Business

An accountable budget 

The Central Bank of Sri Lanka was confident on Thursday (14) that the Sri Lankan economy is making headway despite pandemic-related disruptions while its Governor also expressed confidence in meeting debt obligations without going to the International Monetary Fund (IMF). Two days before that, the IMF made a modest cut of 0.1% in its 2021 global growth forecast. The IMF’s overall revision from 6% to 5.9% however included some significant revisions for advanced economies, including a 1% downward revision of the forecast for the US. The IMF’s revisions were based on a global recovery that continues despite weakening momentum and increasing uncertainty, and acknowledged that for governments and central banks, “policy choices have become more difficult with limited room to maneuver”. 

It is against this backdrop overshadowed by a pandemic that Sri Lanka heads to its budget next month. The consumer shocks these past two weeks have added pressure on a Government facing serious issues on multiple fronts – many of them exacerbated by its own short-sightedness and indecision, and the ineptitude of many of its members. 

The perilous state of our state finances needs the help of some tough, clear-headed decisions by politicians supported by intelligent advice and firm stances by the public service, both aspects that have been found wanting. A Government with a two thirds majority in parliament hardly ever hindered by a weak, meek and for the most part, non-belligerent Opposition must do more than it has this past year to bring our economy back on the path of post-pandemic recovery. It is time for unpopular choices to be made for the greater good; votes must not be the guiding factor in managing our nation’s finances. 

No one said managing an economy amidst a pandemic that brings life and commerce as we know it to a standstill was easy. No one denies that the decimation of tourism has been an unbearable burden. Nor is it fair to pretend that Sri Lanka is the only place to experience soaring cost of living – global consumer prices are at the highest they’ve been for decades and energy prices have surged amid a supply crunch, forcing the eventual capitulation of the Government which was holding onto abnormally low prices that required local operators to sell LP gas at a loss. 

What Sri Lanka is in severe short supply of however is accountability. The public finances allocated through the budget should ultimately benefit the public in a timely and relevant fashion. Resources must be allocated to where they are needed the most in cognisance of the greater economic climate. 

In this light, it is worthy of note that defence spending once again claims the largest part of the budget at a massive Rs. 373 billion for 2022, which is a 15% increase year on year that far outstrips the total of the cornerstones of Sri Lanka’s social welfare – health, which has been allocated Rs. 153.5 billion (amidst a pandemic) and education, which has been allocated Rs. 127.5 billion, amidst extended trade union action by principals and teachers demanding salary revisions that require another Rs. 30 billion annually. 

The public must question, demand information, and track the progress of such spending. Civil society has the right to demand credible policies and realistic allocations that achieve sustainable public finances while fulfilling the needs of the people. The Minister of Finance has indicated that his Budget proposals would introduce a new system of monitoring where funds would be allocated each quarter, and projects would thus have to perform as targeted each quarter to be evaluated worthy of proceeding. Such mechanisms of evaluation would indeed be a welcome change to the standards of accountability in handling our public funds. 

The chatter from the state on Budget 2022 has contained a good mix of positive-speak: “people-friendly”, “business-friendly”, “practical”, “demand generation”, “social direction”, “job creation” and all the other right words. It is a critical budget – one that must not just stabilise a precariously balanced economy but must also set the tone for the rest of this President’s and Government’s tenures in office. It must warrant the attention of the public not just in how it impacts us individually but in how it is geared to build a better country; it is our right to ensure it is the public interest that remains supreme.