New government gears to tackle cash flow shortfalls

Continued from page 7

Tools or safety nets that governments can use to manage cash flow and provide liquidity include increased issuance of short-term treasury bills (T-bills) in financial markets, contingency credit/ repo lines from commercial banks, and overdraft facilities from the Central Bank, he added.

During the first four months of this year, cash inflows to the Treasury by way of revenue and other receipts amounted to Rs. 457.7 billion as against the estimate of Rs. 755 billion which was a decline of 34.3 per cent, compared to Rs. 696.8 billion in the same period of 2019, Finance Ministry data showed.

Another sum of Rs.228.6 billion has been credited to the Treasury during the past two months making a total cash inflow of Rs.686.3 in the first half of this year, the data revealed.

This was mainly due to the lag effect of revision of taxes to the economy with the outbreak of the COVID-19 pandemic in mid-March 2020.

According to Finance Ministry data, the cash outflows including both recurrent and public investment amounted to Rs. 897.9 billion in the first four months of 2020 as against the estimate of Rs. 1,126.0 billion which was a 6.8 per cent decline compared to Rs. 963.5 billion in the same period of 2019.

Total cash deficit as at end April 2020 expanded by 65.1 per cent to Rs. 440.2 billion, compared to Rs. 266.7 billion as at end of April 2019.

The expansion of cash deficit was mainly due to the combined effect of the decline in cash inflows to the Treasury by 34.3 per cent and the increase in operational expenditure by 10.6 per cent to Rs. 800.2 billion from Rs. 723.7 billion.

This has resulted in the expansion of closing negative cash and bank balance to Rs. 304.4 billion as at end of April 2020, compared to Rs. 130.2 billion as at end April 2019, the senior Treasury official said. (BS)