By Ahilan Kadirgamar –
Budgets are deeply political because they are about the distribution of resources. If we take the budget of a family, it is hierarchical and gendered; decision making on expenditure is often monopolised by the head of the family, where male and monetised work are valued over others, particularly domestic work. The same goes for the national budget, not only in terms of the priorities of resource allocation, but also the value given to certain sectors, the limited number of actors determining the budget and particular constituencies making recommendations. Budgets also intervene in deeply political moments shaped by historical social relations whether it be natural disasters, global economic crisis or national political manoeuvres.
There are at least three immediate political economic concerns that will shape the reception of the 2013 Budget. First, if we take the drought that has affected our farmers this year, the impact of such a natural disaster is necessarily shaped by agrarian relations; whether it be the history of land reforms and the size of farming plots, their dependence on wage labour and their access to longer-term credit and subsidies to wade through difficult times. The same can be said of the politics of the global economic crisis. An economic crisis does not erupt out of a vacuum; it is a product of the capitalist system which exploits one section of society to the benefit of another, and in the process also creates the conditions for its own crisis. Furthermore, the impact of the global economic downturn depends on the extent to which the Sri Lankan economy has been integrated into the global economy through financial and trade liberalisation. Next, the controversial Divi Neguma Bill and the immense centralisation of resources and powers under the Minister of Economic Development is bound to shape rural economic life including the distribution of subsidies and local finances such as microfinance loans. The Divi Neguma Bill will both undermine devolution by absorbing subjects and powers belonging to the Provincial Councils and reinforce political patronage down to the local level.
While these concerns are shaping the imminent reception of the Budget, the Government is likely to heed the recommendations of those economically powerful actors and members of the mainstream economic establishment. Serious engagement with the Government on the Budget has been limited to the major financiers of the Colombo Stock Exchange, the Chambers of Commerce and the business community, and the international financial institutions. The IMF and the World Bank in particular have considerable leverage to shape the Budget. The IMF has strict budgetary conditions for its Standby Agreement of 2009 and the World Bank’s loans promote infrastructure development through its heavy investment and pushes for privatisation of education through its funding. The media is also selective in legitimising the views of professional economists, as budgets are viewed as technical policy plans rather than political documents requiring engagement by the citizenry. This situation is not unique to Sri Lanka. A national budget is claimed to be the realm of expert economists and business leaders, even though it is a reflection of the balance of political and economic forces or class relations in any society.
It is in this backdrop that a recently publicised submission by the Active Citizenship for Development Network (ACDN), a forum that has been engaging peripheral communities on local government budgets since 2011, is an interesting and important intervention. The ACDN paper which has received good media coverage – a positive shift in the media’s engagement with budget politics – can be found here. While many professional economists may couch their elitist politics behind technocratic recommendations towards balancing the budget and liberalising the economy, the ACDN paper is bluntly political. In this article, I am going to draw extensively from the ACDN intervention, which begins by asking: “Will the 2013 Budget signal a shift in policies to address the economic challenges facing the marginalised communities and the broader citizenry?”
The ACDN paper has called for greater allocations to the education, agriculture, fisheries and estate sectors, and to consider the gendered implications of the Budget when it cuts social welfare. Yet many mainstream economists take the line that these demands on the Government are counterproductive. They claim it is only with a prosperous private sector, through the privatisation of services such as education and health and the building of private sector friendly infrastructure that capital accumulation necessary for further investment and economic growth can be stimulated. This logic draws from development economics that investment for developing countries can come from foreign aid or local capital accumulation. These mainstream economists extend this argument to social welfare, claiming that state investment in education and health could stagnate capital accumulation.
This argument is particularly weak in the context of the far reaching financialisation and integration with global capital underway since the launch of neoliberal policies in Sri Lanka after 1977 and their acceleration over the last three years. We can readily observe such financialisation in the proliferation of banks and leasing companies, whereby people are increasingly drawn into debt. The same is true of our national economy, which by inviting global finance capital through the Stock Exchange and Sovereign Bonds is creating the conditions for a debt crisis caused by capital flight. Furthermore, parasitic capital accumulation through the privatisation of education and health will not necessarily lead to re-investment in Sri Lanka. Rather, such accumulated capital could be moved to other markets by global financiers or channelled into speculative bubbles by local financiers. Thus such financialisation could in effect dispossess the most needy communities of services, while the profits are absorbed by global and national financiers. Indeed, without clear state policies including state investment, locally accumulated capital and donor aid may end in luxury consumption rather than productive investment. The balance of payment problems that Sri Lanka ran into in February this year was a consequence of such consumption of luxury vehicles, the cost of which had to be borne by the lower classes in the form of massive fuel price hikes.
The 2013 Budget is unlikely to waver from the broader economic policy trajectory set by the Rajapaksa Government. Yet engagement with the budget is important as it is the most concrete articulation of the Government’s economic policies every year. Engagement may not lead to immediate changes, but the cumulative impact of engagement, including strikes and protests, are important if an economic policy package that is acceptable to larger sections of the citizenry are to be won in the future. In the meantime, given the increasing cost of living and the roll-back of essential services, protests are likely to mount. Indeed, such protests are responding to the politics of the Budget.