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 Bill also goes through the first, second and third reading stages and only it becomes a law when it is passed.

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 Public Finance

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.

1. 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.
2. 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:

• 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.
• 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.
• 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.

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".

Second Reading of the Appropriation Bill commence with the Budget Speech, 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 26 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 limit

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.

The Committee stage of the Budget/Appropriation Bill will be conducted over a period of a maximum of 22 days. Standing Order 75(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.

If the Appropriation Bill is rejected by the Parliament, the Cabinet of Ministers shall stand dissolved, as per Article 48(2) of the Constitution.