Consolidated Fund to help additional state spending

The Government is set to withdraw a sum of Rs. 367 billion from the Consolidated Fund under the direction of President Gotabaya Rajapaksa to settle outstanding bills of the previous government and to ease the economic burden of the people during the upcoming Sinhala and Tamil New Year.

This situation has arisen following the government’s recent withdrawal of the amendment to the Vote on Account (VOA) with a limited budget of Rs.1470 billion, and no other recourse to raise funds other than dipping into the Consolidated Fund.

Without a proper budget, Treasury has no powers to spend money, raise new taxes or borrow money to meet any shortfall in the revenue as it has to stick to the VOA allocations.

Under these circumstances President Rajapaksa will have to use his constitutional power to bypass Parliament to fund government expenses accessing the consolidated fund, a senior official told the Business Times.

Taxes, imposts ( similar to taxes), rates, duties, and all other revenues and receipts paid to the state, if they are not already directed to any particular activity, generally accrues to the Consolidated Fund which is the main bank account of the state.

State corporations, revenue collecting state agencies and state enterprises are the other contributors to the fund.

Parliament may decide the purposes for which funds may be drawn from the Consolidated Fund.

It will generally include the payment of interest on the public debt, sinking fund payments, and expenses in relation to the Consolidated Fund, official sources said.

The Treasury expects a cash inflow of over Rs 700 billion in the first quarter to the Consolidated Fund will be able to meet the additional cash requirement of over Rs. 300 billion, a senior official said.

A sum of Rs. 757.6 billion has been set aside for the maintenance of public services in the first four months of 2020, and Rs. 711.8 billion has been allocated for expenditure already fixed by various acts while Rs. 5 billion is allocated for government advance accounts.

Increased collection of social security contribution from public sector employees due to the basic salary hike, the rise in sales and charges and the inclusion of revenue from the United Nations Peace Keeping Operations into the Consolidated Fund were positively attributed to increase in non- tax revenue, he revealed.