Government Utilizes Only Half of Welfare Budget amid Foreign Loan Disbursements

October 18, Colombo (LNW): According to a recent report, the government has utilized just 53% of its allocated welfare budget for the year within the first eight months up to August. The Ministry of Finance’s latest data highlights that much of the welfare funding has been directed towards the ‘Aswesuma’ welfare program.

The report further indicates that Sri Lanka is set to receive approximately 1.69 billion US dollars in loans from multilateral agencies over the next three to five years.

 By the end of August 2024, foreign development partners and lending institutions had signed 10 agreements with the government, totaling 398.7 million US dollars in foreign financing, out of which 350 million dollars are in loans. An additional 48.7 million dollars came through seven grant agreements with Japan and Australia.

Foreign financing disbursements up to August 2024 have amounted to 1.01 billion dollars, including 994.4 million dollars as loans and 11.3 million as grants. 

The Asian Development Bank (ADB) has provided Sri Lanka with 358.3 million dollars, slightly exceeding the International Monetary Fund’s (IMF) contribution of 334 million dollars in budget support loans, while the World Bank has delivered 239.8 million dollars.

Both ADB and the World Bank have aligned their financial support with Sri Lanka’s IMF program established last year. Around 33% of the total disbursements have been allocated to the budget support sector, with 13% going to power and energy, 10% to SME development, and 7% to the finance sector.

The report also noted that an additional 1.69 billion dollars in loans from multilateral agencies remains undisbursed, expected to become available in the next three to five years. Furthermore, only 53% of the welfare budget has been spent during the first eight months of 2024, which amounts to 562.4 billion rupees out of the allocated 1,055.7 billion rupees.

Following IMF recommendations, the previous government increased the welfare budget by 15.3% this year compared to the 915.4 billion rupees spent in 2023. Of the 562.4 billion rupees spent so far in 2024, 112.7 billion was directed towards the “Aswesuma” poverty alleviation program, 9.5 billion for school nutrition, 4.4 billion for school textbooks and uniforms, and 24.2 billion for fertilizer subsidies.