THE GOVERNMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2018 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 for the Year ended 31st December 2018 3 4. Statement of Financial Position as at 31st December 2018 4 5. Statement of Cash Flow for the Year ended 31st December 2018 5 6. Statement of Changes in Net Assets / Equity for the Year ended 31st December 2018 6 7. Significant Accounting Policies 7-10 8. Time of Recording and Measurement for Presenting the Financial Statements of Republic 11-12 Notes 9. Note 1-10 - Notes to the Financial Statements 13-17 10. Note 11 - Foreign Borrowings 18-24 11. Note 12 - Foreign Grants 25-26 12. Note 13 - Domestic Non-Bank Borrowings 27 13. Note 14 - Domestic Debt Repayment 27 14. Note 15 - Recoveries from On-Lending 27 15. Note 16 - Statement of Non-Financial Assets 28-214 16. Note 17 - Advances to Public Officers 215 17. Note 18 - Advances to Government Departments 215 18. Note 19 - Membership Fees Paid 215 19. Note 20 - On-Lending 216-217 20. Note 21 (Note 21.1-21.5) - Capital Contribution/Shareholding in the Commercial Public Corporations/State Owned Companies/Plantation Companies/ Development Bank (8568/8548) 218-223 21. Note 22 - Rent and Work Advance Account 224-226 22. Note 23 - Consolidated Fund 227 23. Note 24 - Foreign Loan Revolving Funds 227 24. Note 25 - Miscellaneous Funds 227 25. Note 26 - Net Assets Adjustments Account 227-228 26. Note 27 - Bank Balance 228 27. Note 28 - Advance from Central Bank of Sri Lanka 228 28. Note 29 - Government Borrowings 228-229 29. Note 29(I) - Foreign Currency Banking Unit Loan (Project) Balances (9196) 230 30. Note 29(II) - Statement of Foreign Loan Balances (8343) 231-270 31. Note 29 (III) - Foreign Currency Term Financing Facility (9190) 271 32. Note 29(IV) - International Sovereign Bond (9194) 271 33. Note 30 - Deposits 229 34. Note 30 - Deposit Accounts Balances as at 31st December 2018 (6000 & 6003) 272 35. Note 31 - Operating Accounts With Government Departments 229 36. Note 32 - Sundry Accounts 229 37. Note 33(A) - Statement of Bank Guarantees Issued by the General Treasury as at 31.12.2018 273-281 38. Note 33(B) - Statement of Letters of Comfort Issued to Local Banks and the Liabilities as at 31.12.2018 282 39. Explanatory Notes 283-284 Schedules 40. Schedule I - Statement of Capital Investment in Development Projects - 2018 285-302 41. Schedule II - Head Wise Summary of Budgetary Provision and Expenditure - 2018 303-308 42. Schedule III - Capitalization Borrowing Cost 309 43. Schedule IV - Statement of Liabilities and Commitments 310-315 44. Schedule V - Statement of Provincial Councils Revenue and Expenditure Report - 2018 316 45. Schedule VI - Face Value of the Treasury Bond (9093) as at 31st December 2018 317 Note to Readers Financial Statements of the Government for the year ended 31st December 2018 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. 30 of 09th December 2017 for 2018, of twenty three (23) Special Spending Units, fifty two (52) Government Ministries, ninety six (96) 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 (90) 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. Accordingly, a part of the non-financial assets have been reported in the financial statements and it is expected to record all the non-financial assets by year 2020. 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. Similarly, according to the Handbook on Government Finance Statistics (GFS) 2014, actions have been initiated to compile the financial data in the GFS data format with a view to improve comparison of government statistics with those of other countries. 