Budget sans A vision
Posted on March 11th, 2019

By Shivanthi Ranasinghe  Courtesy Ceylon Today

Though the Budget is always given huge publicity, by the Media, and becomes the topic of the town, majority of people remain clueless as to what it contains. The ordinary citizen whose discipline is not in accountancy or economics, do not know how to analyse the Budget and find the many digit numbers mind boggling.

Politicians’ wisecracks about the presented Budget do not make the deciphering any easier. Usually the Ministers praise it whilst the Opposition vows to defeat it. Yet, Ravi Karunanayake’s words to the effect, it’s not my opinion that matters; it’s how we accommodate this Budget,” could not have brought any comfort even to the most hardcore UNPer.

Usually people wait for the analysts to throw the titbits such as which commodity and service will cost more in the coming year. However, knowing that except for electric cars, taxes for every other vehicle including go-carts have increased or that the price of an essential food will be reduced hardly gives us the understanding needed to judge the overall Budget or comprehend how this will ultimately affect our purse.

At a media conference on 6 March, by Viyathmaga, Dr. Nalaka Godahewa in his characteristic everyday language explained what a Budget should represent and how we must interpret it.

What is a Budget?

A Budget is a roadmap of a country’s long-term economic development plan, he explained. Therefore, this is the most important document regarding a country’s economy. Though the Budget essentially focuses on the projects of that year, these projects must be the elements of the country’s long-term development plan. The Budget also outlines the strategy to overcome present economic challenges the country faces.

Most unfortunately though, the Budget proposals that were presented in the four years of this Government had failed to live up to this basic standard. The pledges made in these four Budget proposals during this tenure are promptly forgotten by both the Government and the Opposition. Once approved, neither party had taken the pains to follow up the progress of these pledges.

Furthermore, the fact that the same projects keep being included into successive Budget proposals as brand new projects is an indictment of the officials’ own lack of interest, observed Dr. Godahewa. For example, in the 2016 Budget Proposal, item 254 was to build, in Colombo, a fully facilitated international conference hall with seating capacity for 7,000. This very same item was re-introduced in the 2017 Budget Proposal as item 235, with the only difference been the seating capacity for only 5,000.

Therefore, it is not a surprise that the past four Budgets that were passed through had ended, each as a miserable flop. Finance Minister Mangala Samaraweera as an extremely good propagandist may be able to present the Budget in an appealing manner. However, that would not prevent the 2019 Budget proposal, which is without its basic disciplines, from being any different to the failures of the previous four passed Budgets.

The last four years have been a financially tough period for all Sri Lankans. Analysing the contents of the present Budget proposal’s, it appears that 2019 might be even tougher than the previous four years, Dr. Godahewa noted.

In comparison to 2014, the Government income in 2019 is expected to be increased by 94 per cent from Rs. 1,264 billion to Rs. 2,464 billion. However, it is because of the increase of taxes by 97 per cent since 2014. Likewise, in comparison to 2014 taxes levied on goods and services would also be increased by 100 per cent. In 2019 alone, the increase of taxes is 21 per cent.

In addition, the Sri Lankan Rupee had depreciated by 30 per cent since 2014. Therefore, the consumer has to pay more for imported items. Local goods and services also have increased its prices because of higher interest rates, taxes levied on domestic businesses and import prices of raw materials. Though the Finance Minister boasted that public sector salaries have doubled, since 2014, he conveniently omitted that the cost of living of every single citizen has also more than doubled.

Non-State sector

The FM also appears to have forgotten about those who are not employed by the Government sector. The public sector only comprises of 1.4 million workers. There are 3.5 million in the private sector, and 3.3 million are self employed and the incomes of these 6.8 million persons have not doubled. As the income has not kept in step with the expenses, the living standards of half the working population have regressed significantly. However, the FM did not make any reference to this stark reality, observed Dr. Godahewa.

Government expenditure has also increased at the same rate as its income. Therefore, it is not possible to expect long term benefits to the country as investments have not increased, Dr. Godahewa stated.

Since 2014, Government income had increased by Rs. 1,033 billion. That is a 74 per cent increase. As mentioned above, Government expenses too have increased likewise. Yet, the question arises why this has not translated into increased facilities for the people in terms of health, education, transport, sports or security. If the people have not benefitted, then who has, is something we must question, remarked Dr. Godahewa.

Loans

It has been proposed by this Budget to seek loans to the effect of Rs  2,000 billion. We are already holding a debt of over Rs 12,000 billion. Therefore, by end 2019, our National Debt would exceed Rs 14 trillion.

In 2005, the National Debt was Rs 2,200 million. Over the next nine years, this increased to Rs 5,200 billion. However, during this period, Sri Lanka fought and won against a well equipped terrorist organisation that had both sea and air capabilities, including striking power and international support. At the same time, the country saw an unprecedented infrastructural development in terms of express highways, power plants, sea and air ports, and other transport networks.
In the five years under Ranil Wickremesinghe, the National Debt rose by Rs 6, 600 million.

However, as a wag noted, other than the Central Bank Bond scams, this UNP Government is not noted for any other ‘achievement’. Against the GDP, the National Debt ratio is 91 per cent, which is a 20 per cent increase since 2014.
By end 2018, noted Dr. Godahewa, the economic development rate has fallen below 3 per cent. Against Bangladesh’s 7.4 per cent, Nepal’s 7.9 per cent, Bhutan’s 7.4 per cent, Laos’s 6.9 per cent, Pakistan’s 5.4 per cent, Maldives’ 4.8 per cent, Sri Lanka is clearly lagging behind. It is tragic, said Dr. Godahewa; that we are struggling to stay shoulder-to-shoulder with Afghanistan – a country engulfed in terrorism.

Yet, the 2019 proposed Budget does not contain a single proposal or strategy to overcome this dismal situation, noted Dr. Godahewa. This Budget proposal does not include any strategy to – counter the fast depreciating Rupee. In 2018 alone, the Rupee depreciation has been about 20 per cent to  stabilise the foreign exchange rate. The available forex that is less than Rs,7 billion is just enough to cover the loan dues for 2019; to revitalise the current lethargy in  economic environment; strategies to promote exports; create new job opportunities; prevent scams and corruptions such as the Bond scam that has breached investors’ trust; inject life to local industries or  uplift the presently paralysed agricultural sector that provides livelihoods to over one third of our population.
At the very least, this proposal does not contain even an economic goalpost, he observed.

These goalposts and strategies are essential elements in economic development, Dr.Godahewa explained. However, this time too, a Budget has been proposed without either of these details. Therefore, this proposal too, like the previous four, is nothing more than a set of words, asserted Dr. Godahewa.

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