was allocated to implement those 159 proposals.

Around 40 per cent of this money had been spent for 79 expenditure proposals. Further over 50 per cent of the capital expenditure of Rs. 610 billion allocated from the 2017 budget has not been utilised by the relevant state institutions.

Budget 2017 had proposed 325 projects to be implemented and the National Budget Department had allocated necessary funds for each ministry to implement them hassle- free. But the progress of those projects was very minimal and most of them were yet to be launched, senior finance ministry official said.

In the meantime, at least 22 proposals in the 2016 budget have not been implemented and almost all budget proposals have been amended during the committee stage budget debate in parliament displaying the dismal performance of the Finance Ministry, budget analysts said.

Reportedly less than 30 per cent of the capital expenditure has been used by ministries and some of the ongoing projects are no longer beneficial politically for the government and economically for the country, they disclosed.

Although there were common complaints against the Treasury for not allocating funds, the real situation is that the ministries, departments and other institutions do not make use of allocated funds fully and return them to the Treasury at the end of the year, a senior finance ministry official, responding to these allegations, said.

In some cases, this was due to a delay in releasing money from the Treasury and action has been taken to make realistic projections when preparing annual estimates, he disclosed.

According to the recent Public Accounts Committee (PAC) report, a sum of Rs.7300 billon which was 20 per cent of the total allocations for state institutions had been with-held by the Treasury in 2016.

Under this set up, JVP MP Vijitha Herath has made a request from the Finance Ministry to submit to PAC a detailed report on financial allocations and its utilisation by relevant state institutions during the budgets presented in last five years.

Meanwhile the Government is taking a major stride towards transforming the whole budgetary system by introducing performance based budgeting in the upcoming 2018 budget to minimise the problem of unutilisation of financial allocations of ministries and state institutions, well- informed official sources said.

Accordingly, attention has been made to reduce the expenditure specially, in recurrent nature while the capital expenditure will be more focused on expediting continuation works in ongoing projects.

Treasury officials are in the process of preparing the revenue estimates, by considering the revenue impact of various measures taken during the previous years, the impact of expenditure and concessions on revenue base in line with actual performance.

The budgetary process is to focus attention on moving away from input-based budgeting to budgeting linked to outputs and outcomes and it will be consolidated by the National Budget Department of the Treasury.

These changes are likely to include 3- year rolling targets for all government ministries, departments, institutions and schemes.