1 Department of State Accounts Statement of Financial Performance for the Year ended 31st December 2018 Budget Estimate Actual Actual 2018 Note 2018 2017 Rs. Rs. Rs. REVENUE 2,034,000,000,000 Tax Revenue 1,712,317,537,935 1,670,178,219,488 370,000,000,000 Income Tax 1 310,449,314,854 274,561,564,596 1,243,000,000,000 Taxes on Domestic Goods & Services 2 1,060,158,121,748 1,024,280,534,460 421,000,000,000 Taxes on International Trade 3 341,710,101,333 371,336,120,432 199,100,000,000 Non Tax Revenue & Others 4 222,777,949,292 174,839,117,299 2,233,100,000,000 TOTAL REVENUE (a) 1,935,095,487,228 1,845,017,336,787 Less : EXPENDITURE Salaries, Wages and Other Employment 496,602,357,805 Benefits 5 484,758,793,181 463,872,499,215 211,486,894,671 Other Goods & Services 6 172,293,827,456 164,446,014,046 619,200,409,248 Subsidies, Grants and Transfers 7 599,461,407,587 580,556,036,540 853,587,000,000 Interest Payments 8 852,190,046,487 735,565,676,711 360,928,023 Other Recurrent Expenditure 9 260,316,311 1,134,813,412 2,181,237,589,747 Total Recurrent Expenditure (b) 2,108,964,391,022 1,945,575,039,924 (51,862,410,253) REVENUE DEFICIT (a) - (b) 173,868,903,795 100,557,703,137 880,228,849,253 Public Investments 10 625,310,389,518 657,530,018,379 828,366,439,000 BUDGET DEFICIT 799,179,293,313 758,087,721,515 FINANCING THE BUDGET DEFICIT 232,736,739,708 Foreign Borrowings 11 771,607,799,449 601,305,620,998 (307,015,440,000) Foreign Debt Repayments (307,015,430,305) (219,349,640,270) (74,278,700,292) NET FOREIGN BORROWINGS 464,592,369,144 381,955,980,728 10,000,000,000 Foreign Grants 12 12,485,519,835 8,031,087,509 (64,278,700,292) TOTAL FOREIGN FINANCING 477,077,888,979 389,987,068,236 1,871,960,622,411 Domestic Borrowings 13 1,099,262,448,221 856,671,070,650 (929,346,710,000) Domestic Debt Repayments 14 (929,345,627,582) (648,133,870,392) 942,613,912,411 NET DOMESTIC BORROWINGS 169,916,820,639 208,537,200,258 16,800,000,000 Recoveries from On-lending 15 25,583,642,348 16,418,064,232 100,000,000 Sale of Capital Assets 340,784,642 144,077,201 - Divestiture Proceeds 107,882,895,275 44,676,984,794 Net Change in Deposit Accounts and Liabilities 20,056,901,975 113,469,982,423 (Increase)/ Decrease in Cash & Cash Equivalents (1,679,640,545) (15,145,655,629) 895,235,212,120 TOTAL FINANCING 799,179,293,313 758,087,721,515 3 Department of State Accounts Statement of Financial Position as at 31st December 2018 Actual Actual Note 2018 2017 Rs Rs Non Financial Assets 16 1,087,397,624,041 814,335,751,160 Financial Assets Advances to Public Officers 17 30,970,716,088 27,427,831,864 Advances to Government Departments 18 15,303,986,669 15,088,063,621 Membership Fees 19 3,517,179,875 3,517,179,875 On Lending 20 184,160,788,945 181,367,517,946 Capital Contributions to State Owned Enterprises 21 587,320,632,819 578,480,701,820 Rent & Work Advance 22 1,589,016,461 750,310,073 Stamps Stock Account 1,357,244,688 1,305,358,819 Total Financial Assets 824,219,565,545 807,936,964,018 Total Assets 1,911,617,189,586 1,622,272,715,178 Statutory & Other Funds Consolidated Fund 23 (303,948,639,803) (285,571,378,373) Contingency Fund 450,000,000 500,000,000 Foreign Loan Revolving Funds 24 33,678,534,101 31,264,171,850 Miscellaneous Funds 25 859,563,802 991,807,821 Net Assets Adjustment Account 26 (9,415,813,121,099) (8,013,166,621,848) Total Funds (9,684,773,662,999) (8,265,982,020,550) Liabilities Bank Overdrafts 27 148,859,820,080 150,539,460,624 Advance from the Central Bank 28 198,632,571,400 199,800,871,400 Government Borrowings 29 11,276,281,183,366 9,588,100,902,848 Deposits 30 76,867,205,607 75,121,285,516 Accounts Operating with Government Departments 31 (104,886,490,795) (125,940,730,340) Sundry Accounts 32 636,562,927 632,945,680 Total Liabilities 11,596,390,852,585 9,888,254,735,728 Total Funds and Liabilities 1,911,617,189,586 1,622,272,715,178 Contingent Liabilities & Commitments 33 828,944,872,772 652,213,797,000 4 Department of State Accounts Statement of Cash Flows for the Year ended 31st December 2018 Actual Actual 2018 2017 Rs.