the bold and beautiful budget proposals realisable?
rhetoric of and proposals in the Budget were essentially in the
right direction. As indicated by the Minister of Finance before
the Budget, it was oriented towards the development of the rural
sector and was to be a pro-poor budget. Budget 2005 also articulated
a fresh effort at fiscal consolidation.
main thrust of this consolidation was not by a decrease in expenditure
but by an increase in revenue collection. This too is a correct
approach to the country's fiscal situation in a context when the
country is in dire need for developmental expenditure, the resuscitation
of social sectors and the development of disadvantaged regions of
positive aspects of the Budget include enhanced expenditure on health
and education, allocation of funds for the welfare of children,
targeted budgetary expenditure on the most deprived regions of Uva
and Moneragala and allocations for the development of science and
technology in regional centres. All these are much needed development
efforts. The quintessential issue is not the desirability of the
Budget proposals but whether they are implementable.
are several sides to this issue. First will the financial resource
be actually available and on time? Second, are the finances allocated
adequate to achieve the goals? For instance the underdevelopment
of the Uva and Moneragala Provinces are of such a magnitude that
considerably more resources are needed. Third, is there a capacity
to implement these programmes?
allocation of financial resources and their availability are no
doubt indispensable. Yet the effective implementation of the numerous
policies would require efficient administration. The experience
of under utilisation of foreign aid is illustrative of this. These
considerations leave one with scepticism that the good intentions
of the Budget are unlikely to be achieved in large measure. What
is worse is that if these funds are misappropriated and wasted then
it would be a further drain on the public purse.
increase in expenditure on Samurdhi remains controversial. The substantial
increase in wages of public servants was overdue but burdensome.
The employment of graduates is also a further burden on the economy.
These expenditures are arguably burdensome and wasteful. The increase
in Samurdhi expenditure is not likely to go to the deserving poor
as in the past. Despite attempts to improve the targeting that the
Minister himself spoke of, it has been revealed that a considerable
proportion of funds go to undeserving persons, while most of those
in acute poverty do not receive assistance. To pour in further funds
to the programmes is wasteful of public funds. Nevertheless let
us hope that the Minister's efforts to revamp the programme with
development programmes using unemployed recipients of Samurdhi benefits
would have a reasonable measure of success.
employment of graduates by the government is yet another expenditure
that could be wasteful. The Minister failed to mention that Sri
Lanka had the largest number of public servants for the size of
was needed was to prune down the size of the public service, improve
its quality and pay the slimmer service much higher wages. This
has not been the approach. Instead the Budget increased the number
of public servants and increased wages. No doubt political imperatives
dominated this decision.
rightly the Minister stressed the need to increase tax collection.
As he pointed out the proportion of revenue to GDP has been declining
and is as low as 15.7 per cent of GDP. He also pointed out that
it was the lowest in the region. The approach to increasing revenue
is also basically correct. As he said the intention was not to harass
those who are already taxpayers but to enlarge the tax net by bringing
into it errant tax dodgers. This is indeed crucial for a proper
fiscal system and good governance.
Minister Amunugama proposed a number of ways by which tax dodgers
would be tracked down. These include those who incur high bills
for telephones and electricity, those going on foreign travel, purchasing
new cars etc. The point is that these techniques were available
prior to the Budget proposals and yet hardly adopted by the revenue
authorities. That is precisely why the country has only around 200,000
taxpayers. What is there to suggest that the Inland Revenue authorities
would now be able to bring in these errant cases into the tax net?
The chances are that the Minister's expectations would not be fully
realised and that there would be a shortfall in the expected revenue
meandering Budget Speech of the new Minister of Finance touched
on all conceivable subjects. He used his fluency in the two languages
to address the people through parliament via television. He must
surely be a more popular person in the country after the Budget
knew very well on which side his bread had to be buttered. It was
to the poor, the disadvantaged and the rural community that he addressed
the Budget; much more than perhaps any other Finance Minister had
done. The JVP must surely be a bit equivocal about the Minister's
performance: happy that he articulated what they wanted in large
measure and on the other hand, perhaps concerned about the adroit
manner in which he may have stolen some of their popularity in the
in the past the big question is to what extent will the Budget achieve
its goals. Will the disadvantaged regions benefit significantly?
Will the pro-poor budget proposals benefit the poor? Would the government
be able to expand the tax net and increase tax revenue? Will the
budget deficit be contained? The Budget rhetoric was sweet music
to the multitude but will the results be of substantial benefit