02. Information on Government Debt

Following details presented by Hon. Ravi Karunanayake, the Minister of Finance, on the public debt stock at the beginning of the month of July 2015, have been considered by the Cabinet of Ministers.

Details of the total outstanding public debt as at 03.07.2015 are as follows.

03. Commonwealth Heads of Valuation Agencies Conference - Colombo - 2015

Commonwealth Heads of Valuation Agencies Conference is held annually with the objective of providing opportunities to share a wide range of knowledge and views on utilization, rights, development, and valuation of the properties among the member countries.

The proposal made by Hon. Ravi Karunanayake, the Minister of Finance, to organize relevant activities required to holding the above conference in Colombo in the upcoming October with the participation of about 100 representatives of Commonwealth countries, was approved by the Cabinet of Ministers.

04. Town's East of Colombo Water Supply Project Package II and III

The proposal made by Hon. Rauff Hakeem, the Minister of Urban Development, Water Supply and Drainage, to implement the Town's East of Colombo Water Supply Project Package II and III funded by local banks under the implementation of priority water supply projects funded by local banks, was approved by the Cabinet of Ministers.

05. Greater Polonnaruwa Town Development Project

Polonnaruwa town and its nodal points known as Polonnaruwa, Kaduruwela and New Town are growing fast as Heritage City, Commercial City and Administrative City respectively. It has been observed that this town is catering for over 80,000 people daily and this number is likely to increase rapidly. The Urban Development Authority has proposed to implement a number of town development projects to develop Polonnaruwa as a Metro City, overcoming the issues of traffic congestion, parking issues and environmental hazards, keeping with the development plan prepared for the entire town. The proposal made by Hon. Rauff Hakeem, the Minister of Urban Development, Water Supply and Drainage, to implement the Grater Polonnaruwa Town Development project which is comprised of many projects in the fields of commercial development, heritage conservation and tourism promotion, environmental and landscaping development, at a cost of Rs. 16,650 million on a priority basis, was approved by the Cabinet of Ministers.

06. Broadlands Hydropower Project

The Broadlands Hydropower Plant with a capacity of 35 MW is built in Kithulgala area which is in between Ambagamuwa Koralaya and Yatiyanthota Divisional Secretariat areas. This hydropower plant is a significant milestone in the generation of renewable energy in Sri Lanka and one of a few medium scale hydropower plants which are constructed in Sri Lanka. The required loan for the project has been obtained from the Industrial and Commercial Bank of China and the required insurance coverage for the said loan has been taken from the China Export and Credit Insurance Corporation. The proposal made by Hon. Patali Champika Ranawaka, the Minister of Power and Energy, to accept the said insurance corporation as a combined lender of the loan, was approved by the Cabinet of Ministers.

07. Establishment of standardization for fertilizers to be imported outside the fertilizer recommendation

The application of fertilizer for crops varies depending on types of crops, soil conditions, climatic zones and the Department of Agriculture has declared fertilizer recommendations for all food crops. Farmers who are engaged in commercial farming tend to use more chemical fertilizer with the objective of achieving higher economical benefits. Due to factors such as non use of fertilizer in due proportion and the applying of substandard fertilizer have recently given rise to problems associated with healthiness of agricultural products. Over a hundred types of special chemical fertilizer manufactured in various countries in different qualities are available in the local market. The proposal made by Hon. Duminda Dissanayake, the Minister of Agriculture, to establish a standard for fertilizers with the agreement of fertilizer importers, was approved by the Cabinet of Ministers.

08. To approve additional allocations during the year 2015 in order to settle payments under 24 road projects which are being financed by the National Savings Bank under which Rs. 28.0 billion out of the loan proceeds has been used by the Road Development Authority for the payment of activities outside the scope of loans

The Road Development Authority has been implementing a programme for the rehabilitation and improvement of 28 national highways in various parts of the island through domestic contractors with the loans obtained from the National Savings Bank amounting to a total of Rs. 54.70 billion. The RDA has commenced an internal inquiry on use of Rs. 28 billion of this loan for activities outside its scope and has informed the Financial Crimes Investigation Division to conduct investigations into this matter. As the renovations under these projects have been stopped due to the above matter, the joint proposal made by Hon. Ravi Karunanayake, the Minister of Finance and Kabir Hashim, the Minister of Highways and Investment Promotion, to obtain the required funds for the payment of outstanding bills and for resuming works of these projects, was approved by the Cabinet of Ministers.

