2015 Nov Budget Proposal to set up Export Import(EXIM) Bank by 1/4/2016 is still pending with no tangible progress made
The delay in the setting up of an Export Import Bank (EXIM Bank) in Sri Lanka and the discrepancy in the allocation of funds for this purpose by the Treasury have triggered confusion pushing the government’s ambitious plan into the doldrums, economic analysts said.
The proposal to set up the EXIM Bank, with an initial capital of Rs. 25 billion, subscribed jointly by the government and the industry was made in the 2016 budget.
It has also been proposed to allocate Rs. 50 million as seed capital being the contribution of the Government EXIM bank that will be operational from 01 April, 2016.
According to the budget proposal, it is also envisaged to list this company in the CSE.
Although this proposal was made known in the 2016 budget presented in November 2015, no action has been taken to make it operational up to now.
However the very same proposal was included in the 2017 budget presented in 2016 without mentioning that this same proposal was passed in parliament in 2016.
Finance Minister Ravi Karunanayake told parliament during his 2017 budget speech last year(2016) that a sum of Rs.10 billion would be allocated initial contribution for the establishment of the EXIM Bank.
This bank is a government or semi-government agency which commonly provides insurance cover to exporters against losses from non-payment by the importers, as a means to promote the country’s foreign trade.
Other services offered by EXIM Bank may include marine insurance, post-shipment discounting of invoices, pre-shipment advances against confirmed orders, and help in finding new markets, the Finance Minister revealed in parliament last year.
Making the matter more controversial, the government has presented a supplementary estimate in parliament recently allocating Rs.10 billion to set up the bank.
A supplementary estimate should be presented in parliament to provide funds to the Government to meet new or increased costs.
But it is unclear as to why the government has presented a supplementary estimate with a view of allocating a sum of Rs. 10 billion for the setting up of EXIM Bank when the money has been allocated for it from two previous budgets and passed in parliament, an economic analyst said.