Ministry of Finance, Sri Lanka ANNUAL REPORT 2020 Ministry of Finance ANNUAL REPORT 2020 Sri Lanka ISBN 978–624–5674–01–5 Softwave Printing and Packaging (Pvt) Ltd ANNUAL REPORT 2020 MINISTRY OF FINANCE SRI LANKA THIS FINAL BUDGET POSITION REPORT, ANNUAL REPORT 2020, IS PUBLISHED IN TERMS OF SECTION 13 OF THE FISCAL MANAGEMENT (RESPONSIBILITY) ACT, NO. 3 of 2003 ISBN 978–624–5674–01–5 Printed at Softwave Printing and Packaging (Pvt) Ltd, 107 D, Havelock Road, Colombo 05 and published by the Ministry of Finance, The Secretariat, Lotus Road, Colombo 01, Sri Lanka. MINISTRY OF FINANCE (AS AT DECEMBER 31ST 2020) Hon. Mahinda Rajapaksa, M.P. Minister of Finance Hon. Ajith Nivard Cabraal, M.P. State Minister of Money and Capital Market and State Enterprise Reforms Hon. Shehan Semasinghe, M.P. State Minister of Samurdhi, Household Economy, Micro Finance, Self-Employment and Business Development PRINCIPAL OFFICIALS S.R. Attygalle Secretary, Ministry of Finance Secretary to the Treasury R.M.P. Rathnayake Deputy Secretary to the Treasury M.S.S. Saman Fernando Deputy Secretary to the Treasury H.G. Sumanasinghe Additional Secretary Ministry of Finance H.H. Kasthuriarachchi Director General Ministry of Finance Ms. D.H.S. Pullaperuma Additional Director General Ministry of Finance R.M.A. Rathnayake Secretary, State Ministry of Money and Capital Market and State Enterprise Reforms Mr. H.K.D.W.N.B. Hapuhinna Secretary, State Ministry of Samurdhi, Household Economy, Micro Finance, Self Employment and Business Development HEADS OF TREASURY DEPARTMENTS (AS AT DECEMBER 31ST 2020) Department of National Budget Department of Trade and Investment Policy S.D.J. Nilukshan K.A. Vimalenthirarajah Director General Director General G.M.J.K. Gunawardana M.K.P. Kumara Additional Director General Additional Director General Ms. M. Anoma Nandani Comptroller General’s Office Additional Director General Ms. K.A. Ramya Kanthi Comptroller General Ms. Biyanka Gamage Additional Director General Department of Development Finance Ms. Geetha Wimalaweera Department of Public Enterprises Director General P.A.S. Athula Kumara Director General K.A.S.S.K. Perera Additional Director General J.M. Saman Jayasinghe Additional Director General Department of Public Finance Ms. J.C. Weligamage H.M. Saliya Dharmawardhana Director General Additional Director General S.U. Chandrakumaran Ms. D.C.W. Hapugoda Additional Director General Additional Director General E.A. Rathnaseela Department of Management Services Additional Director General Ms. S. Hiransa D. Kaluthanthri Director General Department of Treasury Operations K.G.P. Pushpakumara H.C.D.L. Silva Additional Director General Director General R.M.D.K.G.N.B. Ranathunga Department of Fiscal Policy Additional Director General Dr. M.K.C. Senanayake Director General Ms. Niluka Madampe Additional Director General HEADS OF TREASURY DEPARTMENTS (AS AT DECEMBER 31ST 2020) Department of Information Technology Department of National Planning Management R.H.W.A. Kumarasiri A.V. Janadara Director General Director General K.D.S.R. Perera S. Giridaran Additional Director General Additional Director General Ms. C.S. Perera Department of Legal Affairs Additional Director General Director General Ms. J.S.S. Rupasinghe Department of External Resources Additional Director General Ajith Abeysekara Director General Ms. Malar Gangatharan Additional Director General M. M. Noufal Additional Director General Ms. J.M.S.D. Rathnayake Additional Director General Department of Project Management and Monitoring Department of State Accounts Ms. P.K.A.D. De Silva W.A.S. Upananda Director General Director General N.S.M.P. Ranjith T.N. Ossen Additional Director General Additional Director General M.H.M. Zameel A.P. Kurumbalapitiya Additional Director General Additional Director General Ms. K.D.A. Munasinghe Additional Director General Department of Management Audit Ms. S.A. Chandrika Kulathilake Director General A.N. Hapugala Additional Director General Government Auditor S.M.D.S.S. Rohitha Deputy Auditor General HEADS OF DEPARTMENTS UNDER THE PURVIEW OF THE MINISTRY OF FINANCE (AS AT DECEMBER 31ST 2020) Department of Inland Revenue H.M.W.C. Bandara Commissioner General of Inland Revenue Department of Customs Major General (Retd) G.V. Ravipriya Director General of Customs Department of Excise M.J. Gunasiri Commissioner General of Excise Department of Valuation Ms. P.D.D.S. Muthukumarana Chief Valuer Department of Census and Statistics P.M.P.A. Kumara Director General Department of Imports and Exports Control Ms. T.V.D.D.S. Karunarathne Imports and Exports Control General Department of Registrar of Companies D.N.R. Siriwardhana Registrar General of Companies HEADS OF STATE BANKS / STATUTORY BOARDS and OTHER INSTITUTIONS UNDER THE PURVIEW OF THE MINISTRY OF FINANCE (AS AT DECEMBER 31ST 2020) Central Bank of Sri Lanka National Lotteries Board Prof. W.D. Lakshman