Budget Black Hole: Billions Lost in Transparency

“There is confusion over who is responsible for the implementation of what; which continues to be an issue”-Sureni Weeratunga, Research Analyst at International Monetary Fund

 “89% of funds allocated to the budget proposal shows no progress,” pointed out Verité Research; providing a strategic analysis of Asia in economics, politics, law and media. The budget speech of 2023 had an allocation of LKR 49.3 billion. But LKR 43.9 billion was allocated to this proposal, in which the government provided no information on the progress.

The Verité Research finds out that in 2022 the same incident took place. 93% of the funds were allocated to the proposals and the progress was unknown. At present, out of 25 budget proposals only 18 (72%) are assessable with the available information. (Note: not the amount allocated) Moreover, 7 out of 24 (29%) have been evaluated using the current information. It was pointed out that 52% of promises are not fully implemented.

The below are based on the top 25 expenditure proposals to be tracked from the budget speech.

The proposal of social protection

A senior Research Analyst at Verité Research, and a prior Research Analyst at the International Monetary Fund

(IMF) Sureni Weeratunga said that the highest value proposal undisclosed is on social protection. The allowance that was paid to the beneficiaries of Samurdhi, Elderly, differently-abled and kidney patients was proposed to increase. But progress is undisclosed. Moreover, she stated that there are transparency issues around social spending extending beyond the budget speech.

According to the IMF, first review, in December 2023, Social spending was 0.1% of the Gross Domestic Product (GDP) (LKR 35 Bn) in March 2023. Social spending of 0.25% of GDP (LKR 70 Bn) in June 2023. Spending of 0.6% of GDP (LKR 187 Bn) In December 2023. Spending of 0.4% of GDP (LKR 120 Bn) On September 2023. The above-mentioned status of the commitments is successfully met. Compared to 2023, Weeratunga compared the level of transparency, starting from March 2024, spending LKR 50Bn on the status of unknown. Social spending on June and September 2024, LKR 100 Bn and LKR 150Bn are still on pending status.

Weeratunga added that, according to the Right to Information Act No.16 ministers are to bi-annually publish a report containing information on the budget allocated, indicating the particulars of all plans, proposed expenditures and reports on the funds made. This report is required to be published in the official language and be made available in electronic form on Ministry websites. “As a percentage we have tracked the disclosure of information online in the past few years. 2021- 23%, 2022- 4%, 2023- 4%,” underscored Weeratunga. Budget transparency has improved since 2021- 53%, 2022 (Interim Budget)-29%, 2023- 72%.
“The only website that delivers proactive disclosure of information online is the Ministry of Fishery,” said Weeratunga.

Is the government doing what it is saying?

According to the number of proposals tracked, the fulfilled number of proposals is 16%, which can be also said for proposals that are fully implemented. Under non-implemented proposals, substantial-12%, partial-16%, and poor-24 %. 4% of the proposals were broken, 20% were undisclosed, and 8% were unclaimed. “There is confusion over who is responsible for the implementation of what; which continues to be an issue,” said Weeratunga. She added that the implementing agency (IA) identified by the National Budget Department (NDB) or Fiscal Policy Department (FPD) denied its jurisdiction over the budget promise.  

“The promise given to improve child nutrition was broken. This proposal consists of LKR500 Million to improve Child Nutrition,” said Weeratunga. Amidst the current economic crisis, an increase in acute malnutrition among children under 5 years of age is observed. This fund was granted to strengthen the existing nutrition supplemental programs to reduce health problems arising as a consequence thereof. Moreover, she explained that Rs.15000/- per child per month for six months is to be provided as financial support. She highlighted that 5640 children were identified with severe Acute Malnutrition in selected six districts. However, The Ministry of Health has not received any funds in 2023 to implement this proposal.

Private free trade zones along expressway corridors (2017), infrastructure facilities of Bingiriya and Wagawatte industrial zones (2019), Techno parks establishment of 5 fully- fledged plug and play techno parks (2021), set up relevant infrastructure conducive to FDI in proposed new economic zones in four provinces (2023) are some unfulfilled repeated grand promises. Weeratunga exclaimed that these proposals are partially in progress.

“Providing infrastructure facilities for Rojana industrial park in Milleniya was allocated LKR 2000 Bn, but the proposal was broken (2018),” said Weeratunga. Moreover, she added that the establishment of 7 industrial zones in the North and Eastern provinces was undisclosed.

Regarding the new economic zones, it was said that there is no information on plans for funding for zones in Hambantota and Trincomalee. The allocation for those plans is 7.7.% of the total estimated cost of the two projects in the two zones.

Recommendations

The Verité Research proposes some Recommendations to improve budget transparency and credibility. Well formulated proposals. Each is backed by supporting documents with assumptions and analysis. This can be done under the National Budget Department (NBD) of the Ministry of Finance. Correct Identification of the agencies responsible for implementing proposals. The NDB Department and the Fiscal Policy Department of the Ministry of Finance could monitor this. Improving oversight of budget implementation by the executive and legislature (Parliament committees). The responsible parties for this suggestion are the NBD of the Ministry of Finance, the Committee on Public Accounts and Finance, National Audit Office. Compliance with proactive disclosure requirements of the Right To Information (RTI) Act. Timely and consistent disclosure of information on Ministry websites. This recommendation should be backed by the implementing agencies: Ministries and Departments.

However, less than one-fifth of the proposals were fulfilled by the end of the budget year. The above facts show the lack of budget transparency and inefficiency. Sri Lankan Budget of 2023 declares systemic failure to fulfill promises. As Sri Lanka faces economic challenges, the call for transparency and accountability becomes ever more urgent. Only time will tell if these proposals will move from paper to progress, shaping a more transparent and accountable future for the nation. Will the government hear these recommendations and turn words into actions?