Budgetary bungling

Building a Budget is always a complicated task, mainly because all economic sectors have to be protected and balanced against each other. The new Government has already kicked off the process for 2016 but still has the responsibility to make the process transparent and available to public scrutiny.

International Budget Partnership in its latest survey which measures the state of budget transparency, participation and oversight in 100 countries around the world ranks Sri Lanka a low 69 out of 102 countries. This is quite shocking as every other country in South Asia, with the exception of Nepal, ranks better than Sri Lanka with Bangladesh leading the way. Even conflict-ridden Afghanistan does better, showing the deep need for stronger stakeholder involvement.

When the drafting of a Budget is not democratic and transparent it does not reflect the views of the people. Such sidelining has dual effects, one is that the Budget allocates resources to areas that are not in the best interests of the people and secondly evaluation of budgets cannot be done to see whether allocated funds have actually been spent as promised.  

The survey found the Government of Sri Lanka is weak in providing the public with opportunities to engage in the budgetary process, and the survey results also show that the budget oversight by the legislature in Sri Lanka is weak.

Basically evaluation of Budget allocations and whether they were used in an optimal manner remains very much a smoke and mirrors game in Sri Lanka. The Government can pledge funding but few ways exist to evaluate whether all the money pledged has actually been released and what projects it has been used for. Budget oversight by the supreme auditing institution in Sri Lanka, which is the Auditor General’s Department, is ranked as adequate. Even with Auditor General oversight, the numbers come a year later after the money has been spent.

When revenue targets are not met budgetary allocations can be trimmed mid-year with crucial areas such as agriculture failing to get their due. Verite Research, which conducted the Sri Lankan chapter of the survey, noted that the Government allocated an average Rs. 70 billion spending in agriculture and irrigation. But in 2010, they spent 9% less, in 2011 they spent 23% less, in 2012 34% less and in 2013 67% less.

Cash is also funnelled to obscure funds. In the last Budget presented by former President Mahinda Rajapaksa’s Government, a whopping Rs. 466 billion was allocated to an area headed ‘Development Activities’ but the section had no parliamentary oversight, creating scope for corruption and wastage.    

The report calls on the Government to improve transparency, participation and oversight in order to climb up in the index. This requires the Government to establish credible and effective mechanisms for capturing a range of public perspectives on budgetary matters. It also proposes the establishment of formal mechanisms for the public to assist the Auditor General to formulate its audit program and participate in audit investigations.

The report highlighted the need to publish in-year reports, pre-budget statement, a citizens’ budget and a mid-year review in a timely manner to improve the transparency of budget formation. If budgets can be made more transparent people would be more open to paying their taxes.