We lead life styles quite inconsistent with our incomes. We are one of the poorest nations in the world, but we live as if we were a rich one.

That we have had a trade deficit continuously for the past 24 years bears testimony to this. We import more than we can earn by exporting. Continuous depreciation of the currency, its devaluation now and then, higher tariffs, none of these appears to help.
We are not suggesting that trade deficits are necessarily bad, but when they are continuous, it is indicative of a fundamental disequilibrium. We have to cut down our imports as well as increase our exports.

Until we succeed in the latter we must import only what we can afford. We can't make ends meet in terms of our traded commodities and services. The government continues to spend more than it earns as revenue. Our current expenditure is much higher than our annual revenue. We are not suggesting that budget deficits do not serve a purpose. Yet the nature of government expenditure is not conducive to long-term development.
The continuous budget deficits have resulted in an increasing public debt. The public debt is now higher than the value of our annual production of goods and services - the Gross Domestic Product.

We have to spend about a third of our revenue to pay the interest and capital repayments. We do not appear to be frugal as households either. We are caught up in a consumerism that leaves us with little as savings. No wonder we have a household savings ratio that is lower than that of India, which has a per capita income of about one half of ours. Another clear indication of this national trait is that despite the serious energy problem and the large expenditure on the import of crude oil, the current crisis has hardly led to a curtailment of expenditure on oil.

Neither the price increases in electricity tariffs nor the appeals to conserve electricity have had any serious impact on reducing electricity consumption. Oil imports have been increasing rapidly in recent years owing to increases in electricity consumption as well as increased transport uses. In 2000 alone, crude oil import costs increased by as much as nearly 30 per cent. This was due to both an increase in the volume of imports and an increase in prices. Crude oil imports increased from 13.5 million barrels in 1999 to 17.3 barrels in 2000, while prices rose by 51 per cent. This combination of price increases and the increased imports resulted in the huge surge in import expenditure.

Despite the seriousness of the problem, there is no public consciousness to effectively reduce electricity consumption. In other countries facing such a serious energy crunch, the public would have ensured that they curtailed their consumption. No, not in Sri Lanka! Even the higher prices for electricity have failed to curb domestic consumption. Now the government has to resort to almost prohibitive prices for higher consumers of electricity. In the light of what we have said earlier we are not certain that even this would reduce electricity consumption. There is a national need to inculcate a set of values that would ensure that we live within our means. Households must save more and provide resources for their own advancement in the future and the country's economic investments.

onservation of scarce energy and other resources is a must. The government must keep its current expenditure within its revenue collection. We must import only what we can afford through our export earnings. If we continue to live beyond our means, individually, at household level, as a government and as a nation, we will remain a nation that will continue to increase its debt, suffer balance of payments problems and have inadequate resources for economic growth. Those are the plain facts.

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