Friday Forum notes with concern that unforeseen major changes into expenditures of infrastructure development projects without any preparatory work in planning and undertaking could pose issues including a large scale waste.
Releasing a statement concerning the sudden decisions that have been made by the government to cut down the expenses of infrastructure development projects substantially and increase the expenditure on health and education, the Friday Forum has pointed out this decision could also result in a failure to meet genuine and urgent needs.
While pointing out that it’s an essential feature of a democratic society for governments to share with the governed, all information relevant to the government except sensitive information that is kept a confidential due to security concerns, the group also notes that it is vital for the expenditures to be planned, undertaken and reviewed on completion to ensure resources are efficiently used.
The group has also noted with concern that the recent revisions of expenditure plans by the government demands for such changes to be made equipped with good knowledge concerning the possible consequences resulted through the changes, and have pointed to the decisions that have been made by the incumbent government concerning the Uma Oya scheme and the Colombo Port city.
The Friday Forum has also stressed on the importance of informing the public concerning all mega projects that have been recently completed, pointing out that the incumbent government should not follow in the footsteps of the previous regime during which, the people were kept dark about the costs and benefits including any ill effects of the projects.
Friday Forum considers it vital that the incumbent government publicizes all the details concerning the development projects irrelevant of whether or not they are completed, continuing or being planned.
We publish below the statement in full;
Change in government priorities, project review and public information
Friday Forum welcomes the new opportunities for good governance that dawned with the Sirisena administration, established in early January this year. An essential feature of a democratic society is that government share with the governed all information relevant to government except that which must be kept secret for reasons of security. Certain information pertaining to urgent decisions to be taken by government and affecting the people on a wide front now needs to be given to the public with as little delay as possible.
This is urgent in view of the decision taken by government to cut down substantially expenditure on infra-structure development, and to increase expenditure on education and health. Two particular instances have emerged already. The Uma Oya project has been suspended and there is much anxious debate about the Colombo Port City Project. Friday Forum’s concerns cover the entire spectrum of projects that will be affected by the decision of government to cut down and to change priorities regarding government expenditure.
An essential feature of good governance is that expenditure is planned, undertaken, and reviewed on completion, to ensure that resources are used efficiently. The recent revision of expenditure plans by government demands that when major changes are made, they are made with as good knowledge as possible of the consequences. For instance an arbitrary decision to cut expenditure on a bridge two thirds built in preference to a bridge for which only land clearing has taken place would lead to unnecessary waste of capital, avoidable with better management. This aspect needs attention in respect of vast projects such as the Uma Oya scheme, the Colombo Port City, and large highway and railway projects that had been planned under the previous administration.
The public also needs to be informed about all mega-projects that have been recently completed, including those in and around Hambantota, the construction of expressways and railways, the Norochcholai power plant, and the Nelum Pokuna theatre and Nelum Tower in Colombo city. The people have been kept in the dark by the last administration about the costs and benefits, including any ill effects, of these projects.
Friday Forum considers it vital that the present government put before the public all information relevant to these projects, whether completed, on the way or planned.
There is expertise in our universities and other institutions that teach management which is adequate to undertake the work involved in monitoring and reviewing such projects. Besides, students who collaborate with their teachers in such exercises will find most rewarding work experience otherwise rarely available to them. High quality output will produce case studies useful not only here but all over the world.
The work of research and analysis, as suggested here, will also need to be established on a regular basis to assist the Parliamentary Oversight Committees proposed to be set up to assist Parliament to fulfil more satisfactorily its responsibilities in matters of finance, entrusted to it in Chapter 17 of the Constitution. Friday Forum emphasises the need for Parliament to set up facilities adequate to advise these Committees with background papers to conduct their business. Ad hoc and casual arrangements as now will nullify the value of these oversight committees
Substantial changes in government expenditure on education and health pose equally difficult questions. Normally expenditures in a budget are the result of sustained background work extending back several months or years in the responsible ministries and other institutions. Unforeseen large changes in expenditure, denied the benefit of such preparatory work, pose problems of planning and undertaking expenditure that could result on the one hand in large scale waste and on the other in failure to meet genuine and urgent needs.
