The good and bad of the 2022 Budget

13 Nov 2021

The good and bad of the 2022 Budget

13 Nov 2021

Political parties represented in Parliament have expressed mixed reactions over the Government’s 2022 Budget proposals presented by Finance Minister Basil Rajapaksa last Friday (12). While the governing party maintained that it was a great effort by the Government to put itself back on track towards returning to normalcy after facing the impact of the global Covid-19 pandemic, Opposition parties maintained that the Government had failed to address the economic fundamentals as well as the immediate issues faced by the people, especially the growing issue of the cost of living. Following are some of the views on the 2022 Budget expressed by several political parties. ---- A good framework presented under trying circumstances: SLPP The 2022 Budget cannot be compared with those presented in the past years, as it is presented amidst very difficult circumstances, Media Minister Dullas Alahapperuma said. “This is a very difficult time, where the country is facing unprecedented challenges. We have not experienced such a situation in the recent past. It is in such a backdrop that the Government has taken the arduous task of presenting a budget to get the country back on track,” he said. “The 2022 Budget has presented a good framework,” he noted. He explained that for the first time, a government has taken steps to slash privileges of parliamentarians. “There’s growing public dissention against politicians, especially parliamentarians, claiming they enjoy privileges at the public’s expense and that it is a waste. However, the Government has taken steps to slash allocations to parliamentarians instead of allocating more like in the past,” Alahapperuma said. Referring to the allocation of a large sum of funds in the Budget to address the issue of principals’ and teachers’ salary anomalies, the Minister explained that it indicated the importance given to the country’s education sector by the Government. He further noted that prominence has been given to controlling state expenditure, which is another aspect that has been discussed by the public. “The Government has taken steps to put in place a system where waste is minimised and funds are directed to more important areas,” Alahapperuma said. ----- Driving country towards disaster: SJB Leader of the Opposition and Samagi Jana Balawegaya (SJB) Sajith Premadasa said that the Government’s 2022 Budget would drive the country towards disaster rather than resurrect the country from its present crises. He likened the 2022 Budget to one that would be presented in Somalia. Premadasa said the people expected a progressive budget, but the Government had instead presented a damp squib. “The people wanted a people-centric budget.” “It has not been properly structured. It does not bridge the budget deficit. There’s no plan to address the rising cost of living and inflation as well as uplift the living conditions of the people,” the Opposition Leader noted. “There’s no plan to uplift the farmers, no plan to generate revenue; in short, this is a Somalia-type Budget. This is a budget that has hoodwinked the people,” he said. “This is a budget that is aimed at pleasing their friends and cohorts. The Government does not have a plan to develop the country. This is an empty piece of paper that does not have any short, mid, or long-term plans. The people have been hit by a double whammy,” Premadasa said, adding that the Budget did not contain any salary increments for public and private sector workers. ----- Good effort given current challenges: SLFP Sri Lanka Freedom Party (SLFP) Leader and former President Maithripala Sirisena said the Government had made a good effort to address the issues faced by the economy and country on the whole, given the current internal and external challenges. “It is commendable, since a good effort has been taken to address issues amidst the growing economic challenges,” Sirisena said. ----- Rising cost of living not addressed: JVP The main crisis in the country is the rising cost of living, which has not been addressed in the Budget, according to Janatha Vimukthi Peramuna (JVP) MP Vijitha Herath. “The main issue in the country is the rising cost of living. People don’t have gas, there is no rice in the market, the cost of food and commodities are rising daily, and this has not been addressed in the Budget,” he said. Herath further noted that he sees no solace to the problems in the country and the current Budget will only get the country into further debt. “By the Budget which has been proposed, I don’t see any solace or solution to the current economic crisis. What will happen is that Sri Lanka will get into further debt and the people of the country will be taxed exorbitant amounts to pay the loans the Government is taking,” he said. JVP Leader MP Anura Kumara Dissanayake said while the Government claimed that farmers would be compensated if their agricultural produce was lost or declined due to organic farming, there’s no provision to compensate them according to the 2022 Budget. “No fund has been allocated for this in the Budget. The Finance Minister said no supplementary estimates would be presented outside the Budget as well. It means that this assurance is a hoax,” he said. ----------- Only focused on spending money: TNA Tamil National Alliance (TNA) MP Shanakiyan Rasamanickam expressed that the 2022 Budget only covers how money can be spent, instead of how it should be generated. He said that the only way to generate revenue is through foreign direct investments. However, Rasamanickam added that this was not addressed through the 2022 Budget. “Budget is revenue minus expenditure. We have a massive expenditure and a budget deficit. I