09. Free domestic power supply for resettled families in the North and East

The government is taking continuous efforts to resettle all families displaced by the armed conflict in North and East. At present, 232,828 families (796,342 members) are resettled in the Northern and Eastern Provinces. The provision of access to electricity, water, sanitation etc. to resettled families is a responsibility of the government. The joint proposal made by Hon. Patali Champika Ranawaka, the Minister of Power and Energy and Hon. D.M. Swaminathan, the Minister of Resettlement, Reconstruction and Hindu Religious Affairs, to restore provision of electricity connections free of charge to 20,000 resettled families in the North and to grant an additional allocation of Rs. 105 million to facilitate free domestic power supply connection to 5000 resettled families in 2015, was approved by the Cabinet of Ministers.

10. Submission of International Labour Organization protocol to the conventions and recommendations to the Parliament

Sri Lanka is a member of the ILO. Accordingly, the proposal made by Hon. S.B. Nawinne, the Minister of Labour, to submit the protocol of convention 29 i.e. Protocol to the Forced Labour Convention, and recommendation 203 i.e. Supplementary measures for the affective suppression of forced labour, which were adopted at the 103rd session of the International Labour Conference to the parliament, was approved by the Cabinet of Ministers.

11. Holding the 34th session of the Asia-Pacific Fishery Commission and its Sixth Regional Consultative Forum in Sri Lanka

Asia Pacific Fisheries Commission is a regional fisheries body established under the Food and Agriculture Organization of the United Nations to promote the full and proper utilization of living aquatic resources in the Asia Pacific region by the development and management of fishing and culture operations and by the development of related processing and marketing activities in conformity with the objectives of its members. The proposal made by Hon. Mahinda Amaraweera, Minister of Fisheries and Aquatic Resources Development, to hold the 6th Regional Consultative Forum of the above Commission from 08th to 11th of February 2016 and its 34th session from 12th to 14th of February 2016 and to provide host facilities for the above events, was approved by the Cabinet of Ministers.

12. Implementation of the local Bank funded Water supply projects of Galagadera and Mawathagama

Cabinet approval has already been granted for the award of the contracts with funds secured from the local banks with Treasury Guarantee for the implementation of the Galagadera and Mawathagama water supply projects. After further negotiations by the Committee appointed by the Ministry to review the contract price of the project with the contractor it was agreed to offer lump discount of Rs. 21 Million on completion of the project on the condition that it should be deducted from the final retention money provided the contract has been completed to the satisfaction of the National Water Supply and Drainage Board. The Economic Affairs Sub Committee has also agreed to further processing of the project. The Cabinet of Ministers approved a proposal made by the Hon. Minister of Water Supply and Drainage and Urban Development Rauf Hakeem to proceed with the implementation of this project with Local Bank Funding.

13. Green Poiweer Development and Energy Efficiency Improvement Investment Programme – Package 3 – Medium Voltage Network Efficiency Improvement

Green Power Development and Energy Efficiency Improvement Investment Programme has been implemented under the Asian Development Bank loan obtained in the year 2014. Medium Voltage Network Efficiency Improvement Project is being implemented under package of this programme. The Cabinet of Ministers approved a proposal made by the Hon. Minister of Power and Energy Patali Champika Ranawaka to implement this project in accordance with the recommendation made by the SCAPC Technical Evaluation Committee

14. Completion of the remaining work of the new children’s unit of the De Soyza Women’s

The De Soyza Women’s Hospital at Kinsey Road in Colombo 08 which is under the Ministry of Health is providing an invaluable service to the pregnant women with problems and complexities who come to this hospital from various parts of the country. This hospital has been operating in several old buildings and ten years before it was started to build a new baby unit with a unit for immature babies. However, construction work has been stopped half way owing to the negligence of the contractor. Re-estimates of the remaining work of the building were done.

