By Maheesha Mudugamuwa
The Government has decided not to seek large-scale borrowings and will also not implement new projects until the presentation of a complete budget for 2020, The Sunday Morning learnt.
Speaking to The Sunday Morning, Ministry of Finance Department of External Resources (ERD) Director General R.M.P. Rathnayake said that while the Government had not cancelled any of the ongoing negotiations, it would be very selective and go ahead with only the most productive loans that are in line with the Government’s new policy priorities.
“We will not go for large-scale borrowings considering the Government’s fiscal policy and borrowing capacities,” Rathnayake added.
He also said that new projects would be implemented depending on the Government’s priorities.
“We have a Vote on Account (VoA) for the first four months of 2020 and if the general election follows, there is a possibility of another VoA, and when there is a VoA, there is no room to accommodate new projects. So we have to wait until the VoAs end and then the Government will come up with a full budget. Only then can we include new projects.”
Rathnayake said the Government would focus on the existing projects within the first three months of next year as there were a number of projects which were nearing completion.
“In the meantime, once the major projects are finished, there would be enough space in the full budget to accommodate new projects. There are several projects which are not up to the expected international standards and therefore, there are pending activities to be completed in order to satisfy the existing loans,” he continued.
Highlighting the pending projects, Rathnayake said there were a number of pending projects including water projects and road development projects involving several development partners such as the World Bank (WB), Asian Development Bank (ADB), Japan International Co-operation Agency (JICA), and bilateral donors Korea, China, Japan, and India.
“The large-scale projects still pending include the Central Expressway Sections I and III, several railway projects, and the Light Rail Transit (LRT) project, which all require fairly large amounts in budgetary allocations,” he added.
In addition, as learnt by The Sunday Morning, the Government has already expedited negotiations for several projects, including the Central Expressway Project (CEP). A special discussion was held last week with the Road Development Authority (RDA) on resolving the issues pertaining to Section III.
According to Ratnayake, the Chinese loan which has already been approved for Section I of the CEP would be effective from January.
“We didn’t make the loan effective as once it is effective we have to make commitment charges, and without utilising the loan, there is no need to make those payments.
“We sought another couple of weeks, and once we meet 15%, we can make the China loan effective. They can survive for at least a month or two on the 15% so there is no need of immediately releasing the Chinese loan,” he added. Meanwhile, when The Sunday Morning contacted the Senior Advisor on Economic Affairs to the Prime Minister, Ajith Nivard Cabraal said the Government had not taken a decision to go for large-scale borrowing but it would manage the debt according to a debt management structure.
“The Government’s debt will be managed in a different way to the previous Government. We will have a debt management structure which will be a lot more efficient and effective than what was previously practised,” he added. Cabraal also noted that the Government would not cancel any ongoing projects but there were several projects which were currently being reviewed.