do not think there is a magic trick we can use to fix this other than going to the IMF (International Monetary Fund) or attempting to restructure our debt. We always knew that nothing can be done to change the situation drastically,” he said. Rasamanickam also added that overall, he is yet to look into the changes made to taxation in order to increase government revenue. “At a recent adjournment debate, I gave the Finance Minister some proposals on how to increase government revenue by changing certain aspects of our taxation system. I am yet to assess those details,” he noted. He also added that even if the VAT (value-added tax) and taxation system was changed, it would still not be enough to pull the country out of the current economic state. “We need a few billion dollars in the next six months to repay our debts. On top of that, we need to bring dollars that we can inject into reserves so prices do not fluctuate which will lead to the creation of artificial black markets. The Budget does not have any methods in place to address these issues,” Rasamanickam concluded. -------- Govt.’s 2022 Budget is a failure: UNP The United National Party (UNP) maintains that the Government had not made any effort to repair the destroyed economy, but instead pointed to the failed economic policies of the Government. “Today, the people of Sri Lanka are facing grave hardships. Food items such as rice, milk powder, and sugar are facing shortages. Essential goods such as gas and cement are also in short supply. The economy is facing a bleak future with a growing deficit in the Balance of Payments and a shrinking foreign exchange reserve. The cost of living has skyrocketed, with experts claiming that the cost of essential food items has risen by over 50% in the last month,” the UNP stated. In a statement, the UNP stated: “This budget has not taken any measures to address the concerns of the people. The Finance Minister believes that reducing five litres from government servants’ monthly fuel allowance will help improve the economy. This highlights how far out of touch the Government is with the issues facing the public. “We are facing a global pandemic, but this Government saw fit to reduce the total expenditure on the health sector by Rs. 6 billion. The Highways Ministry allocation has been substantially increased from the previous year; this shows that this Government is more interested in building roads rather than ensuring the health and safety of the citizens,” the party noted. The UNP further stated: “The largest grouping of people in Sri Lanka is the middle class. They are also the people who are suffering the most due to this Government’s mismanagement. Daily, 1,500 people are applying for passports to leave the country. This Budget has not done anything to alleviate the fears of the public. The Finance Minister’s budget will only serve to encourage more people to seek refuge in foreign countries. “We wish to ask the Finance Minister where in his budget does he outline any meaningful efforts to repair the economy that they have destroyed?” the UNP queried. “In 1977, 2001, and 2015, the UNP inherited collapsed economies. On all three occasions, it was a UNP government who was responsible for the rebuilding of both the economy and the country. In 2019, when the UNP handed over to the Government, Sri Lanka’s foreign exchange reserves stood at over $ 7 billion; today, it is just over $ 2 billion. In 2017 and 2018, the UNP recorded two years of primary surplus, the first time in over 50 years. Now, this Government has banned all imports, and still our Balance of Payments is facing a deficit. This all points to the failings of this Government’s economic policies. “The UNP, last Friday (12), started a series of demonstrations in all the districts in the country. We wish to reassure the people that we are still with them; we have not turned a blind eye to the suffering of the public. We will continue to stand with the public and continue to fight this Government’s mismanagement. The people of Sri Lanka are searching for a viable alternative to the disaster that has struck this country’s governance. We as the UNP wish to illustrate that we have the solutions to these problems,” the UNP added. ------ Not addressed country’s structural issues: SJB Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva expressed disappointment in the Budget via a tweet. “Totally disappointing 2022 Sri Lanka Budget. No vision. Nothing in it to address the major structural issues of fiscal and Balance of Payments deficits. No new plans on investments, exports, technology, and innovation. Nothing to address the unbearable cost of living. Only politics,” Dr. de Silva stated. SJB MP Eran Wickramaratne said that it did not address the fundamental issues faced by the country. He highlighted the budget deficit and the ongoing forex crisis. “Issues such as the budget deficit and the forex crisis were not addressed. There was no major push for exporters. Forex can enter the country only if exports are increased,” he noted. Meanwhile, he also said that the funds allocated to address the teacher-principal demands were a good sign. However, Wickramaratne remarked that he was unsure if such funds would be sufficient. Commenting on the funds allocated to address the pension issue, he noted that the amount of funds allocated may not be enough. In conclusion, Wickramaratne said that whether the Budget will address the imminent economic crisis that the country will face in the first quarter of 2022, remains to be seen. (Compiled by The Sunday Morning News Desk)

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The good and bad of the 2022 Budget

The good and bad of the 2022 Budget

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