Friday Forum regrets the practice of several previous administrations to withhold information which was previously made available in White Papers and more definitively in Sessional Papers. One glaring instance is the failure to issue the report of the last Taxation Commission chaired by Professor W.D.Lakshman. All previous such reports were issued as Sessional Papers that, apart from informing the public of government policy, were useful to students and scholars engaged in research in these disciplines. Communications of this nature with the public will make a distinct contribution to good governance.
Dr. G. Usvatte-aratchi Ms. Suriya Wickremasinghe
Dr. G. Usvatte-aratchi, Ms. Suriya Wickremasinghe, Professor Arjuna Aluwihare, Mr. Priyantha Gamage, Dr. Selvy Thiruchandran, Dr A.C.Visvalingam, D. Wijayanandana, Mr. Danesh Casie-Chetty, Mr. Saliya Peiris, Professor Gananath Obeyesekere, Mr. Faiz-ur Rahman, Rev. Dr. Jayasiri Peiris, Dr.Upatissa Pethiyagoda, Mr. Pulasthi Hewamanna, Professor Camena Guneratne, Mr. Javid Yusuf, Ms, Damaris Wickremesekera, Professor Gameela Samarasinghe, Professor Savitri Goonesekere, Mr. Suresh de Mel, Dr. Deepika Udagama, Ms. Manouri Muttetuwegama, Rt. Reverend Duleep de Chickera, Professor Ranjini Obeyesekere, Mr. Chandra Jayaratne.
NAK / March 17, 2015
This is exactly what we have been saying even before the elections. Show us the fraud or corruption that you claim without just claiming them.
Colombo port city costs US$.50000 a day just to keep it on hold. Whose money is that?
These stupido’s now in control only knows to blow their mouths out loud but there has never been any substance to anything they say.
Amarasiri / March 17, 2015
RE: Major Changes In infrastructure Project Expenditures Can Pose Issues: Friday Forum
Sri Lanka has a portfolio of Major infrastructure projects, producing very little return. :Looks like most are negative returns, subsidized by Citizens who skip a meal, malnutritioned children and many other shortcomings in education and health care, except the Mahinda Rajapaksa Ego.
Can you guys/girls do a Portfolio analysis of these Mega Projects? If you are not qualified, can you get somebody who is qualified to do it?
Modern portfolio theory
Modern portfolio theory (MPT) is a theory of finance that attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of various assets. Although MPT is widely used in practice in the financial industry and several of its creators won a Nobel memorial prize for the theory, in recent years the basic assumptions of MPT have been widely challenged by fields such as behavioral economics.
MPT is a mathematical formulation of the concept of diversification in investing, with the aim of selecting a collection of investment assets that has collectively lower risk than any individual asset. This is possible, intuitively speaking, because different types of assets often change in value in opposite ways. For example, to the extent prices in the stock market move differently from prices in the bond market, a collection of both types of assets can in theory face lower overall risk than either individually. But diversification lowers risk even if assets’ returns are not negatively correlated—indeed, even if they are positively correlated.
More technically, MPT models an asset’s return as a normally distributed function (or more generally as an elliptically distributed random variable), defines risk as the standard deviation of return, and models a portfolio as a weighted combination of assets, so that the return of a portfolio is the weighted combination of the assets’ returns. By combining different assets whose returns are not perfectly positively correlated, MPT seeks to reduce the total variance of the portfolio return. MPT also assumes that investors are rational and markets are efficient.
MPT was developed in the 1950s through the early 1970s and was considered an important advance in the mathematical modeling of finance. Since then, some theoretical and practical criticisms have been leveled against it. These include evidence that financial returns do not follow a Gaussian distribution or indeed any symmetric distribution, and that correlations between asset classes are not fixed but can vary depending on external events (especially in crises). Further, there remains evidence that investors are not rational and markets may not be efficient. Finally, the low volatility anomaly conflicts with CAPM’s trade-off assumption of higher risk for higher return. It states that a portfolio consisting of low volatility equities (like blue chip stocks) reaps higher risk-adjusted returns than a portfolio with high volatility equities (like illiquid penny stocks). A study conducted by Myron Scholes, Michael Jensen, and Fischer Black in 1972 suggests that the relationship between return and beta might be flat or even negatively correlated.
Amarasiri / March 17, 2015
“These stupido’s now in control only knows to blow their mouths out loud but there has never been any substance to anything they say. Meaning…Zero credibilty!”