The Cabinet of Ministers approved a proposal made by the Hon. Minister of Health and Indigenous Medicine Dr. Rajitha Senaratne to offer the contract of completing the remaining work of the new baby unit of De Soysa Hospital for Women to the Central Engineering Consultancy Bureau under an estimated sum of Rs. 325.4 Million (with Tax) subject to the covering approval of the Ministry of Housing and Samurdhi on the design and build basis.

15. Establishment of Clinical Waste Management Systems in the needy hospitals in Sri Lanka undere Australian Assistance

One of the most serious problems being faced by the hospital authorities in Sri Lanka is the management of healthcare waste, which consists of various infectious materials. The current Health Care Waste Management (HCWM) practices in the hospitals of Sri Lanka results in significant risk to the public health. Already, Cabinet approval has been granted to proceed with the project proposal for the establishment of clinical waste management systems in the needy hospitals in Sri Lanka under Australian Assistance. The Cabinet of Ministers approved a proposal made by the Hon. Minister of Health and Indigenous Medicine Rajitha Senaratne to implement this project subject to changes that becomes necessary in accordance with the recommendations and approval given by the Cabinet Sub Committee on Economic Affairs and as proposed by the relevant Cabinet Sub Committee.

16. Construction of a new building for the Attorney General’s Department

Due to the lack of sufficient space and facilities in the present Attorney General’s Department construction of a new seven stories building within the land on which the present Superior Court Complex has been started. The Cabinet of Ministers approved a proposal made by the Hon. Minister of Justice Wijedasa Rajapaksa to award the contract for the piling work of the new building as per the recommendations of the Cabine Sub Committees of Technical Evaluation and Procurement.

17. Development of Apparel and Allied industries in Welioya and Musali Divisional Secretaries areas

Already Cabinet Approval has been given to establish Industrial Estates in Welioya and Musali Divisional Secretary Divisions to generate employment for unemployed people and resettled in order to elevate their income levels and living conditions.

Although these infrastructure development activities should be carried out by utilization the funds of the investors in accordance with the said approval, it has become difficult to implement this task due to the reluctance of the investors to carry out these infrastructure development activities since these areas come under the remote districts of Mulativu and Mannar. A survey carried out has revealed that over 2,500 youth are prepared to employ in the apparel industry and about 500 youth have already gained experience in the field through employment in apparel industries and factories outside these areas. The Cabinet of Ministers approved a proposal made by the Hon. Minister of Industry and Commerce Rishad Bathiudeen to construct three buildings each in the Welioya and Musali Divisional Secretary Divisions by the government and allocate these buildings to prospective investors on a long term lease basis to recover the expenditure incurred by the government for the construction of these buildings.

18. Implementation of Laggala New Town and Wilgamuwa Water supply projects with funding secured from local banks with a Treasury Guarantee

The Laggala New Town and Wilgamuwa Water supply projects being implemented by the Water Supply and Drainage Board under the supervision of the Ministry of Water Supply and Drainage and Urban Development are expected to be completed in the year 2017. The Cabinet of Ministers approved a proposal submitted by the Hon. Minister of Policy Planning, Economic Affairs, Child, Youth and Cultural Affairs Ranil Wickremasinghe to authorize the Water Supply and Drainage Board to acquire funds required for the implementation of these two project from the local banks.

19. Printing of required school text books for free distribution in the year 2016

The main task of the Department of Educational Publication is to print and duly distribute the text books required by all the school students adnd student monks in Pirivena throughout the country, free of charge. Printing orders have already been given to the State Printing Corporation, the Government Press and Associated Newspapers Ceylon Limited in accordance with the Cabinet Decision dated 09.07.2015 for printing 13,210,600 copies of 80 types out of 410 books. In order to accomplish this task successfully, 30,862,500 copies of text books from 330 categories are required to be printed from private printing institutions. The Cabinet Procurement Committee has given approval on 20.07.2015 to handover the printing of 30,862,500 copies of text books from 330 categories to 19 printing institutions.
The Cabinet of Ministers approved a proposal submitted by the Hon. Minister of Education Akila Viraj Kariyawasam to get these text books printed from the approved 19 printing institutions.

