Financial Times

Polls and fiscal responsibility
Now that a general election has been thrust on the people because of the inability of President Chandrika Kumaratunga and Prime Minister Ranil Wickremesinghe to work together in governing the country, the least we can hope for is that it would be a peaceful one with the minimum disruption to the economy.

Mindful of the fact that all previous polls have been marred by violence, the Joint Business Forum has issued a call for a fair and violence-free poll and for political parties to ensure they don't nominate crooks or thugs as parliamentary candidates. Whether the parties, who are well known for nominating just such characters - the general secretary of the United National Party even had the cheek to once say that the public should know whom they vote for, forgetting the fact that voters can only vote for those nominated by him - remains to be seen, given the poor track record of the business community in reining in the excesses of their favourite politicians despite control over their campaign funds. The J-Biz has so far avoided making a call to businessmen to stop funding errant politicians as a mark of protest but is scheduled to take up the issue at this week's meeting.

The total cost of the plethora of elections we have had in recent years is colossal and something we can ill afford. As shown in our story today, the direct cost of elections and their indirect costs, in terms of the disruption of work, reduced attendance and productivity, and the foregone or delayed investment, all add up to a tidy sum - money that could otherwise have been used for more productive purposes.

Worst of all is the image of political instability that has been created and which affects badly needed foreign aid and investment, as well as tourist arrivals. The election, and the time it would take for a new government to settle down, would further delay the peace process which means that foreign aid and investment would be affected as would economic growth. Investment decisions will be postponed and corporate earnings affected.

It could affect government fiscal and economic growth targets, particularly if the result is a stalemate and no stable government emerges with a clear majority. And a victory by the left-leaning PA-JVP combine would make matters worse for the private sector and their foreign backers as it would mean all economic programmes would have to be looked at afresh and a possible reversal of the economic reforms undertaken by the UNP.

Another point of concern is the election giveaways that are common during such times and their impact on the economy. The Fiscal Management (Responsibility) Act, that was introduced with much fanfare by the UNP government, with the public being led to believe that such a 'historic' piece of legislation would cure all the ills of fiscal irresponsibility, now appears to be one that lacks teeth. The law was supposed to make fiscal discipline mandatory and stipulated fiscal strategy targets with the finance minister supposed to report to parliament and to the public on the state of public finances before a poll.

We were led to believe that the law would prevent election 'sops' or populist spending measures that could seriously undermine economic stability after the poll. Significantly, this would be the first election to be held after the passage of the new law but it remains to be seen how well it would work because there appears to be no compulsion for governments to adhere to it, no links to foreign aid and no sanctions for violating it.

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