by Verite Research, ‘Sunday Observer,’ Colombo, May 20, 2018
Sri Lanka’s national budget for 2018 allocated Rs. 1.4 billion to the Office on Missing Persons (OMP).[i] The allocation was viewed as a positive step towards supporting reconciliation mechanisms in Sri Lanka. However, a closer look reveals that the allocation entails two betrayals. The first is that the budget process violates the requirements of the law as set out in the OMP Act of 2016. The second is that the OMP’s budget allocation has been placed in a discretionary fund from where it can be diverted to almost any other purpose, thereby negating the firm commitment to allocate finances to the OMP.
Budgetary location of the OMP funds is unlawful
The OMP Act clearly states the method of allocating finances to the OMP. According to section 19 of the OMP Act, ‘The State shall provide the OMP with adequate funds’, which ‘shall be charged on the Consolidated Fund’.[ii] The word ‘shall’ in the law denotes a mandatory requirement.
Sri Lanka’s budget is presented in three ‘schedules’ (or sections) in the Appropriation Act of November 2017, which sets out how funds may be allocated for various institutions and activities.
All funds to be charged on the Consolidated Fund fall within the Second Schedule to the Act, titled, ‘Expenditure of the Government, Authorized by Law and to be Charged on the Consolidated Fund’. However, the Rs. 1.4 billion allocated to the OMP does not appear under this Schedule. Instead, it has been listed in the First Schedule to the Act, which is titled ‘Sums Payable for General Services’.[iii]
The Ministry of Finance has not provided the OMP with funds that are specifically charged on the Consolidated Fund. It has thus violated a provision of the OMP Act by listing all the promised funds in the First Schedule of the Appropriation Act.
OMP funds are vulnerable to being diverted
In addition to placing the funds in the wrong schedule, the Budget Estimates of 2018 also places the Rs. 1.4 billion allocation pledged to the OMP under a budget heading where it is particularly vulnerable to being diverted for other purposes.
The allocated funds have been placed under a provision titled ‘Supplementary Support Services and Contingent Liabilities’ (SSSCL). According to section 6 of the Appropriation Act, funds allocated under the SSSCL provision can be transferred to any other program or department falling under the First Schedule.[iv] The transfer is subject to guidelines in the Budget Estimates, which allow funds to be requested and transferred for many reasons, ranging from the rectification of salary anomalies, to the purchase of official vehicles for Ministries, at the discretion of the Treasury. However, within two months, a supplementary report must be submitted to Parliament stating the amount and reasons for such a transfer.[v]For example, on May 9, 2018, Parliament received a supplementary report on spending Rs. 18 billion for a range of programs and purposes.[vi] Thus the budgetary location of the OMP’s funding permits the Treasury significant discretion to transfer the allocation towards other activities, making the OMP budget allocation insecure.
By contrast, allocations made under the Consolidated Fund enjoy protection from such transfers. The Second Schedule to the Appropriation Act lists 14 government expenditure heads to be charged on the Consolidated Fund. It includes funds for the operational expenses of the National Police Commission, Judicial Service Commission and Elections Commission.[vii]
Article 150(1) of the Constitution provides that a sum of money can only be withdrawn from the Consolidated Fund under the authority of a warrant issued by the Minister of Finance. This warrant can only be issued on the basis that the sum of money has been granted by law (such as the OMP Act) or by resolution of Parliament for a specific purpose.[viii] If the allocation relating to the OMP were placed under this Fund, as required by the OMP Act, it would not be vulnerable to being diverted towards any other purpose.
The funds allocated to the OMP under the SSSCL provision both, (1)disregards requirement of the law, and (2) leaves the OMP vulnerable to having its funds reallocated to other programs without meaningful Parliamentary oversight.
Thus, the Ministry of Finance has disregarded the law, and has placed the funds within a provision designed to avoid committing to the expenditure originally promised. This budgetary approach calls into question the commitment of the Rs. 1.4 billion earmarked for the OMP.
Verité Research is an interdisciplinary think-tank based in Colombo that provides strategic analysis to high level decision-makers in economics, law, politics and media.
[i] ‘Supplementary Support Services and Contingent Liabilities’, Development Activities, Department of National Budget, Ministry of Finance, 2018 Budget Estimates.
[ii] Section 19, Office on Missing Persons (Establishment, Administration and Discharge of Functions) Act, No. 14 of 2016.
[iii] First Schedule, Appropriation Act, No. 30 of 2017, December 9, 2017.
[iv] Section 6, Appropriation Act.
[vi] ‘Rs. 18 b supplementary allocation presented to Parliament’, Daily Ft, May 10, 2018, at: http://www.ft.lk/news/Rs–18-b-supplementary-allocation-presented-to-Par… [last retrieved: May 12 2018].
[vii] Second Schedule, Appropriation Act. These allocations are made in terms of specific laws relating to the institutions in question.
[viii] Article 150(2), The Constitution of the Democratic Socialist Republic of Sri Lanka, as amended.