Cash strapped government hit by the second wave of COVID-19 is grappling to meet the recurrent expenditure till the end of the year as the treasury has to manage it with the balance money of LKR 613.45 billion allocated from the final vote on account for the period of August to December 2020.
At least LKR 71.7 billion is needed to cover-up the expenditure for the last two-month period this year, 9 days before the presentation of the appropriation bill for 2021 in parliament on November 17.
In financing the 2020 budget, the government has relied less on foreign financing and more on domestic short-term borrowings as evident by the issuance of a higher share of treasury bills as opposed to treasury bonds in contrast to the same period for the year before.
Total outstanding debt rose to unmanageable proportions and in the process, domestic debt outpaced the foreign debt. During this time, the share of domestic debt increased significantly.
The total outstanding government debt has increased to LKR 14, 052 billion at the end of the first six months of 2020, the latest Central Bank data revealed.
The total domestic debt of the government has increased to LKR 7,530 billion from LKR 6,629 billion while total foreign debt rose to LKR 6,521 billion from LKR 6,402 billion within the first six months of 2020.
The final vote on account involves a recurrent expenditure of LKR 613.45 billion and capital expenditure of LKR 336.3 billion.
Under Treasury bills ordinance, permission was sought for LKR 750 billion and to borrow LKR 1,300 billion in domestic and foreign borrowings for the year.