Lalith Piyum Perera Governor Chairman People’s Bank Development Lotteries Board Sujeewa Rajapakse Amitha Gamage Chairman Chairman Bank of Ceylon Sri Lanka Accounting and Auditing Kanchana Ratwatte Standards Monitoring Board Chairman Ms. K.M.A.N. Daulagala Chairman Sri Lanka Savings Bank Ms. Keshila Jayawardhana Public Service Mutual Provident Association Chairman R.A.T.A. Ranaweera Chairman National Savings Bank Ms. Keshila Jayawardhana Lady Lochore Loan Fund Chairman A.T. Kurumbalapitiya Chairman State Mortgage & Investment Bank Dr. Udaya Sri Kariyawasam National Insurance Trust Fund Chairman M.M.M. Maujood Chairman Regional Development Bank Mahinda Saliya Tax Appeals Commission Chairman Justice Hector Yapa Chairman Housing Development Finance Corporation Bank Sri Lanka Insurance Regulatory Commission Ms. R.M.R.W. Manchanayake Razik Zarook Chairman Chairman Credit Information Bureau of Sri Lanka Public Utilities Commission of Sri Lanka Ms. T.M.J.Y.P. Fernando Janaka Rathnayake Chairman Chairman Litro Gas Lanka Ltd Sri Lanka Export Credit Insurance Anil Koswatta Corporation Chairman A.H.W. Abawatta Chairman HEADS OF STATE BANKS / STATUTORY BOARDS and OTHER INSTITUTIONS UNDER THE PURVIEW OF THE MINISTRY OF FINANCE (AS AT DECEMBER 31ST 2020) Security and Exchange Commission of Sri Lanka Viraj Dayarathne Chairman Sri Lanka Insurance Corporation Ltd Jagath Wellawatta Chairman CONTENTS Part 1: Macro – Fiscal Perspectives CHAPTER 1 : Developments in Fiscal Policy, Strategy and Challenges 03 1.1 Overview 04 1.2 Way forward with Budget 2021 06 1.3 Reforms in the State Owned Enterprises (SOEs) 08 1.4 Investment prospects 09 1.5 COVID-19 response 09 1.6 Medium Term Strategy and outlook 2021–25 12 CHAPTER 2 : Economic Developments in 2020 25 2.1 Overview 26 2.2 Sri Lankan economy 27 2.3 External sector 38 2.4 Monetary sector developments 44 2.5 Inflation 46 2.6 Employment and unemployment 46 2.7 Equity market developments 47 CHAPTER 3 : Global Economic Developments 49 3.1 Overview 50 3.2 World output 52 3.3 Inflation 53 3.4 Interest rates 54 3.5 Unemployment 55 3.6 Fiscal position 55 3.7 Capital flows and financial behaviour 57 3.8 Currency movements 58 3.9 World trade 58 3.10 World commodity market 59 3.11 Look forward within the Sri Lankan context 61 PART II : Final Budget Position CHAPTER 4 : Government Revenue 65 4.1 Overview 66 4.2 Revenue policy measures – 2020 67 4.3 Government revenue performance 70 CONTENTS CHAPTER 5 : Government Expenditure 91 5.1 Overview 92 5.2 Appropriation Act for 2020 92 5.3 Supplementary estimates 93 5.4 Revised Budget for 2020 94 5.5 Advance Account Activities 94 5.6 Public Expenditure Management 94 5.7 Composition of government expenditure 100 5.8 Sectoral classification of government expenditure 101 CHAPTER 6 : Cash Flow Management, Deficit Financing and Debt 113 6.1 Overview 114 6.2 Government Treasury cash flow operations – 2020 114 6.3 Government Borrowing Programme– 2020 115 6.4 Financing of the Budget 115 6.5 Central government debt 127 6.6 Debt service payments 131 PART III : Functional Performance and Reforms CHAPTER 7 : Development Finance 135 7.1 Overview 136 7.2 Financial assistance for MSMEs 137 7.3 Supports to enhance the productivity of the Agriculture sector 141 7.4 Social security for targeted segments of the society 145 7.5 Foods security 146 7.6 Cost of Living 148 CHAPTER 8 : Performance of State Owned Enterprises 153 8.1 Overview 154 8.2 Energy 157 8.3 State Banks 161 8.4 Water 166 8.5 Ports 168 8.6 Insurance 169 8.7 Commuter transportation 170 8.8 Aviation 171 CONTENTS 8.9 Construction 173 8.10 Lotteries 175 8.11 Livestock and dairy 176 8.12 Marketing and distribution 178 8.13 Plantation 179 8.14 Health 181 CHAPTER 9 : Public Finance Management 189 9.1 Overview 190 9.2 Changes in Public Finance Management Processes in the current environment 190 9.3 Statutory Funds, Trust Funds and Departmental Fund Management 191 9.4 Parliamentary control over public finance 192 CHAPTER 10 : Human Resource Management 197 10.1 Human Resource Management in the public sector 198 10.2 Cadre Management in 2020 198 10.3 Distribution of public service cadre by service level- 2020 199 10.4 Cadre of the Government Development projects 199 10.5 Health service 201 PART IV : Financial Statements 203 BOX Articles Box 1.1 Key policy responses to COVID-19 10 Box 1.2 Major Fiscal Measures: January – May 2021 14 Box 4.1 Major Fiscal Measures: January – December 2020 79 Box 5.1 Digitalizing the Government amidst COVID-19 Outbreak 111 Box 7.1 Special Measures for Re-energizing COVID 19 Affected MSMEs 136 Box 7.2 Reforms in Agriculture Sector: Economic Revival and Poverty Alleviation 149 Box 9.1 Improving Governance through Internal Auditing 193 Box 9.2 A Snapshot of the management of selected Non- Financial Assets of the Government 195 Box 10.1 Establishment of Multi Purpose Development Task Force 200 TABLES 1.