Budget and public sector reforms

Tuesday, 8 December 2020 02:31 - - {{hitsCtrl.values.hits}}

Trade Minister Bandula Gunawardena last week took it upon himself to direct heavy criticism at Finance Ministry officials during a speech in Parliament, blaming them for failing to include proposals in the Budget, distribute funds to implement proposals, and work to make State-Owned Enterprises (SOEs) solvent.

The statements are worth further examination because the Finance Ministry plays a central role in the management of public finance and many of Sri Lanka’s economic problems are linked to fiscal policy. Economists and other experts over the years have suggested that Sri Lanka should adopt a longer Budget cycle that would give the time for Treasury officials and line ministries to evaluate proposals better and come up with data-based reasons to adopt some proposals while rejecting others.

Such a step would also allow for each proposal to be evaluated and a timeline drawn up for implementation. Minister Gunawardena finding fault for not having a pet proposal included is unfair as the Budget should ideally be policy rather than project-based. It is true parliamentarians are elected, but it is precisely because public officials should, technically, be without bias that they are the better evaluators and implementers of Budgets.

Successive budgets in Sri Lanka presented by governments of different hues have failed the credibility and implementation litmus tests. Sri Lanka does not have a Parliamentary Budget Office, nor does it have a dedicated branch of Government to monitor implementation and update the public on whether the proposals laid out in the Budget are being implemented in the right way. If Minister Gunawardena’s statements are to be heeded these reforms would be welcomed by parliamentarians as much as the public.

Routinely key allocations for education, healthcare and housing as well as a host of other measures are listed in the Budget, hailed for a few weeks and then sadly swept under the carpet. Critical policies such as pension schemes, measures to increase female participation in the workforce and progressive legal changes have died a silent death behind the scenes, because they get lost in the jumble of competing interests and priorities. The public only even get to know of how much did not get done, because of media and civil society efforts to demand information and evaluate Budget performance.

The Finance Ministry retains much discretion over fund allocations under a Budget and funds may get shifted around depending on the challenges and changed circumstances experienced by the country in the 12 months after the Budget presentation. Greater transparency on this front is precisely why a Budget Office is necessary.

Minister Gunawardena’s ire was also directed at Treasury officials who sit on SOE boards but are powerless to stem their losses. On this point much remains to be done, including empowering public sector officials to withstand political influence, introducing whistle-blower protections and changing the Finance Ministry’s role to be an effective shareholder of SOEs rather than a passive administrator. This Government has clearly articulated public sector reforms as a goal and there are few ministries more powerful than Finance to be a starting point.