Walking the talk

Prime Minister Mahinda Rajapaksa this week presenting the Appropriation Bill gave a stinging criticism of the former Government. However, his administration has as much of a challenge to ensure their first Budget, to be presented next week, walks the talk. 

Budget 2021 will be the first policy document presented by this Government since coming into power but more importantly its implementation will be crucial to inspiring market confidence at a time when there are serious concerns about the country’s debt repayment sustainability. This is why it is imperative that the upcoming Budget has more transparent implementation and oversight than earlier editions. 

Sri Lanka’s track record on budget implementation is less than impressive. Over the years it has repeatedly missed deficit, expenditure and revenue targets and lapsed on important policy promises. Budget 2019 (Sri Lanka did not have a Budget for 2020) is a case in point. Budget 2019 ran into numerous implementation and transparency snags, with 41% of its policy proposals undone and progress of 32% of its proposals worth Rs. 100 billion remaining undisclosed. 

A new report by think-tank Verite Research released this week indicated the last Budget of the Yahapalana administration was largely shambolic. The platform Budgetpromises.Org, which was launched in 2017, tracks progress and openness of key proposals in the Budget. To evaluate Budget 2019 the platform tracked 37 promises, with a total allocation of Rs. 100,875 million. It also shadowed implementation of policy proposals and openness of ministries.

The report found that for 32% of Budget 2019 proposals, there was no information available in the public domain. This was a significant increase when compared with the 13% seen in 2018 and 11% in 2017. In addition, implementation of 11% of Budget 2019 proposals were poor, 3% were partial and 8% were not carried out at all. Only 32% of the proposals were fulfilled and 5% were completed at a substantial level.

In 2019, openness on proposals was also hindered by the frequent changes to ministerial portfolios. Researchers found only five ministries ranked moderately well on transparency, but even they failed to proactively disclose and share information on how public funds were being used. The five top ranked were Finance, Transport, Media, Labour and Skills Development, and Buddha Sasana Ministries. The worst performers were Justice, Roads and Highways, Industries and Supply Chain Management, Healthcare and Sports and Youth Affairs. The Defence Ministry also failed to impress, ranking 11th, even though it has the largest fund allocation under the Budget. 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. This has become all the more important as COVID-19 has worsened deficits and weakened macroeconomic stability.

The issue of transparency is also not helped by the Government strengthening its control over key oversight bodies. Both the Committee on Public Enterprises and Committee on Public Accounts are headed by Government Parliamentarians and efforts are being made to take over the Committee on Public Finance. There has been no effort to push ministries to proactively publish information on key Budget proposals or establish a Parliamentary Budget Office. 

These issues need to be dealt with speedily if Budget 2021 is to actually deliver what will be promised to the people.