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Appropriation
Bill (The Budget)
Introduction
The Budget is the more popular name for what Parliamentarians
refer to as the Appropriation Bill. In the annual calendar of
the Parliament of Sri Lanka, the Annual Budget Presentation
and ensuing debate takes precedence over most, if not all, legislation,
motions and resolutions which Parliament debates in any given
year. Like any other Bill presented in Parliament, the Budget
goes through the first, second and third readings and only becomes
the law when it is passed in all three readings.
The Budget is not an average Finance Bill, although it follows
the same procedures of any Bill. It is a tradition that the
Minister of Finance will use this opportunity to announce to
the country, and in fact to the world, the Government's economic
policy, its performance in the past years, and new directions
it is proposing to take. Hence, it is important to all taxpayers,
commercial enterprises, investors, and to people who are relying
on state welfare.
Parliament's Powers over the Finances of the Country
The Constitution of the Democratic Socialist Republic
of Sri Lanka - Chapter XVII, forms the foundation of
Parliament's powers over all public finances.
Article 148
This article states that any Public Authority or Local Authority, which is considering the imposition of any tax, rate or other levy, will do so only under the authority of a law passed by Parliament. All Public Finances will be under the total control of Parliament.
Article 149
Funds of the Republic which are not already allocated for a
particular purpose will be credited to the Consolidated Fund.
Taxes, Imposts, Rates, Duties, and all other revenues and receipts
paid to the State, if they are not already directed to any particular
activity, will accrue to the Consolidated Fund. Parliament may
decide the purposes for which funds may be drawn from the Consolidated
Fund. It will generally include the payment of interest on the
public debt, sinking fund payments, and expenses in relation
to the Consolidated Fund.
Article 150
The Government may withdraw funds from the Consolidated Fund
once Parliament passes a resolution or a law, granting a specific
sum of money for a specified public service to be spent in a
particular financial year. Once the Parliament authorizes, the
warrant under his signature Minister of Finance alone has to
be issued, for the withdrawal of the specified amounts to be
effected.
Paragraphs (3) and (4) of Article 150 provides
for two exceptions to this general practice.
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This applies to a situation
in which Parliament has been dissolved before it has allocated
funds through the budget. Then, the President is empowered
to authorise expenditure for the maintenance of Public
Services for a period of 3 months from the date on which
the new Parliament is scheduled to meet. |
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In the case of the President dissolving
Parliament and calls for an election when monies for the
purpose has not been already allocated by Parliament,
then the President may authorise the release of funds
from the Consolidated Fund after having consulted the
Commissioner of Elections. |
Article 151
Parliament may by law set up a Contingencies Fund for urgent
and unforeseen expenditure. If the Minister of Finance is satisfied
that there are no funds already allocated to meet the emergency,
he may with the consent of the President first obtained, authorise
an advance payment to be made from this fund. As soon as possible
thereafter, a Supplementary estimate has to be presented in
Parliament and its approval obtained, to replace the amount
so advanced.
Reserves
There is provision made by Financial Reserves Act No16 of 1944
for Parliament to keep any funds that are not appropriated in
a general reserve or special reserve fund. Such funds may be
transferred to the Consolidated Fund by a resolution of Parliament.
Article 154R
When the Provincial Councils were established by the Thirteenth
Amendment to the Constitution, Parliament voted funds for the
respective provinces from its annual budget by following the
recommendations of the Finance Commission. Article 154R stipulates
that the Governor of the Central Bank, Secretary to the Treasury,
and three others representative of the three major communities
and who have distinguished themselves in finance, administration,
business or learning, shall comprise the Commission.
The Finance Commission discusses the needs of the Provinces
with the key officials of the Provincial Administration and
General Treasury. It formulates the guiding principles which
forms the basis of its recommendations and Article 154R(5) states
it should particularly take into account population, per capita
income, elimination of disparities, and reduction in per capita
incomes.
The Commission's recommendations are made to the President who
in turn will communicate them to Parliament. The Government
will take into consideration these recommendations and "in consultations,
with the Commission, allocate from the Annual Budget such funds
as are adequate for the purpose of meeting the needs of the
Provinces".
The Appropriation Bill
The main steps in the preparation of the budget may be summarized as follows:
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The Ministry of Finance issues
the Budget Circular in the first quarter of the current
year. Ministries with the help of departments and agencies
functioning under them, prepare estimates of revenue and
expenditure. |
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The Finance Commission, in accordance
with its constitutional mandate recommends allocations
to the Provincial Councils, and submits them to the President.
These are taken into account by the Treasury. |
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The Ministry of Finance holds discussions
with Ministries in order to make estimates conform to
government policy and priorities. Then they are submitted
to cabinet for their study and approval. The finalised
estimates will reveal a surplus or deficit for the Government
budget. For the last several decades successive governments
have been running a deficit. These estimates are presented
to Parliament in the Appropriation Bill, which is in fact
the First Reading of the Budget, by the Minister of Finance. |
The general practice is for the Minister of Finance to present
the Appropriation Bill in the early part of October in the current
year and after passage through Parliament, it will be in force
from the 1st of January, the following year. This practice is
deviated from when a general election has been called and a
new Parliament has not been elected as yet, or when a new government
has just been sworn in and they have had no time to present
a proper budget.