I think you are on to something here.
Yes are a lot with IQs below 79 who supported Mahinda Rajapaksa. They elected, the same type of stupido’s.
Countries are ranked highest to lowest national IQ score.
Rank ——– Country ———————– % ————-
1 Singapore 108
2 South Korea 106
3 Japan 105
28 Sri Lanka 79
Ambedkhar Reborn / March 18, 2015
Rcently I read somewhere that Chinese President Xi Jinping launched a much – published drive against corruption after he came to power two years ago, vowing to target both hig- level “TIGERS” and low- ranking “FLIES “.
Any of MR regime’s Lankan high- level ” TIGERS ” involved with mega projects like Colombo Port City Project ? If so are they in exile in the clouds or space above the Port City ?
Can Friday Forum enlighten the Lankan Citizens who do not have dual citizenship?
If there high- level T s involved what solutions the F.F is proposing to MS and Ranil.?
Jagath Fernando / March 18, 2015
You cannot stop projects just like that.
Punish the wrong doers but projects should go on.
Everything is at a stand still.
Mohamed / March 20, 2015
You better study the macro economy, if you really wanted to comment on government spending on infrastructure projects. Specially explore more on employment, shadow pricing, project appraisal, importance of infrastructure projects for government in creating employment, emerging economic scenarios etc.
Anyhow there may be reason for you to talk some think irrelevant such as MPT. Because You that Srilankan with lowest IQ. Highest level of IQ needed to relate the right analysis in right place. As you are aware, it isn’t your problem
D.Nimal / March 21, 2015
The bunch Friday Forum members( it seems to me unofficial thinking tank, poor learning ill feeling of Sri Lankan society ) may had been visited many Major cities in world, including London, New York, Berlin, Paris, Rome, Vienna, Moscow, Madrid ,Tokyo, New Delhi, Bangkok, Hon-Kong, Soule, Beijing, Shanghai, Kualaumpure and Singapore. (I have never been out this an island.)
How you may have witness and look at those cities views? and enjoy and benefitted during your staying combatable journey; even that your visited major cities as special privileges’ class of Sri Lankan elites.
How they build large infrastructure projects are funded by Billions of US dollars that Using Tax Payers Money.
Most of fund are derived, from that sources of national debts or funds allocated by national budget and GDP has been allocated by foreign loans from IMF, WD and ADB.
While majority ruling governances of concern countries has issues billions of Bonds for developed infrastructure is major part of country assist for overall development including Education and Health.
That how is that economic and infrastructure developments comes into being throughout the Globe.
You all may have read more than me, but your letter has misled public by hide facts in world Economy Development and how its exist?
“.. at time the ascent of money has seemed inexorable. In 2006 the measured economic output of the entire world was around $ 47 Trillion. .. market capitalization of the World Stock Market was $ 51 Trillions ,10% larger. The total value of domestic and international bonds was $ 68 Trillions, 50% percent larger. The amount of derivatives outstanding was $ 473,more than TEN TIMES larger. Every day two trillion dollars change hands on foreign exchange market…”
The Ascent of Money by Ferguson. These datas has change last 10 years that amount defiantly larger than said by Ferguson 2007.
Our talents academic do more research and development of new era of changing of New venture development of capitalist economy in reformed of democracy governances and refine the new rules of Capitalist world as well as Sri lanka.
Your thinking tanks new proposals are welcome ,but traditional and orthodox line of social-economy policies are outdated NOT suited to New World Order -21st century.
The new set of Ruling team of MS, CBK and UNP-Ranil.W.. all of them are old guard of outdated school of thought, who had been rule and ruin our nation.
They had been Run War Tone economy since 1977 to 2005 by UNP and CBK-led SLFP alliances. Anti-national capitalism and anti-democratic outfits had been run by UNP and CBK. We were brink of collapse of our nations during 30 years war led by LTTE Tamil ruthless Terrorist class back by Indian ,US and UK led splitters.
Now new form of regime has been installed in Colombo by blessing of foreign power not the interest of People of Sri Lankan, but vested interest of Indian RSS -BJP anti-secular policies dominated by Modi’s Govt. center of New Delhi. Colonial clouds are in our sky!