Government allocates over half of expenditure for debt servicing this year

• State sector worker salaries and pensions to take up 70% of re-current expenditure 
• Capital expenditure to rise by 25% this year 
• Rs 77 billion allocated for rural economy 

The government has allocated over 50 percent of total expenditure for debt servicing in the Appropriation Bill 2019, amounting to Rs. 2.23 trillion, the highest ever debt servicing value in the country’s history, the Finance Ministry stated.

Accordingly, Rs 1.2 trillion and Rs. 930 million has been allocated for domestic debt servicing and foreign debt servicing this year.

The government estimated that the total expenditure will expand by 14.2 percent to Rs. 4.55 trillion this year, targeting a budget deficit of 4.8 percent of GDP and a primary surplus of 1 percent of GDP.

The Ministry of Finance and Mass Media, Mangala Samaraweera yesterday submitted the Appropriation Bill 2019 to the parliament. 

According to the Bill, the government has allocated Rs 1.42 trillion for recurrent expenditures and over Rs. 1 trillion or 70 percent of recurrent expenditures to be spent on salaries and pensions of State employees. 

The government also estimates to spend Rs. 50 billion “Samurdhi” scheme and Rs. 85 billion for various welfare and subsidy programmes. Meanwhile, the government revenue is estimated to rise to Rs. 2.39 trillion this year, representing 15 percent of GDP and the government plans to borrow Rs. 2.16 trillion to finance the budget deficit through local and foreign financing sources. 

The government’s capital expenditure is estimated to increase by 25.4 percent to Rs. 838 billion compared with last year.

The highest allocations in the capital expenditure account are made for roads, education, irrigation, water, health and housing developments.The government in particular has allocated Rs. 77 billion for development activities in the rural economy which includes Rs. 48 billion for “Gamperaliya” rapid rural development programme, Rs. 14 billion for rural infrastructure development and Rs 10 billion for “Pibidunu Polonnaruwa” programme. 

The Ministry of Defence has secured the highest budget allocation of Rs. 393 billion which includes Rs. 356 billion for recurrent expenditure and Rs. 37 billion for capital expenditures. 

The Ministry of Highways and Road Development has got the highest capital expenditure of Rs. 175 billion with Rs. 176 billion overall allocations for the ministry.
In addition, the capital expenditure allocation for Ministry of Economic National Affairs and Economic Policies rose to Rs. 82 billion from Rs. 23 billion in last year’s budget as the Ministry would implement several infrastructure development projects including “Gamperaliya”.

The budget allocation for Ministry of Education and the Ministry of Health, Nutrition and Indigenous Medicine has remained unchanged at 2018 levels of Rs. 187 billion and Rs. 105 billion respectively. 

The government also allocated Rs. 4 billion and Rs. 5 billion to the non-Cabinet Ministry of Digital Infrastructure and Information Technology and to the non-Cabinet Ministry of Ministry of Science, Technology and Research while Rs. 185 million was allocated to the non-Cabinet Ministry of Public Distribution and Economic Reforms.

The 2019 budget proposal is scheduled to be presented to the Parliament for second reading on March 5th. The third reading debate will be held on March 13 and the final vote will take place on April 4th.