Chandra J sends his proposals for 2013 Budget to the President

Good governance activist and former Chairman of the Ceylon Chamber of Commerce Chandra Jayaratne has submitted several key proposals for consideration in the 2013 Budget by President and Finance Minister Mahinda Rajapaksa. Here is the text of his letter containing the proposals sent to President Rajapaksa:

20th August 2012
H. E. Mahinda Rajapaksa,
The President and Minister of Finance and Planning,
Temple Trees,
Colombo 3.

Your Excellency,

Proposals for the National Budget 2013
1. Effective Allocation of Scarce National Resources
2. Improved Systems for Effective Public Financial Management

This letter details some suggestions for consideration in preparing the National Budget 2013 to be presented in parliament in November 2012. These suggestions deal with several strategies aimed at strengthening the best practices embedded good governance processes and specifically relates to:
n“Effective Allocation of Scarce National Resources” and
n“Improved Systems for Effective Public Financial Management”.
“Public financial management is an essential part of the development process. It supports the efficient and accountable use of public resources, helps underpin macroeconomic and fiscal stability, and guides allocation of resources to address national priorities. Since resources can leak wherever systems are weak, public financial management covers all phases of the budget cycle, including budget preparation, internal control and audit, procurement, monitoring and reporting arrangements, and external audits” – ‘IDA Article titled ‘Public Financial Management for better results’.
It is suggested that the development oriented 2013 national budget, sets the future directions, tone and expected management culture, all aimed at strengthening public financial management and fiscal stability led good economic governance, and thus embrace within its scope all of the elements described in the above mentioned IDA quotation, leading to realisation of improved and sustainable results and outcomes which will empower the nation and its people with growth and prosperity led benefits.
It is further suggested that the budget proposals embody the under noted specific good governance measures, to become effective from 2013;
1. The allocation of scarce national resources through the budgetary process to be subject to a strict validation, in terms of agreed national priorities aimed at
a. stimulating sustainable growth,
b. ensuring macroeconomic and fiscal stability,
c. infrastructure development adding value to the nation,
d. empowering the people
e. promoting equity and social development
f.  eradication poverty,
g. ensuring environmental sustainability and
h. realising the millennium development goals in the medium term.
2. In pursuit of (1) above, require all Chief Financial Officers of ministries, government departments and state enterprises in receipt of Treasury financial allocations or guarantees, to detail in financial allocation requisitions submitted to the Treasury through their relevant Ministers, in respect of all budget allocation line items exceeding Rs. 1Billion in expenditure and/or capital spends ,
a. the national economic justifications for such allocations and
b. validation against agreed national priorities as referred to in (1) above,
c. expected key outcomes and
d. key performance indicators (both qualitative and quantitative), along with
 e. key milestone achievements expected over the three year period post expected spends
3. Make all Chief Financial Officers of ministries, government departments and state enterprises with Treasury financial allocations or guarantees, accountable
a. to set in consultation with the respective Ministers, the priorities of the Ministry, which must be aligned to the National priorities referred to in (1 ) above and
b. be duly accountable to the President and the Cabinet to ensure that all budget allocation line items exceeding Rs. 0.5 Billion in expenses and/or capital spends , the national economic justifications for such allocations and validation against agreed national priorities as referred to in (1) above, expected key outcomes and key performance indicators (both qualitative and quantitative), along with key milestone achievements expected over the three year period post expected spends are submitted prior to any draw down of such allocations from the Treasury
4. Creation of a Parliamentary Standing Committee on Public Finance Management and Fiscal Stability. The terms of reference of this permanent Standing Committee will be to support the Treasury and the Executive in assuring that public financial management and fiscal stability led good economic governance processes are effectively in place and are built on the ‘Public Expenditure and Financial Accountability’ diagnostic framework developed by the World Bank to drill down and assess public investment management systems. Refer http://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/08/09/000158349_20100809092806/Rendered/PDF/WPS5397.pdf
5. The parliamentary Standing Committee on Public Financial Management and Fiscal Stability to validate that all public spends ( both of a revenue expenditure and spends of a capital nature) in excess of Rs. 500 million per each item of spend, including all single line item spends proposed in the budget and in any supplementary estimates to be disbursed by the central government Treasury directly or through provincial and / or other local government authority or public corporation or state owned enterprise, and ensure that they are
a. in line with the agreed national priorities,
b. equitable and are devoid of any regional, ethnic, religious, caste, status linked bias and
c. are supportive of poverty alleviation, achievement of millennium development goals, improvement of social infrastructure and public services/utilities linked investments, livelihood/lifestyle oriented economic enhancements and environmental sustainability.
6. Public Accounts Committee and Committee on Public Enterprises to be presented with and conduct outcomes based reviews of independent post audit reports ,compiled after completion of all spends referred to in 3 above, recording therein the discharge of due accountability in achieving the set objectives and goals, implementation economy/efficiency/effectiveness and outlining lessons learnt and recommendations for action.
7. Arrange as a component part of the reports presented to parliament in terms of the Fiscal Management (Responsibility) Act No. 3 of 2003 for the fiscal gap of Sri Lanka (the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years) as at the end of the preceding year to be tabled and arrange for all reports tabled presented in terms of the Fiscal Management (Responsibility) Act No. 3 of 2003 to be reviewed by the Standing Committee on Public Financial Management and Fiscal Stability.

Yours sincerely,
Chandra Jayaratne
cc. Dr. Sarath Amunugama, Snr Minister of International Monetary Co-operation
Mr. Basil Rajapaksa, Minister of Economic Development
Mr. Geethanjana Gunawardena Deputy Minister of Finance & Planning
Mr. Lalith Weeratunga, Secretary to H.E. the President
Dr. P. B. Jayasundera, Secretary Finance
Governor, Central Bank
Auditor General
Country Director, International Monetary Fund
Country Director, The World Bank
Country Director Asian Development Bank,
Chairman, Ceylon Chamber of Commerce
President, Organization of Professional Associations
Chairman, Sri Lanka Economic Association
Chairman, Bankers Association of Sri Lanka