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Budget 2022: Do the proposed reforms address underlying issues of SL?

20 Nov 2021

By Pasindu Guneratne  The 76th Budget of the Democratic Socialist Republic of Sri Lanka was presented in Parliament by Finance Minister Basil Rajapaksa, under President Gotabaya Rajapaksa’s policy framework, “Vistas of Prosperity and Splendour”. Over the years, the public has come to anticipate concessions whenever a budget is presented. This year’s Budget, similar to the previous year, is a document brimming with rhetorical flourishes which exemplify the failure and defectiveness of short-sighted economic policies and strategies of the existing Government that have worsened the difficulties experienced by the people of our country over the last couple of years. The state expenditure for next year will be Rs. 3,912 billion and the total revenue will be Rs. 2,284 billion. According to the minister, the budget deficit for the fiscal year 2022 is Rs. 1,628 billion, which is 8.8%. But is the Budget 2022 capable of delivering economic prosperity to our nation?  Farmers in crisis Although the Government had repeatedly stated that the farmers affected by the ban on synthetic fertilisers and pesticides will be compensated, the Budget Appropriation Bill did not furnish any such relief to those who are visibly disturbed and struggling with their cultivation. It is evident that the agrochemical fertiliser ban, which was imposed overnight in April when Sri Lanka was not ready for full-scale organic farming, laid the foundation for the current situation. As a result, farmers are worried about the future of their livelihood, and the country is experiencing a significant food shortage. Since the Minister of Finance clearly mentioned that the Government would not bring any more supplementary estimates during the year, it is apparent and obvious that there will be no mechanism to compensate the farmers battered by the suddenly confronted fertiliser shortage. Whilst the proposal made to allocate Rs. 22,000 million to introduce new agro-technologies is indeed a commendable initiative, the deficiency is none of these proposals come up with feasible solutions to major issues faced by farmers such as poor access to quality seeds, wildlife damage to crops, climate and weather-related disasters, and lack of market information and marketing concerns, despite all of them being recognised as major challenges in the Budget speech as well. Defence spending on the up The Ministry of Defence received the highest allocation in the Appropriation Bill for the Fiscal Year 2022, and this was the scenario for some time. The Government has proposed a defence budget of Rs. 373.1 billion ($ 1.86 billion) for 2022, a 14% increase over the allocation in 2021. In 2009, our average defence budget was Rs. 214 billion. This demonstrates that defence expenditure is higher than it was at the peak of the military conflict. It is an accepted fact that during a conflict, defence should be the highest priority. Despite the conclusion of the civil conflict in 2009, defence spending in Sri Lanka has been increasing. People have been brainwashed into believing that defence was the most prioritised expenditure of the budget. A systematic analysis of Sri Lanka’s post-war defence budget reveals that the country overspends on defence and the defence budget is inefficiently handled. According to World Bank (WB) statistics, Sri Lanka’s defence budget accounts for 11% of total central government expenditure, although it accounts for just 5.79% among nations with a similar population. Also, according to another research, Sri Lanka spends almost the same amount as Myanmar, which has a population of 50 million, and the Philippines, which has a population of approximately 100 million. Although the military conflict is over, our defence spending continues to rise. When it persists even 10 years after the war, it clearly demonstrates that peace has not been achieved in our country. A reduction for health  Despite the Covid-19 pandemic, the Health Ministry has been allocated Rs. 6 billion less in funding for the fiscal year 2022 than for the fiscal year 2021. Sri Lanka, and indeed the whole world, is struggling to face the unprecedented global challenge posed by the coronavirus. Despite the development of many vaccinations that may assist in controlling Covid-19, most health experts estimate that the world will have to live with the virus for the next two to three years. It is, therefore, somewhat puzzling to find that the Government’s budget allocations have witnessed a reduction for health and an increased allocation for defence. SL still lags behind its peers The United Nations Children's Fund (UNICEF) said children’s education is among the hardest hit by the Covid-19 pandemic throughout the world. Prolonged school closure and limited access to distance learning has deprived children of their universal right to education, particularly in developing nations. According to the United Nations (UN), at least 147 million children worldwide do not have access to online or remote learning. A majority of schoolchildren in Sri Lanka have been deprived of education for more than a year due to lack of communication equipment for online education, and thousands of children have dropped out of school because of the pandemic. The new method of online education for schoolchildren in Sri Lanka is and has been as foreign to many children as the Covid pandemic itself. The proposal made by the Finance Minister to invest to expedite the process of establishing islandwide telecommunication coverage and provide fibre optic high-speed internet to over 10,000 schools in the country is truly an excellent move. However, if schools are to utilise such facilities, further expenditures on computers and other required resources also need to be allocated. Furthermore, the proposal made to allocate Rs. 2,200 million through the Appropriation Bill to establish 1,000 national schools islandwide would more likely contribute to the reduction of inequities in access to quality education. However, public education spending has fallen further in recent years, both compared to gross domestic product (GDP) and proportionally to overall government spending. Public education expenditure remained around 3% of GDP before 2007 and it has steadily dropped since then. According to the proposals, Rs. 157.6 billion has been allocated for education in 2022 which is a Rs. 6 billion decrease from the fiscal year 2021. Furthermore, the proportion of the public expenditure on education would remain comparatively low, relative to GDP (7.51% relative to total public expenditure) in Sri Lanka in 2022 and Sri Lanka’s public education expenditure, relative to GDP, is even below the average of most of the low-income countries in the world. However, societies are now shifting to knowledge-based systems in the globalised economies, and if we are to restructure our outdated educational system to suit this trend to go forward with the world, allocations being made for education must be expanded and increased.  Strategy to win back the trust The President’s Gama Samaga Pilisadara (Discussion with the Village) initiative is far too overstated and has been allocated around Rs. 85 billion. It can also be considered as one of the highest allocations in the 2022 Appropriation Bill. Furthermore, much of the allocations made through the Budget, such as for rural development (Rs. 42 billion) and road development (Rs. 22 billion), are prone to corruption, misappropriations, and other mishaps. The huge expenditure allocated on the rural development initiative denotes a contraption to repossess the voter base lost due to a number of crises in the country, the soaring cost of living, failed promises, and shortage of essential items – results of short-sighted economic strategies. Finally, the Budget 2022 will continue to intensify the difficulties faced by the people of our country and consequently, the rich will keep getting richer while the poor will keep getting poorer day by day. (The writer is the National Organiser of the Parapura Youth Organisation. He is also an assistant civil engineer who is pursuing a bachelor’s degree in civil and infrastructure engineering, pursuing a bachelor’s degree in political science, and following a diploma in psychology and counselling)  

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