Can Budget 2022 Deliver Economic Prosperity?
Posted on November 15th, 2021

By Shivanthi Ranasinghe Courtesy Ceylon Today

In the coming week the newlypresented Appropriation Bill 2022 (Budget for 2022) will come under the scrutiny of politicians of both divides, economists and other stakeholders. Opposition Leader Sajith Premadasa is already on record that it is a ‘Somalia-like’ Budget. The Yahapalana Government’s economic guru, Dr Harsha de Silva commented that despite the enormous effort to produce the Appropriation Bill, the result is insignificant. The kind of Budget the Opposition had in mind is an interesting question. 

Both Sajith Premadasa and Ranil Wickremesinghe, who has the potential to grab Premadasa’s vote base, were not present when the Finance Minister Basil Rajapaksa began his presentation. Neither had either Premadasa or Wickremesinghe, despite their long political careers been able to inject the economy with any growth during the Yahapalana Governments reign. 

What should have been the Island’s golden era was scuttled away by the Yahapalana Government. Locally, regionally and globally conditions were conducive for the economy to grow, during the four years of the Yahapalana Government. After the conclusion of a 30 plus year war against terrorism, the country was ready to move forward. 

While neighbouring countries like Pakistan and Bangladesh boomed, the mismanagement of Sri Lanka’s economy was appalling. It was as if the Yahapalana Government’s true agenda was to sabotage the economy. Therefore, whatever criticism the Opposition offers that is not supported with hardcore facts or sensible alternatives is nothing more than just noise – noise made just to have their presence felt and nothing towards the intellectual discourse that the country really needs. 

Expectations and Reality 

Realistically it is not possible to expect a people’s-friendly Budget at this point of time. The whole world is grappling with a pandemic of proportions not experienced in living memory. Even economically-strong countries are struggling to keep afloat. It is not only in Sri Lanka where hundreds of thousand people lost their jobs – it is a global phenomenon. The cost of living rose and continues to rise exponentially not only in Sri Lanka but globally. Already many countries including Sri Lanka are facing shortages of various commodities as gas.

 This situation may well continue to the next year. At a time when the Government’s own revenue has fallen drastically whilst its expenses has risen dramatically, it is not possible to expect a Budget that can cushion the people from the dwindling economy. Nevertheless, the Appropriation Bill presented for 2022 appears to be a reasonable one.

 It seeks to redress those affected by the pandemic, reduce State expenditure, resolve teachers’ salary anomalies, strengthen industries such as transport and uplift rural development. However, we cannot escape from the underlying fact that this is a deficit Budget. It has been estimated that the total income for 2022 would be Rs 2,284 billion, but the total expenditure would be Rs 3,912 billion. This amounts to a deficit of Rs 1,628 billion. Clearly, we need to seek financial assistance to meet this gap. 

Getting into debt is not the issue. Even economically-solid countries manage their affairs on financial assistance. The trick is to manage the debt. During the war days, successive Governments managed day-to-day affairs on debt. The Finance Ministers of each Government was to travel around the world seeking financial assistance from other countries. It was President Mahinda Rajapaksa who broke this cycle. His Administration concentrated on investments with the objective to increase productivity. 

Within ten years, he managed to increase per capita income, reduce debt to GDP ratio, improve and modernise the infrastructure and add strategic assets to the country’s portfolio. The 2022 Budget too seeks to increase the productivity of the country. However, if the Gotabaya Rajapaksa Administration is to sustain this development program, they must first have a fundamental understanding of the reasons for the Mahinda Rajapaksa Administration to fail. 

Facts that toppled Mahinda Rajapaksa’s Administration

 It is true that India and the West played a pivotal role in toppling the strong nationalist Government of Mahinda Rajapaksa. However, this project would not have been possible if not for the small minds and opportunistic politicians in this country. Technically, only the people can decide the fate of politicians. Therefore, getting rid of opportunistic politicians who betray the country to come to power lies in the hand of the voter. 

It is unfortunate that there are loopholes in the Constitution that allows rejects as Wickremesinghe to be a Member of the Parliament. Likewise, there are MPs who are in trouble with the law who attend Parliamentary sessions while on bail or even in remand custody. There are also MPs who are engaged in divisive politics. The presence of such MPs affect the trust people have in the Parliament.

 It is hoped that the new constitution will close all these gaps that allow less than honorable as our lawmakers. The Rajapaksa Administration must also make an effort to understand the mindset of the people. When John F Kennedy said, Ask not what your country can do for you but what you can do for your country,” it was hailed as one of the greatest quotes. President Gotabaya Rajapaksa addressing the Nation hours before the third lockdown outlined the seriousness before the country and warned that if this situation continues we would all have to make sacrifices. His remarks were met with derision. 

His warning was seen mostly as an excuse. The social Media went into a frenzy of sorts demanding to know the sacrifices the MPs would make. Basil Rajapaksa’s maiden Budget for 2022 had responded well to this question. It is proposed in the new Budget that an MP can only qualify for a pension if only he acts as a people’s representative for 10 years. 

