• Yet to receive Cabinet minutes: Deputy Treasury Secy. 
• Instructions to be sent to ministries once minutes received 

Directions will be issued by the Finance Ministry to all Government ministries to save 5% of the allocations received for capital expenditure under the 2023 Budget, according to the decision of the Cabinet of Ministers.

Speaking to The Sunday Morning Business, Treasury Deputy Secretary R.M.P. Rathnayake stated that while a decision had been made by the Cabinet to reduce 5% of the total capital expenditure allocated through the 2023 Budget (about Rs. 162.2 billion), the Treasury was yet to receive the relevant Cabinet minutes.

Elaborating further, he stated: “Once the Treasury receives the Cabinet minutes confirming the decision to cut down 5% of the total capital expenditure allocated through the 2023 Budget, we will thereafter take steps to issue the relevant instructions. This entire process will take a few days.”

Commenting on how this proposed 5% capital expenditure reduction would be implemented, Rathnayake stated that all Government ministries would be instructed to save 5% of the allocations received for capital expenditure under the 2023 Budget. 

This was confirmed by Department of National Budget Director General S.D.J. Nilukshan, who said that a circular would be issued to all Government ministries upon receipt of the Cabinet decision. He added that each ministry would have the freedom to determine how this 5% reduction in capital expenditure was to be achieved.

During the weekly Cabinet briefing, Cabinet Spokesman Dr. Bandula Gunawardena revealed that President Ranil Wickremesinghe had informed the Cabinet on Monday (9) that the Treasury was facing a shortage of funds, as the Government’s revenue in December was less than expected, with the economy contracting in 2022.

Further, Gunawardena said that these expenses had been met by the Treasury via money printing in the past, but added that the International Monetary Fund (IMF) and multilateral agencies had instructed Sri Lanka to halt money printing operations.

Money printing by the Central Bank, also known as issuing ‘reserve money,’ grew by a total of about Rs. 11.3 billion in 2022 after growing by Rs. 330 billion in 2021.

However, Rs. 20.6 billion was printed and added to the economy in the first week of January 2023, as the reserve money increased to Rs. 1,369 billion from Rs. 1,348 billion in the last week of December.