Rationalising public funds

Sri Lanka’s fiscal woes have been ongoing for decades and COVID-19 is in danger of exacerbating them to dangerous levels. Not only is the Government running double digit Budget deficits to deal with the pandemic, it is also failing to rationalise and prioritise its expenses at a time when that is essential to combating the pandemic. 

The incidents of the past few weeks have shown that it would be foolhardy to underestimate the impact of COVID-19. Given the tragedy unfolding across the Palk Strait and the ever-present danger of new variants as well as the challenges faced in vaccinating an entire populace, there needs to be greater vigilance on how limited public finance resources will be expended. 

On this front, Sri Lanka has always fared poorly. There is little understanding of how the Annual Budget is implemented and timely information on fund allocations or project implementation are almost non-existent in the public domain. Sri Lanka also does not have a parliamentary Budget office despite repeated appeals from think tanks to set one up to give timely updates to parliamentarians. 

The Budget Department of the Finance Ministry has high levels of discretion of how it allocates funds and can reduce allocations if deemed necessary. This is also why Budget allocations that are customarily announced in November are trimmed discreetly throughout the subsequent year or transferred to other ministries. 

Reports by the Auditor General, while important, only tabulate how funds are used after they are spent, leaving little space for advance gatekeeping. The same is true of the Committee on Public Enterprises (COPE) and Committee on Public Accounts (COPA) that track public finance but lack teeth to hold key public officials accountable. This lack of coherence and transparency is a huge challenge, especially in the middle of a global pandemic. 

For over a year, it has been clear that Sri Lanka will need greater investment in its healthcare facilities to combat COVID-19. Despite the war ending more than a decade ago, the largest budgetary allocation is still given to defence and perhaps more concerning is that much of what is earmarked for health, education and housing is recurrent expenditure funnelled mostly into public employee salaries. The politicisation and inefficiency of the public sector means that investment is not made in public sector workers who are important, such as medical and other professionals. The recruitment of 80,000 development officers across two governments is a prime example of this. 

The presence of a bloated public sector means that capital investment remains low as the Government cannot afford it. Even when it is done, it is for big ticket expenses such as infrastructure, usually funded by loans, which bring a whole host of additional headaches to an already fragile economy. Funds to expand hospitals, beds, intensive care facilities, import drugs and improve access are lost in this melee of bad policymaking and even worse execution. 

Even after the pandemic arrived in Sri Lanka, Cabinet papers beyond count have been approved for non-essential expenses with a Rs. 650 million allocation for gyms this week being the latest. The public have every right to be angry about this at a time when the healthcare system is buckling under the strain and patients are struggling to find sufficient hospital beds. But this issue will only be solved by aligning these mismatched functions of government at the highest level