By Friday Forum –

Dr. Jayantha Dhanapala

Women struggling to sustain homes, wage earners, the business community and economists and other professionals, all await the presentation to parliament of the government’s budget proposals for the year 2013, on 8th November 2012. All of them, no doubt, have their own concerns and expectations as to the impact the national budget would have on their own budgets and economic well being. Many of them will also be entertaining thoughts of its impact, on the country itself and the nation’s well being.

Friday Forum, as a group of concerned citizens committed to social justice, the rule of law and democratic change, wishes to place some thoughts before the public, legislators and the government, on what it hopes, the budget will address and what the budgetary process and the outcome of that process, ought to be.

We wish that the processes involved in the development, approval and the effective implementation thereafter of the Budget be exercised with transparency, equity and due accountability to deliver sustainable growth and prosperity to the nation and its people. We believe that the citizens have a right to be made aware of the likely future impact on them and the nation as a consequence of the budget. These concerns include:

A. What are the national resource allocation priorities, trends in the shift of priorities and specific areas where cuts have been imposed and areas where additional resource allocations have been made? What are the justifications for both cuts and additional allocations? What are the consequential impacts on different segments of society? What measures of relief and support are offered to those negatively impacted, especially the marginalized segments of society? 

B. Are the major infrastructure projects funded by previous budget allocations delivering outcomes and returns as anticipated? Where these investments have been funded mainly out of borrowings, will the expected future cash flow returns from these projects be adequate for debt servicing commitments?

C. What is the fiscal gap ie. the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years? Is it positive or negative? Are there statutory controls on borrowing and if so are these being adhered to? What are citizens right to information, since citizens never appear to get a clear picture of the details of borrowing and the future consequences? 

D. Are there serious initiatives towards assuring that all key budget expenditure items are managed with economy, efficiency and effectiveness and allocated with equity?

E. What are the initiatives towards minimizing of wasteful / unproductive/ inequitable expenditure and what measures are in force to eliminate corruption?  Which Minister leads such initiative and to whom is he accountable? What have been the beneficial outcomes during the last year?

F.  Will the budget taken as a whole pass the citizens’ test in regard to justice, equity, transparency, sustainability and priorities for national reconciliation, poverty alleviation and economic opportunity widening growth?

The unenviable task before those entrusted with designing a budget in the current volatile global environment and in the face of daunting structural and systemic issues that the Sri Lankan economy faces at present have been widely discussed. Indeed, the crisis in education, problems facing our health sector, the long neglect of plantation communities, the economic travails of our farmers and fisher folk and the dire conditions of our rural and urban poor are concerns that we have been revisiting year after year. It would be naïve to expect a single budget, to present instant solutions to any of the chronic problems that the country’s economy faces at present.

What we could hope and wish for is a budget that unambiguously points to the strategic direction in which the country’s economy should move, in the long march to recovery. We wish for a budget that takes the people into confidence, lays bare the hard choices and challenges before the nation, avoids trying to apportion blame and invites the participation and cooperation of all in facing those challenges.

Preparing a budget for a country is in principle no different from preparing our own household budgets or a budget for a business entity. It is the product or outcome of an iterative process of increasing revenue to match the expenditure and/or pruning expenditure to match revenue. It is also about the choices we make about our investments in our society and economy that, in future, will shape our incomes, expenditures and economic well being. The problems we face today as a consequence of not following a meaningful budget-making process along with lack of fiscal discipline, and adopting feasible approaches towards overcoming them, have been analyzed and presented by many, and are well known.

To mention a few, the country’s expenditure has to be aligned to its revenue. Although the debt to GDP ratio has improved significantly, the servicing of debt has reached a worrisome level. Exports as a percentage of GDP have declined. The need to manage effectively the potentially devastating risks from a balance of payments crisis created by the bludgeoning foreign debt in volatile capital markets requires attention. This is especially critical in the event the major infrastructure investments fail to realize adequate returns to service debt and interest commitments.

There is no doubt that hard choices need to be made in charting our way out of these problems. It is not that our professionals and politicians are unaware of the hard choices to be made. However, the desire to grab power or the desire to stay in power has prevented politicians from placing those hard choices before the public. The country is crying for leadership that will abandon partisan politics and place the country’s interests before those of the party and self.

The Friday Forum does not see the need to place specific budgetary proposals for the government’s consideration at this stage. It is a matter of regret that the opportunity for presenting independent views and proposals for the government’s consideration, every year, has been provided as late as September/October, by which time, items of government expenditure have, most likely, been finalized. It is recommended that the public consultation process be initiated when the mid-year reports are tabled in Parliament in terms of the Fiscal Responsibilities Act. However it would not be inappropriate to express some views on the budgetary process itself.

The budget is placed before Parliament for debate and approval, since Parliament has been vested with full control over public finance. The Standing Orders of Parliament have allotted 26 days for debate and adoption of the proposals, and also specified several stages through which the proposals are considered viz the first reading, the second reading and the committee stage, in recognition of the importance of the proposals in shaping the country’s economy. Thus it would not be unreasonable for the public to expect an objective analysis of the proposals being made by members of both government and the opposition, given the impact the proposals would have on the lives of every citizen and all economic activity in the country. However, a perusal of the records of Parliamentary proceedings shows that the budget debate every year descends into a political slanging match, with the exception of a few learned and thoughtful contributions, usually from the same parties, every year.

As a collective outcome of the budget debate, the legislature could agree to national priorities for key discretionary spending as well as issues of future foreign borrowing and parliamentary oversight. The Friday Forum appeals to members of parliament on both sides to raise the level of debate, and given the gravity of the economic problems we face, to use the debate to place the difficult choices and challenges the nation faces, before the public in a bi-partisan manner, rise above narrow party politics, and collectively set directions for sustainable and inclusive development, economic well-being and prosperity.

Yours sincerely,

Jayantha Dhanapala  and Dr. G. Usvatte Arrachchi

On behalf of The Friday Forum;

Jayantha Dhanapala, Dr. G. Usvatte Arrachchi, Rt. Reverend Duleep de Chickera, Dr. Jayampathy Wickramaratne, Professor Arjuna Aluwihare, Manouri Muttetuwegama, Dr. Deepika Udagama, Suresh de Mel, Lanka Nesiah, Sithie Tiruchelvam, Dr. Devanesan Nesiah, Mahen Dayananda, Shanthi Dias, Reverend Dr. Jayasiri Peiris, Dr. U. Pethiyagoda, Anne Abeysekera, Ahilan Kadirgamar, Dr. A. C. Visvalingam, J.C. Weliamuna, Faiz-ur Rhman, Daneshan Casie Chetty, Dhamaris Wickramasekera, Ranjit Fernando, D. Wijayanandana, Dr. Camena Gunaratne, Javid Yusuf, Tissa Jayatilaka, Chandra Jayaratne