Disaster-related spending: Supplementary allocations will suffice: Treasury
The Government intends to finance post-Cyclone Ditwah relief, recovery, and reconstruction through supplementary budgetary allocations rather than the main National Budget, according to Treasury Deputy Secretary A.N. Hapugala.He maintained that the additional expenditure would not disrupt fiscal stability, commodity prices, or foreign reserves.
Hapugala added that disaster-related spending in the coming year would be accommodated within existing fiscal frameworks, noting that significant fiscal space remained available under supplementary expenditure provisions. He said that approximately Rs. 400 billion could be mobilized through two additional expenditure ceilings without undermining the Government’s overall cash position, which currently stands at around Rs. 1.3 trillion.
Referring to statutory fiscal limits, Hapugala said the Public Financial Management Act permitted a budget ceiling of 13%, but stressed that exceptional circumstances such as a large-scale natural disaster allowed for limited flexibility.
“I think an extra 1% can be allocated in this exceptional situation,” he said. “Therefore, we can provide the necessary supplementary budgetary allocation.”
Addressing concerns over whether large-scale reconstruction and relief spending could lead to higher prices for essential goods, Hapugala rejected the notion that fiscal-side expenditure would translate into immediate price pressures. “No, I do not think this will have an impact. This is expenditure on the fiscal side and should not directly affect the prices of commodities like medicines or fuel,” he said.On the question of foreign reserves, Hapugala said the disaster response could, in fact, have a positive effect, citing expected inflows of external budgetary support from international partners. The Treasury Deputy Secretary also responded to questions on the apparent disparity between estimated disaster losses and the funding currently identified for relief and reconstruction, indicating that discussions with multilateral institutions were ongoing. “I cannot specify the exact plan at this moment. We are currently planning discussions with foreign organizations, such as the World Bank and others, to secure support. I cannot state the exact amount that will be available, but we should be able to provide clearer figures in the future,” he said.
When asked about the relatively small share of foreign assistance in the total disaster-related expenditure to date, Hapugala said detailed figures on expenditure composition and forecasting fell under the purview of budget authorities, adding that further clarity would emerge as discussions with external partners progressed.
The Treasury’s assurances come amid growing public scrutiny over the financing of disaster response efforts following Cyclone Ditwah, which caused widespread damage across multiple sectors and prompted calls for transparency on funding sources, fiscal trade-offs, and long-term recovery planning.