The Secretary to the Treasury has issued a circular specifying the guidelines for the preparation of Annual Budget Estimates 2023 within the medium-term budgetary framework 2023-2025.

The circular read: “The economy of Sri Lanka is currently faced with the most challenging state of affairs since independence. In these circumstances, fiscal space has become extremely tight due to the drastic increase of government expenditure, severely limited government revenue and the diminished capacity of the government to borrow. In this context, preparation of the National Budget 2023 has become highly challenging.”

The objective of National Budget Circular No. 05/2022 is to provide guidelines to prepare the budget estimates for the year 2023, within the medium-term budgetary framework 2023-2025.

The Budget 2023 should be prepared with the aim of restoring the lives of the people which have been severely affected in the face of the economic crisis, preventing further deterioration of weak economic indicators, and laying the foundation for subsequent macroeconomic stability and economic growth.

In that respect, the “whole-of-government-approach” is crucial in considering managing of the present crisis situation.

Further, instead of preparing expenditure estimates by considering only about the respective organization, the spending agencies should contemplate beyond such estimate preparation and pay close attention to the availability of imprest for financing such expenditure, the communiqué read further.

The circular mentions that in preparing the annual budget, income and expenditure should be adjusted in line with medium and long-term macroeconomic goals and government policies/priorities. “Therefore, the budget 2023 should be prepared with the objective of achieving a surplus of 2% of GDP at the end of 2023-2025 medium term.

Increasing government revenue is a foremost necessity to bring down the primary budget deficit, however, the alternative of reducing the expenditure has become mandatory. In order to reduce government expenditure while maintaining the quality of public service delivery, increasing the productivity is a must, it read further. Accordingly, the theme of preparation of budget 2023 should be “making a transformative change via minimum inputs.”

The circular says due attention should be paid to multiple sectors/areas in the preparation of Budget 2023, including moving towards renewable energy sources and ensuring a continuous energy supply, improving and streamlining public transport services, encouraging foreign direct investments (FDIs) favourable to the country, ensuring food security in the country and implementing programs to increase foreign remittances.

According to the circular, new recruitments will not be made to the public service in the year 2023. Hence, no allocation will be made for this purpose.
 
 
The circular is attached below:

National Budget Circular No 05-2022 by Ada Derana on Scribd