Budget implementation

As the days tick down to Budget 2019, an evaluation of the larger proposals under the previous edition has shown that it has failed to deliver on transparency and implementation with only 8% of 38 major proposals worth Rs. 149 billion on target, with 33% categorised as either broken, neglected or undisclosed.

Releasing the latest ‘Budget Promises: Beyond Parliament’ update, Verité Research tracked 38 proposals, which were allocated above Rs. 1 billion in Budget 2018, for the first six months of 2018. Their research found there has been little improvement in implementation when compared with Budget 2017 and Budget 2018, with transparency actually declining for the latter. The bulk of new expenditure proposals in Budget 2018 were also categorised as lagging in implementation. 

While the Government’s progress in implementing its Budget promises remains stagnant, its willingness to disclose information has declined. In the first half of 2018, information on progress for 74% of the tracked promises were either not available or obtained with difficulty. 

Only three proposals were on track. They were a Rs. 17.5 billion project to provide 20,000 housing units under the Urban Regeneration Project by 2020 for the poor by the Megapolis and Western Development Ministry, a Rs. 2 billion skills development program by the National Youth Corp and a Rs. 1.7 billion fisheries harbour development project by the Fisheries Ministry. 

As much as 59% of the proposals were tagged as lagging. These include significant projects such as the Rs. 3 billion Aruwakkalu waste disposal site, Rs. 5.3 billion in concessional loans to agri companies to improve technology infusion, and Rs. 3 billion for a contributory pension scheme for farmers. 

Among the undisclosed proposals, which amounted to Rs. 45 billion, were a slew of projects, including Rs. 3.5 billion allocated for education reforms, Rs. 1.25 billion for medical faculties at the Wayamba, Sabaragamuwa and Moratuwa universities, Rs. 5 billion to expand the availability of technology degrees, Rs. 24 billion for urban regeneration projects, and Rs. 2.5 billion to improve the rural road network.

What all this underscores is the need for the Budget to prioritise the most important economic and political agendas and then actually achieve them because a Budget is essentially the catalyst for a policy agenda. The researchers were also concerned over the role of the Budget Implementation Unit that was supposed to have overseen many of the crucial proposals and called for much more transparency of public finance.      

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. 

It is clear that Sri Lanka cannot keep missing its targets. Sri Lanka has slipped to the 85th position in the 2018 Global Competitiveness Index from 81st in the previous year.

Out of 12 broader pillars, Sri Lanka had improved in terms of infrastructure, health, ICT adoption, skills, and market size, but lagged in the other factors, such as institutions, macroeconomic stability, product market, labour market, financial system, business dynamism, and innovation capability. 

With just weeks to go before Budget 2019, efforts have to be made to clarify where Budget 2018 implementation is and how the next edition may take key proposals forward.