To cover the budget deficit we have to either take loans or sell existing properties - Bandula

To cover the budget deficit we have to either take loans or sell existing properties - Bandula

9 June 2021 08:44 am

Trade Minister Bandula Gunawardena says that a very difficult financial situation has to be managed due to the sharp decline in government revenue.

"No matter what party the government belongs to, no matter which government rules the country, we all have to accept that the day-to-day running costs of the country will not be borne in many years. That is why there is a deficit in the recurring account of the state budget. How can it be covered?

One is that we are borrowing locally and overseas. Foreign aid and other fiscal instruments are used to cover any budget deficit. This is the same scenario that happens at a home. If our income is one hundred thousand rupees and we cost Rs 150000 per month, there will be a deficit of 50000. Then what we have to do is ask for help from someone and to return back without interest, Or we have totake a loan, Or sell an existing property or asset. Even the government has to face this problem like that manner.

It is not possible to take a loan. The guaranteed limit now exceeds 10%. Therefore, the Financial Management Act now needs two amendments. One is to increase the debt consolidation period of this Management Act to 2030. Second, increase the existing 10% guarantee on loans to 15%, ”he said.

Minister Bandula Gunawardena stated this while addressing a debate held in Parliament yesterday (08) to amend several financial regulations.