Sri Lanka current administration is breaking the law in withholding information that should be filed in parliament under a fiscal responsibility law, which should be corrected from this year, a legislator has said.
“By 30th June they are bound to present to parliament the estimates and actual income, expenditure cash flows and loans obtained,” United National Party legislator Harsha de Silva, an economist told reporters.
“All these years they have not been doing so, in violation of the constitution and the laws of this country.”
In June and November the finance ministry is expected to reveal the information in parliament, usually up to April in the first interim report.
In past reports the estimates and actual have been presented in respect of cash flows but not on expenditure, and income, debt he said.
“So we want to warn the government ahead of time, there is time one more month to please ensure that they abide by the law table in parliament all the relevant material,” de Silva said.
“If they continue to break the law then we will also have to take different action as opposed to the action we have been taking in the past to deal with the ongoing law breaking situation.”
De Silva did not elaborate on the action the opposition will take.
From last year Sri Lanka has been facing a fiscal crunch with weak revenues amid an economic slowdown.
Fiscal data for the first month or two of the year which are usually published by the Central Bank by April has not been forthcoming this year.
Sri Lanka has in the past delayed ‘bad’ news including foreign reserves, foreign exchange intervention data perhaps until better data is available.
There has also been a debate about overall deficit data reporting with key spending items such as road building now being financed with bank credit to a road development agency outside the central government budget.
A defence hospital costing about 0.5 percent of gross domestic product is also being built with bank credit. Subsidies, which should be financed by the budget especially in energy are also being given through state owned enterprises with bank credit.
Last year the International Monetary Fund estimated the overall public sector deficit including state enterprises to be 8.6 percent of GDP compared to a reported overall (central government) budget deficit of 6.4 percent.
The effects of such action however is seen in high bank interest rates and crowded out private borrowings for investment.
In the first three months of the year state and SOE borrowings from the banking system rose to a record 178 billion rupees or about 2.7 percent of GDP compared to a projected annual budget deficit target of 5.8 percent of GDP.
– May 27, 2013 (LBO)