Conflicting policies

Thursday, 16 June 2016 00:00 -     - {{hitsCtrl.values.hits}}

THE International Monetary Fund (IMF) had bleak news for the Government this week, reiterating Sri Lanka’s economic outlook is facing risks from the Government’s inaction on key policies and a significant deterioration in the external environment. The organisation has insisted the Government fast-track reforms aimed at boosting Government revenues to cut the fiscal deficit, improve foreign exchange reserves, cut public debt and Sri Lanka’s risk of debt distress, and improve public financial management.

As the public is well aware Sri Lanka’s finances are in a precarious situation because of high external debt, partly due to heavy infrastructure borrowing under the previous Government. However, austerity measures remain deeply unpopular and the Government rather than leading from the front has continued its handout program to political elites regardless of the massive revenue loss to the State. 

According to reports the Government will increase concessionary vehicle permits to Public Servants from the current $25,000 to $45,000 in a new circular to be issued shortly by the Treasury’s Trade and Investment Policy Department.

The Government suspended the Concessionary Vehicle Permits (CVP) in November citing the huge drain on foreign exchange, air pollution and traffic congestion. Senior public servants like Secretaries, additional Secretaries, Departmental Heads, Directors, District Secretaries, University dons, Chief Secretaries of Provincial Councils are among those eligible for the CVP.

Interestingly it was Finance Minister Ravi Karunanayake during the 2016 Budget proposed to end the practice of giving tax-free vehicles to State workers and elected ruling class. During his speech Karunanayake admitted the Government had lost Rs. 147 billion in revenue from 2012 to August 2015 and acknowledged the system was “politicised” and “misused”.

According to the Finance Ministry 32,237 vehicles have been imported to the country from 2012 to August this year with the concessionary permits. The Government has earned only Rs. 63.8 billion from them. Yet almost immediately the Government contradicted their statement by awarding members of parliament vehicle permits, which resulted in the Government Medical Officers Association (GMOA) demanding permits as well. 

The stalemate on principle was short lived as the Government returned to doling out permits freely and even rolled out an additional Rs.1.17 billion supplementary estimate to purchase vehicles for dozens of ministers. Under vehement public protest Prime Minister Ranil Wickremesinghe last week called for the imports to be postponed but subsequent reports found the funds had already been released by the Treasury. 

The Government has also steadfastly refrained from introducing a framework to define the type of vehicles that can be purchased by politicians and kept quiet about the estimated 20,000 vehicle permits likely to be released in stages under the new regulations. Vehicle permits are freely sold on the market at colossal prices and have sprouted a culture of corruption where the person the permit is issued for often sells it. 

The new vehicle permits providing higher concessions will result in larger losses to the Government. Though a case can be made for deserving public servants at a time when the average Sri Lankan finds vehicles beyond their buying capacity it is unconscionable that the Government continues to feather the pockets of politicians and elites.