Striking a Budget balance

Thursday, 18 November 2010 23:44 -     - {{hitsCtrl.values.hits}}

The balancing act of the Budget is a much-talked-of topic in the media these days. With the presentation tabled for Monday, a mere two days after the second presidential swearing-in ceremony there is a distinct possibility that the euphoria will slump rapidly once the salient points of the document are revealed.

Generally the Budget holds one point of interest to the public: Salary hike. Media reports have already pointed out that this is highly unlikely, given that the focus of the Government is more on development, based on large scale infrastructure projects and reducing the Budget deficit, rather than handing out more money to public servants. News reports indicate that even to give a Rs. 100 increase to the public sector, the Government has to increase recurrent expenditure by as much as Rs. 1.4 billion a month.

There are positive points to this move, since holistic development will grow the overall economy rather than focusing on one set of people, particularly since Sri Lanka has a vast cadre of public servants who for the large part need to upgrade their professionalism as well as productivity. Therefore, the unions which have been haggling for a Rs. 9,000 pay hike will possibly wait in vain. Considering the increased cost of living, they will have to consider a balancing act of their own to tighten belts until the economic situation improves – which will take more time. So their disappointment is likely to be sharp.

Yet, there is another side to the Budget that stakeholders are waiting for (i.e.) news of Government assistance to industries through subsidies and handouts in terms of tax cuts, or streamlining the entire tax system as well as honouring the agreements that were previously made. The apparel sector, for example, has been hankering for the payment of their rewards scheme for over two years and have pinned their hopes on the upcoming Budget. Many others are waiting in line for relief to expand and increase investment as well as provide more employment. These aspects must be focused on.

Whilst this may be the case, the private sector in general needs to move away from depending on Government assistance in the long run. The end of the war is the biggest advantage that the private sector must harness to become competitive, whilst pushing the Government to improve the enabling environment such as consistent policy framework, sound macroeconomic indicators leading to lower inflation, interest rates and stable foreign exchange, infrastructure development, efficient institutions, better rule of law and order, end to corruption; and good governance for businesses and economy to grow.

The Appropriation Bill surprised many with its massive allocation for defence, the relevance of which was questioned in a time of peace but confirms the repayment burden of the massive funds borrowed to fight and win the war against terror.

People are also concerned about what provisions the Budget will provide for controversial bills that were passed recently, namely the one for gaming. In addition Rs.12 billion was passed in supplementary estimates by the Parliament last Thursday, underscoring the need for more transparency and accountability for public finances within the Budget allocations.

Development is all well and good, but the people have a right to know how these monies are being spent and simply allocating money willy-nilly will not do. Expenses must be structured in such a way that they reach the people regardless of which political party they support. The Budget is made for the people, but not necessarily by the people; therefore extra attention must be applied as to who benefits from it all. A Budget that will usher in new opportunities for all is what post-war Sri Lanka immediately needs.