This means, an MP must be elected twice into the Parliament if to receive a pension. This is applicable even to the Executive President. Furthermore, all MPs and Government officials will receive five litere less fuel from their monthly allowance. New construction or modernising office premises is also to be suspended for two years.

 None of these proposals will be popular among the MPs – on both sides of the divide. Yet, these are necessary measures to be taken notwithstanding the political consequences. It is a matter of grave concern that most of our MPs are motivated by privileges and perks. Switching sides or condemning the Government whilst being in power just because the desired position was not granted is not uncommon in Sri Lanka. Former President Maithripala Sirisena switched his alliance from President Mahinda Rajapaksa, while being the Health Minister and the General Secretary of the SLFP, because he was not appointed as the Prime Minister. 

Wijeyadasa Rajapakse’s grouse with the Government is because he did not get the Justice Ministry portfolio. National List MP Tissa Vitharana’s disappointment with the Government is because the allegedly promised Cabinet portfolio was not given. These disgruntled elements are waiting to be cherry picked by those who need to topple the Government in power. 

Therefore, policies that directly affect politicians have the potential to boomerang on the policy makers. In that context, Finance Minister must be applauded for his courage to curtail these privileges. However, factors that affected Mahinda Rajapaksa’s presidency were not limited to a geopolitical agenda or unprincipled politicians. That administration was very weak in its communication. That lack of engagement created the vacuum that was filled by the opposition with falsehoods. 

Changes the Budget cannot address 

The Gotabaya Rajapaksa Administration too is making the same mistake by not strengthening its propaganda arm. This Government was able to manage the pandemic admirably. It was at a time when vaccines were hoarded by the West and many smaller nations were thereby denied of even a single vaccine, we got ours. 

Throughout the three lockdowns, the vulnerable communities were well looked after. Despite this calamity, both construction and agricultural sectors were protected. Provisions were also made to allow other economic sectors to function. By the time the country was facing a third lockdown, the tourism industry was just beginning to open up. 

Instead of allowing months of hard work to be reversed, the Government allowed certain areas of tourism as surfing to continue. Yet, the increasing perception amongst many is that this Government has not been able to fulfil its pledges. While battling a crisis as huge as the pandemic, it is unreasonable to expect a Government to fulfil pledges made before the crisis. However, the Government ought to promote its agenda more aggressively and keep the people engaged. The crisis over the organic fertiliser is a case in point. Even though this was spelt out in President Gotabaya’s manifesto, the Government should have gone into an awareness creating programme first.

 This conversion back to organic fertiliser was a long overdue project. This demand to change should have precipitated from the farmers themselves. Yet it did not. Today, farming communities are up in arms against the banning of agrochemicals. This in itself is surprising as agrochemicals did not reduce the cost or production nor increased its yield. Desperate farmers thus resorted to applying five times the recommended dose. Even after Government subsidies and price controls, he is unable to make much of a profit. 

However, none of these factors are taken into account as the debate on organic fertiliser conversion rages on. The farmer in Sri Lanka being poor is an anomaly. After all he is engaged in producing a commodity essential to the Nation. Yet, he is unable to make a profit, which is due to his ignorance. He is simply following the same steps he has been taking over the years. However, agriculture is a subject that is taking giant leaps in technology. None of these thinking have reached Sri Lanka.

 Therefore, the Government must take steps to expose this kind of new technologies and experiments to them farming communities. There must be an effort to educate the farming communities and engage them also in research and development of best techniques and practices. The much needed call for new agricultural methodologies and practices should come from the farming communities. 

The Government must be shrewd enough to nudge the farmer into insisting on best and new practices instead of dictating terms to the farmer or forcing him to adapt out of his comfort zone. In the new Budget it is being proposed to confirm jobs in the State sector for graduates. At the same time, the retirement age has been extended to 65 years. At the same time, the Finance Minister promised that the State sector will be able to absorb new cadre. However, the State sector is already bulging with over employment. 

This large numbers at Government officers is not reflected in its efficiency. This has also led to large scale corruption. Instead of jobs within the Public Sector, this Government must revamp the education system to produce more entrepreneurs than job seekers. While a job guarantees security in the form of a pay cheque, an entrepreneur gains freedom to manage his economy irrespective of the country’s economy. With more entrepreneurs a country will enjoy better service, innovation and leadership. This Government should also inculcate an environment of accountability. For instance, this budget proposal seeks to redress the teachers’ salary anomalies by allocating Rs 30,000 million. 

However, the more important move for the Government is to bring better education tools and training to teachers. It is vital that children receive a proper education with the required support needed by each student at school itself. The current practice where children must be supported with tuition to follow class lessons needs to be made redundant. Without ensuring that the teacher performs and delivers, it is unfair to tax the society to foot the teachers’ salary bill. As a community, we must understand the difficult situation before the country. 

Instead of arguing over taxes and subsidies, we must aim to reduce our imports and wastage whilst increasing our productivity. We must reconcile to do without luxuries without blaming the Government. Our focus should be strengthening the country’s economy and not on our personal comforts.

By Shivanthi Ranasinghe | Published: 2:10 AM Nov 15 2021

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