When Parliament is facing such a situation, it resorts to passing
a Vote on Account. This procedure is a convention of Parliament
and finds no mention in either the Constitution or the Standing
Orders. Parliament does not pass funds for new projects, only
to those that are in progress. Departments and public agencies
are allocated funds to the extent that services essential to
the community have to be maintained. Therefore, after a brief
debate the Vote on Account is approved without a vote being
called for.
In its introductory paragraph, the Appropriation Bill for any
given year states the main purpose of the Bill in the following
manner:
"An act to provide for the service of the financial year concerned,
to authorize the raising of loans in or outside Sri Lanka, for
the purpose of such service, to make financial provision in
respect of certain activities of the government during that
financial year, to enable the payment, by way of advances out
of the consolidated fund or any other fund or moneys of, or
at the disposal of the government, of moneys required during
that financial year for expenditure on such activities, to provide
for the refund of such monies to the consolidated fund; and
to make provision for matters connected therewith or incidental
thereto".
This is the First Reading of the Budget, and the Minister of
Finance announces the date for the Second Reading, which is
in fact the detailed presentation of the Government's proposals
to raise revenue for its programmes through its annual Budget
in relation to the following financial year.
The Appropriation Bill, although it has very special status,
follows the same procedure as any average Bill of Parliament.
Thus, after the First Reading, a citizen may challenge the constitutionality
of its provisions before the Supreme Court in accordance with
Article 121.
It is to be noted that Standing Orders prescribe that not more
than a total of 29 days for the total budget process, of which
not more than 7 days may be devoted to the Debate on the 2nd
Reading, and not more than 22 days may be used for the Third
Reading or Committee Stage.
On what is commonly called the Budget Day or the Second Reading
of the Appropriation Bill, all sections of society await the
announcement of Budget Proposals. The Minister of Finance carries
his brief case, tied with a ribbon, into the Chamber. It is
symbolic of the secrecy of the proposals, and Parliamentary
convention demands that if news of a proposal is leaked before
it is announced in Parliament, the Minister resigns.
He will submit a report on the state of finances and the economy
of the country as the first part of the speech. The Second Part
contains the revenues and expenditure proposals, detailing the
manner in which taxes will be levied and the level of expenditure,
interest rates, subsidies and other concessions the Government
will be committed to implement. Generally, he will indicate
Government's position in relation to fiscal and monetary policy,
foreign aid and foreign investment, employment and social welfare.
The Budget Estimates are presented in a format which has been
followed for several years. It has two Schedules called Schedule
one and two. Schedule one comprises of the Recurrent and Capital
expenditure statements of the various Ministries and the departments
functioning under them. They are organized under Heads of Expenditure
and they are further divided into Programmes and Projects.
The Second Schedule deals with the Advance Account activities
of government departments, and it specifies the minimum limit
of receipt and maximum level of expenditure. Any variations
of these limits have to be done by Parliament after the Minister
of Finance submits revised estimates to the limits.
The presentation of the Budget is followed by a maximum of seven
days of debate. Time is allocated to the Government and Opposition
for speaking when the Committee of the Business of the House
meets. The respective Whips allocate time to constituent parties
and their members who wish to intervene in the debate. At the
end of the allocated seven days the Appropriation Bill is put
to a vote. Once Parliament votes for the Bill, it will be referred
to a Committee of the whole House. This is the Committee Stage
of the Appropriation Bill or the Third Reading.
It is also customary for all Ministries to distribute, among
all members, Progress Reports of activities undertaken by the
respective agencies functioning under their Ministries.
If a Member intends to move any amendment to the Budget, he
should give notice of the amendment to the Government at the
end of the Second Reading, and during the Committee Stage the
government would indicate its acceptance or rejection.
The Committee stage of the Budget/Appropriation Bill will be
conducted over a period of a maximum of 22 days. Standing Order
70(5) reads: "Except as provided in paragraph (1) of this Order
not more than twenty two of the days shall be allotted to the
Committee stage of the Appropriation Bill and on the last of
such days at 6.00 p.m. The Chairman shall, unless the Bill has
previously been reported, put forthwith the question on any
amendment under discussion and then successively on any Government
amendments to that Head and the Question necessary to dispose
of that Head and then proceed successively to put forthwith
the Question with respect to each Ministry's Heads".
The Opposition Party will decide how much time the House should
devote to each Ministry vote. Thereafter, time is allocated
between government and opposition, with the opposition receiving
more speaking time.
At the conclusion of the discussion on each Head, the question
is put to the House for their vote. A convention has developed
where a division is not called by the opposition on each Head
and the vote is taken only at the conclusion of the debate on
all Heads.
In most instances there are more Members wishing to intervene
than there is time for each to state his or her comment. Therefore
the respective parties are given an allocation of time. Standing
Orders permits a Member to speak more than one occasion during
this stage of the debate.
Having passed all Ministry Votes in a Committee of Whole House,
Parliament resumes sitting at the House immediately thereafter.
At this point, the Hon. Speaker would announce that the Appropriation
Bill for the particular year has been passed by Parliament,
with or without amendments.
This empowers Government to spend the allocated expenditure
for public services in the very next calendar year beginning
the 1st of January.
The consequence of Parliament rejecting the Budget is the resignation of Government or dissolution of Parliament, if one year has lapsed since the Parliament was sworn in. A new Government will have to submit a Budget afresh. Article 70(1) (d) of the Constitution provides that if the President has not dissolved Parliament on the first occasion on which the Appropriation Bill has been a rejected, the President shall dissolve it if the very next Appropriation Bill too is rejected.
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