NCE requests representation in Budget Monitoring Committee

Tuesday, 26 March 2019 00:00 -     - {{hitsCtrl.values.hits}}

The National Chamber of Exporters (NCE) has called for its inclusion in the Budget Monitoring Committee of the Ministry of Finance, to be able to monitor effectively expenditure items related to exports sector as well as the actual results achieved through Budget proposals. 

NCE recently conducted a ‘Post-Budget Exporters Forum’ to assess proposals of the National Budget which impacts on the export sector, and make aware member exporters how best they could make use of export-related proposals for business development.

One of the main issues that came to be highlighted was the poor implementation of proposals during the past two to three years. In this regard, the work carried out by the well-known research institute ‘Verité Research’, which provided an overall picture of implementation of expenditure items exceeding Rs. 1 billion, showed the performance to be highly unsatisfactory.   

Verité Research findings

The Progress Tracker of Verité Research with respect to 2017, shows that implementation of only 8% of expenditure items over Rs.1 billion had been captioned ‘fulfilled’. Progress only on another 22% of expenditure items were seen to be substantial.  Out of the balance, implementation with respect to 35% of the items were seen to be either partial or poor, 24% of the items were classified under the caption ‘broken’, which meant they had either been dropped or postponed or were not scheduled for implementation in the year of assessment, and 11% of expenditure items were classified under ‘undisclosed’ which meant no information was available on the promise, or the information available was unusable.   With respect to 2018, for which information related to the Progress Tracker was available for the first six months, only 8% of expenditure items above Rs.1 billion were seen to be progressing in a manner which depicted that the implementation process was either on track in terms of the implementation schedule or were ahead of implementation targets.  The Research Director of Verité Research disclosed at the panel discussion that the information related to the Progress Tracker for the full year of 2018 will be made available by April this year, providing the full picture with respect to the Budgetary Year 2018.

With regard to the expenditure items exceeding Rs.1 billion having a bearing on the exports sector, it was noteworthy that the proposal for the establishment of a development bank (proposed to replace the earlier budgetary proposal for the establishment of an Exim Bank) was classified under the caption ‘neglected’.  In other words, this major proposal to financially support the export sector has been in limbo during the last few years, although it had an allocation of Rs.10 billion for capital expenditure.   Similarly, the expenditure item with an allocation of Rs. 2 billion for capital expenditure to establish the ‘Rojana Industrial Park’ in Milleniya, which is a Thai investment, was classified under the caption ‘lagging’, which meant it was being implemented behind schedule. Also, the proposal related to the Information Communication Technology Agency (ICTA) to improve service delivery through the infusion of technology and digitisation, which had an allocation of Rs. 2 billion, was classified under the caption ‘undisclosed’. 

Missing information

With regard to expenditure items related to exports, it was also revealed that the tracking mechanism of Verité Research did not cover some important expenditure items, since their allocations were below Rs. 1 billion, which was the threshold for institute.  Among such export-related programs and expenditures were the allocations for the National Exports Strategy (NES) under the Export Development Board (EDB) and the ‘Export Market Access Support Scheme’ of the EDB, as well as the several loan schemes under the ‘Enterprise Lanka Program’ impacting on exports, where the respective loans were expected to be disbursed by the State and private sector banks, with diverse percentages of the applicable interest rates being subsidised by the State. The Chamber also laments that proper information is not available regarding export-oriented Foreign Direct Investments (FDIs) which comes into the country, particularly hi-tech manufactures related to exports.  

It was heartening to note that the EDB had utilised the full allocation made in the 2018 Budget in respect of the NES and the Export Market Access Support Program. Since bigger allocations of Rs. 250 million and Rs. 400 million respectively had been made for 2019 with respect to these two important programs, it is imperative that the actual expenditures, and more importantly the overall results impacting on exports, be properly monitored. It appeared that the EDB had played a proactive role in the Monitoring Committee established by the Ministry of Finance with regard to expenditures related to the export-oriented programs. However, it appears that there is a need for the Monitoring Committee to meet on a regular basis with a clear and streamlined agenda covering the different categories of expenditure items (for example export related expenditures) since different Institutions are responsible for such expenditures. Such a measure will enable them to engage according to a specific time schedule, to assess performance related to actual expenditures under their purview, and more importantly the results achieved out of such expenditures, to enable effect any course corrections that would become necessary.

Overall, the NCE highlights the importance of inclusion of the relevant private sector stakeholders in the Monitoring Committee of the Ministry of Finance, and particularly representation of the NCE as the only private sector Chamber which exclusively serves Sri Lankan exporters, so as to be able to monitor effectively expenditure items related to the exports sector as well as the actual results achieved.