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THE GOVERNMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2020 DEPARTMENT OF STATE ACCOUNTS GENERAL TREASURY COLOMBO-01 TABLE OF CONTENTS Page No. 1. Note to Readers 1 2. Statement of Responsibility 2 3. Statement of Financial Performance 3 4. Statement of Financial Position 4 5. Statement of Cash Flow 5 6. Statement of Changes in Net Assets / Equity 6 7. Current Year Actual vs Budget 7 8. Significant Accounting Policies 8-12 9. Time of Recording and Measurement for Presenting the Financial Statements of Government 13-14 Notes 10. Note 1-10 - Notes to the Financial Statements 15-19 11. Note 11 & 11(a) - Foreign Borrowings 20-32 12. Note 12 - Foreign Grants 33-34 13. Note 13 - Domestic Non-Bank Borrowings 35 14. Note 14 - Domestic Debt Repayment 35 15. Note 15 - Recoveries from On-Lending 35-36 16. Note 16 - Statement of Non-Financial Assets 37-45 17. Note 17 - Advances to Public Officers 46 18. Note 18 - Advances to Government Departments 46 19. Note 19 - Membership Fees Paid 46 20. Note 20 - On-Lending 47-48 21. Note 21 (Note 21.1-21.5) - Capital Contribution/Shareholding in the Commercial Public Corporations/State Owned Companies/Plantation Companies/ Development Banks (8468/8548) 49-54 22. Note 22 - Rent and Work Advance Account 55-59 23. Note 23 - Consolidated Fund 60 24. Note 24 - Foreign Loan Revolving Funds 60 25. Note 25 - Miscellaneous Funds 60 26. Note 26 - Net Assets Adjustments Account 60-61 27. Note 27 - Bank Balance 61 28. Note 28 - Government Borrowings 62 29. Note 28(I) - Foreign Currency Banking Unit Loan (Project) Balances (9196) 63-64 30. Note 28(II) - Statement of Foreign Loan Balances (8343) 65-101 31. Note 28 (III) - Foreign Currency Term Financing Facility (9190) 102 32. Note 28(IV) - International Sovereign Bond (9194) 103 33. Note 29 - Deposits 62 34. Note 29(I) - Deposit Accounts Balances (6000 & 6003) 104 35. Note 30 - Operating Accounts With Government Departments 62 36. Note 31 - Sundry Accounts 62 37. Explanatory Notes 105 Schedules 38. Schedule I (a) & I(b) - Statement of Bank Guarantees Issued by the 106-118 General Treasury & Letters of Comfort Issued to Local Banks and the Liabilities 39. Schedule II - Statement of Capital Investment in Development Projects 119-138 40. Schedule III - Head Wise Summary of Budgetary Provision and Expenditure 139-147 41. Schedule IV- Statement of Liabilities and Commitments 148-154 42. Schedule V - Statement of Provincial Councils Revenue and Expenditure Report 155 Note to Readers Financial Statements of the Government for the year ended 31st December 2020 comprising the Statement of Financial Performance, Statement of Financial Position, Statement of Cash Flow, Statement of Changes in Net Assets / Equity, applied Accounting Policies and Notes thereto are forwarded herewith. The Statement of Financial Position shows the assets and liabilities of the Government whereas Statement of Financial Performance shows government’s affairs in relation to revenue collection and use of resources as provided by Appropriation Act No. 06 of 20th November 2020 for 2020, of twenty one (21) Special Spending Units, twenty eight (28) Government Ministries, forty (40) State Ministries, ninety eight (98) Government Departments and twenty five (25) District Secretariats and the way that fiscal deficit could be financed. Further, in the Financial Statements, it is reflected the financial support provided to Forty Nine (49) Commercial Public Corporations, ninety four (94) Government Owned Companies / Plantation Companies / US Dollar Denominated Companies, three (03) Development Banks in the form of capital contribution or shareholding and also information relating to allocation of financial resources to nine (09) Provincial Councils by the Central Government. As per the provisions provided under the Fiscal Management (Responsibility) Act No. 03 of 2003, Financial Statements should be prepared to reflect financial results and Financial Position of the Democratic Socialist Republic of Sri Lanka. Since these financial statements should be prepared in accordance with the Article 149 and 150 of the Constitution of Democratic Socialist Republic of Sri Lanka in addition, generally accepted accounting principles could not be followed in all the time. However, in such deviations, reasons for deviation and the relevant alternate accounting policies are disclosed in the financial statements. Modified cash basis accounting method is used to prepare the Financial Statements and actions are taken to include the assets and liabilities generated through the cash basis transactions in the financial statements whenever possible. The Computerized Integrated Government Accounting System (CIGAS) has been further developed enabling non-financial assets are recorded in the Financial Statements, starting from the year 2015. 