Basil firm on strict austerity measures

• Says no new recruitments to public sector; no new vehicle imports
• Calls for self-sufficiency in liquid milk to cut down on milk powder imports
• Says govt. in no position to loosen austerity measures announced in Budget 2022 due to tight fiscal space
• SL’s foreign reserves fell to US$ 1.6bn by end-Nov., sufficient for just one month of imports 

Finance Minister Basil Rajapaksa yesterday said the government wouldn’t soften the strict austerity measures announced in the Budget 2022, which includes a freeze on new public sector recruitments, and stressed that the government is in no position to loosen up these measures given the narrowing fiscal space.
“Under any circumstance, we cannot to grant additional funds beyond the budget. We cannot allow new vehicles or new cadre to the public sector. There are already so many employed in the public sector. In some Divisional Secretariat offices, there are more officials outnumbering the chairs,” the Finance Minister stressed.
He said this participating in a programme to promote self-sufficiency in liquid milk, organised by the State Ministry of Livestock, Farm Promotion and Dairy and Egg Related Industries. 
Addressing the event, Rajapaksa cited the need for Sri Lanka to produce its dairy requirement to cut the importation of milk powder using valuable foreign exchange, which could be used to import fuel, medicine etc. 
Explaining the main reasons for the dire foreign exchange situation of the country, Rajapksa pointed out that the number of migrant workers from Sri Lanka had dipped to 53, 000 last year compared to an average of 230, 000 per annum before owing to the pandemic.
Meanwhile, he promised that Sri Lankans wouldn’t even hear the word “famine” despite the current economic difficulties faced by the country. He also said the government is determined to maintain its policy on organic farming while allowing the private sector to import chemical fertiliser as per the requirement. 
Last month, Rajapaksa delivering his inaugural budget speech in Parliament emphasised that the Ministers wouldn’t be allowed to request for supplementary spending above the allocation made in the budget 2022.
The recurrent expenditure is estimated to reach Rs.2.99 trillion in 2022 from the estimated Rs.2.82 trillion this year.

The expenditure on salaries and wages is estimated to top Rs. 1 trillion mark next year from the estimated Rs.887 billion this year, while the expenditure on subsidies and transfers is estimated to come down to Rs.663 billion next year from estimated Rs.677 billion this year.
Meanwhile, the government expects to nearly double public investments to Rs.931 billion next year from an estimated Rs.582 billion this year.
If the Budget 2022 is approved in its final reading, the Finance Minister opined that it would enable to transform the country. In particular, he noted that budget 2022 consists of many proposals that are targeted to preserve foreign exchange outflows.
Meanwhile, as of November-end Sri Lanka’s foreign exchange reserves fell to US$ 1.6 billion, merely sufficient for one month of imports. Rajapaksa said the decline in reserves was due to repayment of foreign loans and importation of necessary items such as fuel, medicine and food. 
Sri Lanka has another US$ 500 million sovereign bond payment to settle on January 18, 2022, which could most likely be at the expense of foreign reserves, unless the government finalises the proposed currency swap arrangement with India.