The Sundaytimes Sri Lanka

Sri Lanka has second largest expat population in the world

Next to Lebanon in terms of per capita population

A strong link between the rule of law and an effective budget emerged at an in-house panel discussion hosted by the Business Times at the Wijeya Newspapers Ltd auditorium on Wednesday. It was revealed that if the judiciary is not independent and strengthened in terms of high wages, the national budget and all other civil society basic rights would suffer.

The issue was raised by opposition parliamentarian and economist Eran Wickramaratne during a discussion on the performance, so far, of the 2012 budget and expectations

From left : K. Romeshun, Prof Sirimal Abeyratne and Eran Wickramaratne. Pic by Amila Gamage

in the November 2013 budget.

This is part of the three-pronged, unique approach to the national budget by the Business Times focused on reflecting the views of the people on the expectations in the 2013 budget and an analysis of the current 2012 budget, up to now. This was done through an island-wide survey conducted by the Colombo-based Research and Consultancy Bureau (RCB), an email poll and a panel discussion involving Mr Wickramaratne, Prof. Sirimal Abeyratne from the University of Colombo’s Economic Department and K. Romeshun, a team leader on poverty issues at the Centre for Poverty Analysis (CEPA). (See Pages 2, 6 & 7 for more on this series). The island-wide poll in nine provinces, asking a range of questions on national/provincial development and other issues, saw many people raise some interesting points. Here is a sample of those views: Kurunegala – The budget always shows an excess budget meant to fleece the people in the coming year; money spent on annual celebrations often of a political nature should be diverted to development; more teeth for independent commissions; the opposition should share the blame for the state of affairs in the country because it is weak and allows the Government a free hand.

Embilipitiya – The ‘rulers’ decide how much their share of the budget should be and then distribute the balance for everyone else; public and private sectors are hoping for a 30% wage hike this year; suggestions from the ordinary people are ignored in budget preparation; health and education need more money from the budget.

Kalutara – A lot of money is wasted by bringing raw material from outside rather than utilising cheaper raw material from the districts.
The email poll strongly reflected the need for the President to give an undertaking in the budget that he would not tolerate corruption and mismanagement; and noted that there was over-spending and too much borrowing, locally and overseas.

Mr Wickramaratne linked the rule of law to the budget saying that independent institutions need to be strengthened and public sector management improved. He stressed the need to restore the dignity of the judiciary and law enforcement authorities specially the police as there was a widespread institutional failure in the country.

“Financial independence will restore the dignity of the judiciary,” he said, recommending that Supreme Court judges’ salaries be increased to Rs. 500,000 a month and accordingly salaries of Appeal Court judges increased to Rs 400,000, High Court judges to Rs 300,000, District Court judges to Rs 200,000 and Magistrates to Rs. 100,000 a month.

Finding the funds for this is not a problem when compared to the exorbitant cost of vehicles used by the Government.
Mr. Wickramaratne warned that eroding respect for the rule of law will lead the people towards taking the law into their hands.
Having a society where a person (Julampitiya Amare) had not been arrested despite repeated warrants, and attacking the court room and threatening a judge in Mannar has led to an erosion of confidence in the Police, he said.

“We cannot afford to erode the dignity of the judiciary. The independence of the judiciary takes meaning only when it is independent of the Executive,” Mr. Wickramaratne noted. Responding to a question on what civil society can do, he replied civil society should push for politicians and public servants to be arraigned before courts if they violate the laws of the land like in India where civil society takes on this responsibility.

Economic activity, he said, is currently centered on personalities rather than institutions which can sustain economic and business activity. State institutions are losing its managerial and professional staff as a result of politicization, poor remuneration and non-conducive work environments.

The public service is deteriorating day by day due to a low salary structure where it cannot retain professional staff.
He urged civil society not to lose hope despite the corrupt system but to exercise vigilance and agitate as there are still honest individuals in all institutions including the judiciary.

Mr Wickramaratne raised an interesting and hitherto, little known statistic that Sri Lanka’s expatriate population is the second largest in the world in per capita population terms, next only to Lebanon; a resource not properly utilised. Prof. Abeyratne, who raised some cogent economic issues, stressed the need to maintain a consistent fiscal policy for economic stability. Agriculture along with fisheries has never been the driving force of an economy because of its natural limitations, he said, adding that the answer lies in industry.

Almost all the government revenue is spent on recurrent expenditure while money for capital expenditure is raised through loans.
The Government, he argued, believes in an administration with a large workforce and high remunerations schemes. So there’s no way inflation will come down.

The Central Bank’s decision to take into account the Colombo Consumer Price Index, measured by the Census and Statistics Department for its calculations for core inflation since 2007, has hidden the actual price trend and it does not reflect the economic impact on middle and lower income groups which constitute the bulk of Sri Lanka’s population, he added.

The country’s budget deficit reflected a downward trend during the period of 2007 to 2009 although it has experienced a serious balance of payment issue during this period. This was a numerical magic, he said. Sri Lanka will have to depend highly on trade and Foreign Direct Investment (FDI) rather than on borrowings and unstable capital inflows to tackle a possible balance of payment crisis.

While private remittances have grown tremendously, it does not reflect a country’s productive capacity or prosperity but shows its misery and poverty (due to large numbers seeking employment abroad), he said. FDIs has slowed down during the past few years even after the war ended and Sri Lanka is lagging behind other countries in Asia in terms of inflows.

However the Government’s annual foreign loans has increased by over US$1 billion since 2006 and remained at $2.5 – 3 billion during the past two years, he said. CEPA’s Romeshun said that budget 2012 has made a number of interventions on behalf of lower income groups but so far it has not filtered down to this sector. A proposal to build multi-storied flats containing 50,000 housing units, to resolve housing problems of urban shanty dwellers is yet to materialise.

The proposal to raise the monthly allowance paid to the elders of over 70 years to Rs 1,000 from Rs. 300 is now in force but it’s inadequate for them to even to buy their medicine. The government is implementing a massive infrastructure development project countrywide but little has been done to reconstruct or build rural roads connecting these highways and to repair dilapidated rural bridges.

Villagers have transport difficulties and their children attend schools with great difficulty, he said. The Government should improve the quality of education in rural areas, and provide incentives for teachers in difficult areas. Poverty is not only influenced by income and expenditure but also by measures such as adequate health, education and nutrition, private and social assets, free time, empowerment or attainment of minimal social participation and security.

How poverty is measured should go beyond the use merely of a monetary approach. These aspects are also coming into public scrutiny in Sri Lanka, he said. A majority of poor children has low levels of education which in turn results in low-level temporary and insecure employment, which is reflected in over 60% of Sri Lanka’s labour force remaining outside the formal employment market, he revealed.

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