20 Obtaining assistance from Netherland to finance the development of Kalutara General Hospital as a Specialized Maternal and Children’s Hospital

The Cabinet of Ministers took note of the details given by the Minister of Finance Hon. Ravi Karunanayake that the Cabinet of Ministers in the Cabinet meeting held of 08.07.2015 has approved the development of Kalutara General Hospital as a Specialized Maternal and Children’s Hospital and the Ministry of Finance on behalf of the Government of Sri Lanka is to enter into two agreements with the Robo Bank of Netherland and Hatton National Bank of Sri Lanka to obtain Euro 28.7 million required for this purpose.

21. Abolition of pension discrepancies in the Tri Forces

The Cabinet of Ministers gave approval on 10.06.2015 to compare the salaries based on the salary structure effective from 01.01.2006 which abolished the pension discrepancies for those who retired before the year 2006. Accordingly the Public Administration Circular No. 16/2015 has been issued. Accordingly the Cabinet of Ministers approved a proposal made by the Minister of Public Administration, Local Government and Democratic Governance Hon. Karu Jayasuriya to revise the pensions of those who served in the tri forces and retired before the year 2006.

22. Preparation of Budget 2016

Hon. Ravi Karunanayake Minister of Finance informed the Cabinet that it has been planned to prepare the Budget for the year 2016 to achieve the undermentioned objectives.

• Reduce the budget deficit to 5.5% of Gross National Production
• To maintain the state investment level between 6 – 8% of the GDP
• Encourage to make private sector investment between 22 – 24% of the GDP
• Maintain the total investment level of the economy at 30% of the GDP

•Achieve an economic growth beyond 8% in the medium term framework of 2016-2018

In this context The Ministry of Finance is in the process of formulation of the annual national budget for 2016 within the Medium Term Budgetary Framework for 2016-2018 in consultation with the relevant line Ministries.

It has been observed that there is a significant amount of carried forward liabilities settled at the following budget year being a practice for decades. Due to this reason, the targets of development programmes have not been reached on time and as a result, allocated resources for the year are not sufficient to meet the requirement of the budget year. Also with these developments, cash flow management of the Treasury has become extremely difficult. Therefore, it has been decided to introduce Zero Based Budgeting method as a tool of budget preparation and implementation from 2016 onwards. With this method it is expected to manage the public expenditure prudently.

Accordingly, the Department of National Budget will issue a Budget Call 2016 including guidelines of preparation of this year’s budget within the targets of Medium Term Budgetary Framework. Further, all spending agencies are requested to prepare their estimate for 2016 under the Medium Term Budgetary Framework by using the zero based budgeting method in which reviewing missions, objectives and functions of Ministries/ departments/ institutions and assessing the relevance of all activities being carried out so far, in the current context are considered integral elements. An Annual Budget will be prepared with a starting point of “0” and the expenditure will be limited to approve budgetary provisions. Accordingly, any issue associated with carry forward expenditure should not arise. Resource allocation to the Ministries is based on the sectoral ceilings. Accordingly, the consultation process with the spending agencies will commence in the 1st week of August 2015.

23. The present status of the Commission to investigate Allegations of Bribery or Corruption (CIABOC)

Hon. Prime Minister Ranil Wickremasinghe informed the Cabinet of Ministers the situation that has arisen due to cooperation and guidance being not given by the Chairman and Commissioners of the Commission to investigate Allegations of Bribery or Corruption who have been appointed by the previous government. He said that due to the activities of the Chairman and the Commissioners the total activities of the Commission have become defunct. The Hon.Prime Minister also stated that it has become difficult even to take legal action in respect of a large number of complaints for which investigations have been completed.