The Sri Lankan Government must prioritise the allocation of Rs. 500 billion in the Treasury, meant for retiring treasury bills next year, for recovery efforts and compensation to citizens affected by the Cyclone Ditwah, Chairperson of the Committee on Public Finance and Parliament Member Harsha de Silva said yesterday (3).
“For emergency situations, we had advised for an amount exceeding Rs. 1 trillion to be kept in the Bank of Ceylon and People’s Bank. The Deputy Minister said that Rs. 500 billion of that sum is to be used for retiring treasury bills. I would like to tell him that retiring of treasury bills can be postponed for another year or two.”
“Spend this money on the people who have been suffering from this calamity,” de Silva told Parliament during the debate over compensations for individuals and communities who have borne damages to their properties, businesses, and livelihoods.
“Instead of looking to save a decimal percentage of interest by paying this Rs. 500 billion, spend it for this purpose,” de Silva said, referring to the sum of money that had been sidelined for retiring treasury bills in 2026.
De Silva added that the debt burden of Sri Lankan MSMEs, which have undergone volatile business climates in the past five years, is to cross Rs. 1 trillion in the near future. “Another thing is the MSME debt burden, which is around Rs. 900 billion, is going to surpass Rs. 1 trillion in the coming days.”
Furthermore, as Sri Lanka is meant to adhere to the primary expenditure limit of 13% of GDP in 2026, as set by the IMF and reiterated in the Public Financial Management Act, No. 44 of 2024, de Silva said that the limit may be exceeded in instances where it is crucial.
“The primary challenge is for 2026. Under the Public Financial Management Act, there is a primary expenditure limit of 13% declared, which is in line with the IMF agreement. Therefore, with that in mind, under the Public Finance Management Act’s Section 14, 2 and 2(a), if it is required we can exceed the limit.”
“Though we have agreed to the limit with the IMF, under the Public Finance Management Act, we have the ability to spend the adequate amount next year. I believe that if we can do so, we can spend either Rs. 300 billion or Rs. 500 billion for reconstruction,” de Silva said.
“We do not exactly know the total damage; some say it’s $ 3 billion, Minister Alawathuwala told me it’s $ 6 billion. It hasn’t been assessed properly. The World Bank has been commissioned to present a study on the total damage in two weeks’ time. When we say $ 6 billion, that’s around Rs. 2 trillion.”
For immediate relief and individual compensation, de Silva noted that the monies allocated for the 2025 budget were yet to be fully spent. “The 2025 budget expenditures have not been completed; therefore, there is some money left. Money meant for emergencies, cleaning houses and roads, there is around Rs. 30 billion in the Government Treasury. Another Rs. 20 billion can be taken from other places, so around Rs. 50 billion can be spent in the next four weeks. The Government has no excuse since it has all the funds it needs to spend on the circulars issued.”
He further noted that though Rs. 25,000 is the standard compensation, with Sri Lanka’s inflation in recent years, it may not suffice. “At least Rs. 50,000 can be spent. It’s been said that Rs. 25,000 will be spent, but with inflation I doubt anything can be done with it. Find the true amount and make the payment.”