Editorial Courtesy The Island

Thursday 7th March, 2019

The government has presented an election budget. Having lost the local government polls very badly, it is all out to regain popular support. It has tried to give something to everyone in a bid to arrest the rapid erosion of its vote bank. The goal it has set for itself is very ambitious as the very theme of the budget suggests: Enterprise Sri Lanka – ‘Empowering the people and nurturing the Poor’.

The public sector workers have been promised a 2,500-rupee allowance. This alone is proof of the government’s desperation. One of the main reasons for the yahapalana administration’s pecuniary woes is the massive public sector pay hike it granted, in 2015, to win the parliamentary polls. Its fear of elections seems to have made the government turn a blind eye to reality and throw caution to the wind.

The Rajapaksa government gave away sil redi in a bid to win the last presidential election, albeit in vain. The present administration is throwing public money around by way of loans to garner votes. It has undertaken to grant concessionary housing loans to newly married couples up to Rs. 10 mn each, to be paid back, in 25 years, at a 6% interest rate.

The people’s housing needs must be met, but it has to be ascertained whether the proposed scheme is feasible and the interest rate realistic. Loans are also being given without collateral to ‘entrepreneurs’ and the question is how the government proposes to minimise the default rate, which is very high in this country. Will the state banks suffer heavy losses as no collateral is to be put up for the special loans?

Many people in the rural sector find themselves in a debt trap thanks to the micro finance companies which exploit them mercilessly. They are losing their properties to these institutions which encourage borrowing at usurious interest rates.

The government should have addressed the issues pertaining to micro financing. President Maithripala Sirisena’s brother, Dudley, has taken up cudgels for the hapless debtors; he has pledged to deliver them from the clutches of micro financing Shylocks. His campaign will help muster support for his brother, at the next presidential election.

It has been proposed to expand the Samurdhi movement to cater to many more beneficiaries. Samurdhi is already poorly targeted and this increase will make an already bad situation far worse at the expense of the taxpaying public.

The government’s success in making good on the impressive promises, in the budget, hinges on its ability to raise funds in sufficient amounts. Usually, tax revenue falls short of the target and the government has to jack up indirect taxes which increase the cost of living further.

The possibility of the people having to pay more for fuel, water, electricity, etc. so that the government can grant the promised allowance to the public sector workers and soft loans to others cannot be ruled out.

Meanwhile, Finance Minister Mangala Samaraweera, in his budget speech, on Tuesday, painted a very rosy picture of the economy. At the very outset, he declared that the economy had stabilised and there was an up-swing in the economic growth. He has unwittingly given the lie to the government oft-repeated claim that it cannot grant relief to the public and usher in development because it has to pay back loans its predecessor drew.