Complexity of budget-making
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The margosa tree conversations have become an integral part of this column. Adding some spice and flavour has been Aldoris, the choon-paan karaya, whose music-blaring tuk-tuk of breakfast food wakes up the neighbourhood, with the young man getting involved in a lively conversation with the trio.Very often a topic, subject or view by the trio forms the discussion of this column. That was the case on Thursday morning, when Aldoris came calling, stopping at the gate where the trio had gathered.
“Ah……den ithin oyage mila ihala yavi mokada ena sumaney nae aya-weya (Ah…..now your prices will go up because the budget is next week),” warned Kussi Amma Sera. “Aiyo, nae miss. Api danney nae-ney mila ihala yawida, pahala yawida kiyala aya-weyey (Aiyo, no miss, we don’t know whether prices will go up or down in the budget),” replied Aldoris. “Saamanyayen, eka thama vidiha (Generally, that is the practice),” said Serapina. “Mata hithenawa Janadipathi-thuma hondata kalpana karai kiyala mila wedi nokora inna, mokada janathawa thawama duk vindinawa-ney jeevana viyadama nisa (I have a feeling that the President would be careful not to raise prices because people are still suffering from the cost of living),” noted Mabel Rasthiyadu.
When President Anura Kumara Dissanayake presents the 2026 budget in Parliament on November 7, it would be his second budget presentation for the year, after unveiling the 2025 budget in February in his capacity as Minister of Finance. The usual budget presentation in November 2024 was postponed owing to the Presidential election in September followed by the Parliamentary Elections in November.
The aroma of piping hot ‘maalu paan’ wafted through the office room and I made a beeline to the kitchen to fetch a bun and a mug of tea. As I was returning to my computer, the home phone rang. It was Pedris Appo, short for Appuhamy, the retired agriculture expert who does farming. Pedris Appo wanted to discuss the budget and the impact on agriculture which has some bearing on his livelihood. “I think the President, who cares about farmers, will give us a good deal,” he said. “I am not sure, as he needs to stay the course in the IMF-supported economic reforms process,” I said.
“That may be the case but agriculture is close to his heart as his family comes from a humble farming background,” he said. “The dilemma of the government is about the kind of policies that are required to make agriculture, in particular rice growing, a lucrative profession,” I said. “That is a difficult question and handing out subsidies in the form of fertiliser inputs may not be the answer,” he conceded.
It is easy to make recommendations but where is the money to implement them? Very rarely do chambers of trade and commerce recommend revenue-earning measures. These were my thoughts when I perused numerous proposals and recommendations that are traditionally made by chambers to the government, ahead of the budget presentation. These groups ask for the ‘sun, moon and stars’ without blinking an eye and government budget-makers are left scratching their heads, wondering how to fund all these proposals.
Here’s a suggestion to the chambers: While these chambers and allied organisations present individual proposals to the government ahead of the budget, reflecting on their own area of economic and business activity, won’t it be stronger and more relevant if they brainstorm and present one, single document containing proposals for the budget?
While they may represent different business and industrial interests, one single document would help the government to examine the possibility of accepting some of these proposals instead of having to wade through several documents (running into many pages) of proposals which becomes a complex job. A single, unified set of proposals has a stronger chance of getting accepted.
Let’s examine some of the proposals presented to the government this time:
The Ceylon Chamber of Commerce has urged the government to set up a separate task force on business reforms in Sri Lanka. It suggested establishing a National B-READY Task Force to drive business climate reforms and implementation of a Public-Private Partnership Act, strengthening the National Agency for PPPs.
In the area of tourism and infrastructure, the chamber suggested launching a global marketing campaign for tourism (a long-awaited move), accelerating the rollout of a National Digital ID and rollout of 5G Broadband, while expanding rural broadband; and boosting agricultural productivity through mechanisation and fostering an enabling environment for data centre investments.
The National Chamber of Exporters (NCE) of Sri Lanka called for bold reforms to strengthen the export sector, attract investment and enhance Sri Lanka’s global competitiveness. It said exporters face delays and high costs due to inefficient procedures and outdated systems and thus called for a modern cargo scanner at the Katunayake Export Processing Centre and a single-window digital system for exporter registration and renewals.
The NCE said Sri Lankan exporters often lose value by supplying under foreign labels. To build stronger brand equity, the NCE proposed state-backed liability insurance and tax concessions for brand-building; fast-tracked trademark registration and Sri Lanka’s accession to the Madrid Protocol; and relaunch of the EDB Brand Development Programme and global campaigns showcasing Sri Lankan quality. It said
Sri Lanka’s exporters need more incentives to move up the value chain (more costs to the government).
The Organisation of Professional Associations (OPA), in its proposal urged the creation of a National Investment Facilitation Authority (NIFA) as a one-stop-shop to fast-track the foreign investment approval process within 60 days; establish a Digital National Land Bank (GIS-based) to identify lands for industry, tourism, agribusiness and energy; launch the ‘Invest Sri Lanka’ campaign targeting Renewable Energy, Manufacturing, Technology, Export Promotion, Tourism Infrastructure, and Agribusiness and enhance Investor Aftercare Services with a dedicated Investor Relations Cell and annual CEO Roundtables.
On tourism, the OPA called for the development of a 10-year unified branding strategy, positioning Sri Lanka as a high-value, must-visit, experiential destination with a targeted marketing plan and campaign. On agriculture, it said: develop an e-database of under-utilised land with potential for agriculture; and consolidate small agricultural plots through the concept of cooperative/collective farming.
At the end of the day, all these proposals require funding, which organisations making these proposals are silent about. Where is the money? Traditionally, budget-making has been a complex process as the revenue from tax proposals is just enough to pay the interest component of loans (not the loan itself) and for capital and recurrent expenditure more loans have to be secured.
The IMF’s mantra is cut spending, reduce waste and raise taxes to fund capital and recurrent spending. No easy task for a government struggling to balance an economy and imposing taxes that won’t hurt the people. No easy task indeed!
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