Wednesday, 26 February 2020 08:56

Project readiness criteria established for disbursement of foreign and local financing

Govt. institutions encouraged to implement projects with domestic resources


The Ministry of Finance has issued a circular laying down steps to ensure “project readiness” for the effective disbursement of foreign and local financing for future projects.

The circular has been issued to secretaries of ministries and state ministries, chief secretaries of provincial councils, heads of departments, district secretaries and all heads of statutory bodies by Treasury Secretary S.R. Attygalle.

The Treasury Secretary said the Government annually invested a large portion of local and foreign financing resources in building social and economic infrastructure through development projects and programs but a considerable number of them were recorded as slow-moving for various reasons which were not given due attention during the initial stage of the projects’ preparation.

“It has been observed that most of the slow-moving projects will end up with project extensions, cost variation or partial project cancellation, which will in turn incur a significant financial, economic and social cost for the country. Project readiness is an important criterion for the allocation of financial resources from the National Budget for the implementation of development projects,” Attygalle said in the circular.

He added that it was often observed that foreign and local financing allocated for projects was not properly utilised due to various issues relating to project readiness such as delays in land acquisition, poor designing, planning and coordination, inadequate implementation arrangements, delays in obtaining necessary approvals for project staff and environmental and social safeguards.

The circular directed ministry secretaries to personally ensure that requests for budgetary provisions for the supply of goods and services and civil works from the Department of National Budget were done only after meeting the readiness criteria.

It added that given the country’s high exposure to foreign financing, every effort should be made to implement the projects with the domestic resources available within the medium-term budgetary framework while foreign financing opportunities should only be explored for infrastructure projects that consist of a considerable volume of import content and require foreign expertise and technology.

(FT)

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