Sri Lanka’s public sector vehicle expense rises dramatically

At a time when the public finances of the government is facing challenges on many fronts, Sri Lanka’s capital expenditure for the procurement of vehicles for public sector institutions has increased dramatically during the past two years, an official report revealed.

According to available official data, while the outlay for public vehicle acquisition was about Rs.1.4 billion a year in 2015 and 2016, it has increased to over Rs.16 billion in 2017 and Rs.9 billion in 2018, an increase of 12 and 9 times, respectively.

The 2019 budget allocation for this purpose has shot up to Rs.17.43 billion.

This was despite the increase in expenditure on the Operational Leasing Method as well; a senior Finance Ministry official said adding that it constituted a worrying increase in what was allocated to the acquisition of vehicles.

In the aftermath of the recent terror attack, the Treasury is now saddled with additional defence expenditure amidst low growth, debt increases, high interest costs and lack of budgetary space for developmental activities.

Therefore, improved informational standards and due diligence along with a necessary cut in public expenditure including expenses for public vehicle procurement have become the order of the day, he added.

However when the Committee on Public Finance (COPF) noted this anomaly of extra spending on public vehicles and asked for a response, the Ministry of Finance explained that in 2017 and 2018 a “large number of utility vehicles was procured, mainly for the defence and railway sectors.”

The handling of costs was affected by the exemption and reinstatement of excise duties on vehicles procured through the Consolidated Fund, the Ministry said.

These explanations themselves helped to illustrate one of the entrenched problems of budget information provided to Parliament, COPF said.

According to Finance Ministry data, in 2017 a sum of Rs.1.23 billion was spent to purchase ambulances, Rs.4.25 billion for boats and vessels for the defence sector, Rs.7.6 billion for locomotives, Rs.100 million for Police and STF vehicles, Rs.615 million for water bowsers and boats and Rs. 2.58 billion for other public vehicles.

In 2018 the Treasury has spent Rs.2.67 billion on navy vehicles, Rs.6.1 billion for locomotives/compartments, Rs.200 million for health sector vehicles, Rs.53 million for Police and STF vehicles and Rs.28 million for a Parliament bus.

The COPF has directed the Ministry of Finance to exercise due diligence in ensuring that the summary estimates are broken-down/aggregated in a more intelligible manner, and reported/aggregated in sensible categories that enable Parliament to make better decisions.

(Bandula)