{"id":93589,"date":"2019-10-05T14:02:51","date_gmt":"2019-10-05T21:02:51","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=93589"},"modified":"2019-10-05T14:03:51","modified_gmt":"2019-10-05T21:03:51","slug":"public-service-salary-and-pension-bill-exceeds-one-trillion-rupees-for-the-first-time","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2019\/10\/05\/public-service-salary-and-pension-bill-exceeds-one-trillion-rupees-for-the-first-time\/","title":{"rendered":"Public Service Salary and Pension bill exceeds one trillion rupees for the first time"},"content":{"rendered":"<h2 style=\"margin: 0cm; margin-bottom: .0001pt;\"><span style=\"color: #0000ff;\"><em><span style=\"font-family: 'Helvetica',sans-serif;\">Gamini Sarath Godakanda\u00a0<\/span><\/em><\/span><\/h2>\n\n\n<p><strong>Can\nSri Lanka afford a trillion rupee Public Service?<\/strong><\/p>\n\n\n\n<p><strong><em>Sri Lanka\u2019s annual Public Service Salary and Pension bill exceed one trillion rupees per annum for the first time in history. Milinda Moragoda calls upon Presidential Candidates to present their proposals for meaningful Public Service reform.\u00a0<\/em><\/strong><\/p>\n\n\n\n<p>The budgetary allocation for salaries and pensions for 2019 amounts to\u00a0Rs\u00a0685\u00a0billion. The estimated cost of the public\u00a0sector salary increases this year is\u00a0Rs\u00a0120 billion. The total public sector salary bill for 2019\u00a0is therefore estimated to reach\u00a0Rs\u00a0805 billion.\u00a0In addition, the budget\u00a0outlay for pensions in 2019 is\u00a0Rs.\u00a0212 billion and is expected to be Rs\u00a0235\u00a0billion\u00a0in 2020. This will take the annual public service wage and pension bill in excess of one trillion rupees for the first time in history.<\/p>\n\n\n\n<p>Public sector salary and\npension increases boost aggregate demand without generating an increase in\nsupplies in the economy. They are, therefore, inflationary. In practice, the\nincreases in salaries are likely to be eroded by&nbsp;a&nbsp;rise in prices. In\naddition, the incremental&nbsp;aggregate demand will also leak into imports,\nthereby putting pressure on the balance of payments. This can then result in a\ndepreciation of the Sri Lanka Rupee, and place further pressure on the price\nlevel (inflation).&nbsp;<\/p>\n\n\n\n<p>These negative effects can only be contained if the salary increases are funded by cutting other recurrent expenditures, raising revenue, or a combination of these two measures. Cutting capital expenditure is a less good option as it reduces growth impulses in the economy. Ultimately, someone has to pay the piper.\u00a0<\/p>\n\n\n\n<p>The worst option is to\nfund the salary increases through additional borrowing. Increasing the public\ndebt to fund recurrent expenditure will be highly detrimental as there would be\nno rate of return to defray the cost of servicing the additional debt incurred.\nAgainst this backdrop, it is imperative that all Presidential candidates\npresent realistic and sustainable plans and policies to deal with public\nservice reform to the country as part of their election manifestos as a matter\nof urgency.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gamini Sarath Godakanda\u00a0 Can Sri Lanka afford a trillion rupee Public Service? Sri Lanka\u2019s annual Public Service Salary and Pension bill exceed one trillion rupees per annum for the first time in history. Milinda Moragoda calls upon Presidential Candidates to present their proposals for meaningful Public Service reform.\u00a0 The budgetary allocation for salaries and pensions [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-93589","post","type-post","status-publish","format-standard","hentry","category-politics"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/93589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=93589"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/93589\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=93589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=93589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=93589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}