Budget priorities

The Budget is perhaps the single most important policy document any Government releases each year. It gives details of policy priorities of the Government and allocates public funds to achieve them. Therefore tracking the Budget gives important insights to whether the Government is following through on its promises, to what extent, and whether these policies are progressive and achievable.  

The Open Budget Survey (OBS), released last week by Verité Research, scores countries on the openness of their budget process. The survey is conducted every two years. The 2019 cycle of the OBS has placed Sri Lanka 54th out of 117 countries, with a budget transparency score of 47/100.

Sri Lanka has been gradually improving its budget transparency, increasing its scores from 39 and 44 in the 2015 and 2017 cycles of the OBS. However, Sri Lanka’s score still falls below the minimum benchmark score of 61 needed to be classified as having a ‘sufficient’ level of budget disclosure under international standards. In South Asia, Sri Lanka is ranked behind Afghanistan (50) and India (49).

In 2010 Sri Lanka had a score of 67, which was well above the benchmark score, but this gradually reduced in the subsequent years. This is partly due to other countries moving forward faster and increasing their budgetary process, implementation, and consultation standards to move up the index.

In 2019 the main change was that Sri Lanka published a citizens’ Budget online. But many other efforts such as a Parliamentary Budget Office that was promised by the previous Government failed to materialise. Mid-year reports released by the Government have also failed to impress with continuity of expenditure and projects failing to match up. Many of these details are shared within Government Ministries and Departments but are not released to the public.  

Sri Lanka also performs badly on Budget implementation and has low scores on Budget formulation as well as approval. Ministries rarely release information proactively and one of the biggest issues has also been ill-thought out policies being included in the Budget only to be later taken out. The Exim Bank proposed by the former Government is one example. Needs and views of lower income groups, such as the plantation sector are routinely overlooked while more powerful stakeholders such as the private sector usually get policy makers attention. On Budget audit Sri Lanka scores just 33 out of 100.

Sri Lanka, with its significant debt and governance issues, can no longer afford to have Budgets that do not walk the talk. Key reforms, including State-owned enterprise restructuring, improving exports, improving imports, and implementing pragmatic social welfare nets, need to be outlined in the Budget to give all stakeholders, including the private sector, a chance to base their planning on something solid.

Among the recommendations in the report were fuller and more consistent reporting in budget documents, strengthening parliamentary oversight and improved public participation in Budget implementation. All these should get the attention of the current Government, especially since it has operated three Votes on Account (VoAs) this year with the last two sans any parliamentary oversight. When the Budget cycle rolls around in November, additional effort should be made to reduce discretionary powers of the Finance Ministry to re-allocate funds from the Treasury, give more time for the Budget formulation process and include more public stakeholders in the process to ensure that vulnerable communities are also given a stronger voice. This first fully fledged Budget of this Government could well set the stage for the next four years.