1 Department of State Accounts Statement of Financial Performance for the year ended 31st December 2020 Actual Actual Note 2020 2019 Rs. Rs. REVENUE Tax Revenue 1,216,542,212,179 1,734,925,039,071 Income Tax 1 268,249,209,463 427,699,517,596 Taxes on Domestic Goods & Services 2 584,528,022,877 973,843,968,827 Taxes on International Trade 3 363,764,979,839 333,381,552,648 Non Tax Revenue & Others 4 162,344,709,871 172,271,329,558 TOTAL REVENUE (a) 1,378,886,922,050 1,907,196,368,629 Less : EXPENDITURE Salaries, Wages and Other Employment Benefits 5 578,607,175,229 528,791,109,005 Other Goods & Services 6 221,067,351,945 199,834,301,479 Subsidies, Grants and Transfers 7 881,469,192,145 703,508,610,370 Interest Payments 8 975,433,945,096 888,786,940,392 Other Recurrent Expenditure 9 26,135,743,017 701,758,477 Total Recurrent Expenditure (b) 2,682,713,407,433 2,321,622,719,723 REVENUE DEFICIT (a) - (b) 1,303,826,485,383 414,426,351,094 Public Investments 10 811,772,950,114 637,218,885,361 BUDGET DEFICIT 2,115,599,435,497 1,051,645,236,455 FINANCING THE BUDGET DEFICIT Foreign Borrowings 11 600,888,442,365 935,100,943,059 Foreign Debt Repayments (504,209,483,237) (572,337,719,713) NET FOREIGN BORROWINGS 96,678,959,128 362,763,223,346 Foreign Grants 12 5,348,418,756 7,909,404,110 TOTAL FOREIGN FINANCING 102,027,377,884 370,672,627,456 Domestic Borrowings 13 2,170,373,454,767 1,105,658,355,163 Domestic Debt Repayments 14 (458,694,003,212) (544,648,165,984) NET DOMESTIC BORROWINGS 1,711,679,451,556 561,010,189,178 Recoveries from On-lending 15 19,428,812,810 18,271,349,279 Sale of Capital Assets 256,998,608 2,874,087,532 Divestiture Proceeds - 3,111,000,000 Net Change in Deposit Accounts and Liabilities 12,855,536,059 50,048,421,773 (Increase)/ Decrease in Cash & Cash Equivalents 269,351,258,580 45,657,561,237 TOTAL FINANCING 2,115,599,435,497 1,051,645,236,455 3 Department of State Accounts Statement of Cash Flow for the year ended 31st December 2020 Budget Estimate Actual Actual 2020 2020 2019 Rs. Rs. Rs. Cash Flow from Operating Activities 1,358,000,000,000 Tax Receipts 1,216,542,212,179 1,734,925,039,071 27,850,000,000 Fees, Fines, Penalties and Licenses 26,619,272,655 35,741,507,603 16,500,000,000 Profits 14,768,452,766 22,833,341,079 119,150,000,000 Other Receipts 110,804,741,847 94,853,135,877 1,521,500,000,000 Total Cash flow from Operating Activities (a) 1,368,734,679,446 1,888,353,023,630 Less - Cash disbursed for: 831,017,178,834 Personal Emoluments & Operating Payments 799,674,527,175 728,625,410,484 923,796,240,034 Subsidies & Transfer Payments 881,469,192,145 703,508,610,370 1,049,837,551,420 Finance Costs 1,001,569,688,113 889,488,698,869 2,804,650,970,289 Total Cash disbursed for Operating Activities (b) 2,682,713,407,433 2,321,622,719,723 NET CASH FLOWS FROM OPERATING (1,283,150,970,289) ACTIVITIES (c)=(a)-( b) (1,313,978,727,986) (433,269,696,094) Cash Flows from Investing Activities 7,000,000,000 Interest 7,296,743,428 13,819,218,389 3,500,000,000 Dividends 2,855,499,175 5,024,126,610 200,000,000 Divestiture Proceeds & Sale of Physical Assets 256,998,608 5,985,087,532 15,000,000,000 Recoveries from On Lending 19,428,812,810 18,271,349,279 25,700,000,000 Total Cash flow from Investing Activities (d) 29,838,054,021 43,099,781,811 Less - Cash disbursed for: Purchase or Construction of Physical Assets & 924,208,471,711 Acquisition of Other Investment 811,772,950,114 637,218,885,361 924,208,471,711 Total Cash disbursed for Investing Activities (e) 811,772,950,114 637,218,885,361 NET CASH FLOW FROM INVESTING (898,508,471,711) ACTIVITIES (f)=(d) - (e) (781,934,896,093) (594,119,103,551) NET CASH FLOW FROM OPERATING & (2,181,659,442,000) INVESTMENT ACTIVITIES (g)=(c) + (f) (2,095,913,624,079) (1,027,388,799,644) Cash Flow from Financing Activities 2,178,254,695,723 Local Borrowings 2,170,373,454,767 1,105,658,355,163 482,567,055,050 Foreign Borrowings 600,888,442,365 935,100,943,059 8,000,000,000 Grants Received 5,348,418,756 7,909,404,110 2,668,821,750,773 Total Cash flow from Financing Activities (h) 2,776,610,315,888 2,048,668,702,331 Less - Cash disbursed for: 463,298,118,000 Repayment of Local Borrowings 458,694,003,212 544,648,165,984 526,000,000,000 Repayment of Foreign Borrowings 504,209,483,237 572,337,719,713 - Net Change in Deposit Accounts and Other Liabilities (12,855,536,059) (50,048,421,773) 989,298,118,000 Total Cash disbursed for Financing Activities (i) 950,047,950,389 1,066,937,463,925 NET CASH FLOW FROM FINANCING 1,679,523,632,773 ACTIVITIES (j)=(h) - (i) 1,826,562,365,499 981,731,238,407 (502,135,809,227) Net movement in Cash (k)=(g) + (j) (269,351,258,580) (45,657,561,237) Opening Cash Balance as at 01st January (194,517,381,317) (148,859,820,080) st Closing Cash Balance as at 31 December (463,868,639,897) (194,517,381,317) 5 Department of State Accounts Statement of Changes in Net Assets / Equity for the year ended 31st December 2020 Rs.