Question of appropriation

Friday, 22 October 2010 04:14 -     - {{hitsCtrl.values.hits}}

SOMETIMES numbers make little sense. The decision by the government to allocate Rs. 215.21 billion for defence expenditure in the 2011 Budget has surprised many and raised questions of the government’s commitment to peace and economic development. Indeed the IMF’s Executive Board during its Article 4 consultation had expressed hope that the defence expenditure would be cut in the 2011 Budget.

During the Cabinet media briefing Media Minister Keheliya Rambukwella justified the move by pointing out that the military hardware needed for the war required massive payments — most of which are still being worked off. He insisted that the specifics of the payments will be outlined in the Budget and recalled instances when the weapons were imported on a mere a phone call. This means that as much as a fifth of the national Budget will still be funnelled for defence expenditure, a bleak reality when the country is trying to fast track its economic progress.

In comparison allocation for the Economic Development Ministry is estimated at Rs. 75.24 billion, health Rs. 62.25 billion and ports and aviation services at Rs. 28.65 billion. While two of these ministries are also under the Rajapaksa clan the imperative question is where the policy of the government will lead the country under such lopsided conditions.

The internally displaced have been earmarked a sum of Rs. 1.74 billion since the theory is that the people have been resettled and therefore would not need consistent assistance. However what the government must remember is that livelihood development is an uphill task and even though Cabinet approval has been granted to reopen the Atchuvely Industrial Estate in Jaffna, which before the war housed 36 small and medium enterprises the recuperation period for these companies will take at least the better part of next year. Policy makers are also concentrating on obtaining short term loans from the Asian Development Bank (ADB) and similar monetary organisations so that they can establish key infrastructure on the ground as soon as possible.    

So while it is laudable for the government to take much of the responsibility of rehabilitation on their shoulders, it is nothing more than what is expected of them and they must remain mindful of the fact that increased private sector investment – both local and foreign — is essential to providing growth through income generation.

Private-public partnerships require time, clear and unchanging policy as well as controlling power for the private sector to remain profit oriented. If they do not have the opportunity to manage their business sans arbitrary decisions and power plays then the investors are going to fight shy of entering these areas.

The Appropriation Bill has clearly proven that the task of rehabilitation and economic development cannot begin independent of conflict dependencies such as loan repayment for weapons, which can realistically run into millions of dollars. This creates a double burden of loans with infrastructure development that the government will have to balance out with strong assistance to the private sector. Expecting to boost income through taxes would be premature unless the country has a consistent inflow of investment and expansion for private entities would be impossible unless the banking sector is strengthened with the government conceding control.

Caught in a chicken and egg situation the 2011 Budget will have many balls to juggle at the same time. With many and sometimes contrary ideas expressed on how and when economic development should take root creating a facilitating environment is the biggest challenge come 22 November when parliament convenes to open a new chapter in an old debate.