22 January, 2021

Blog

The Budget & The Virus

By Kumar David

Prof. Kumar David

It is not fair to blame the government for the Covid-19 pandemic sweeping across the country. The first wave of the pandemic from mid-March to end-May was handled successfully and it seemed we had put it behind us. Yes, some things could have been done better. Why on earth was the army boss put in charge of the Task Force; the downside is showing now. Didn’t Gota appreciate that you can’t give a virus marching orders and expect it to disappear into the twilight. Why Gota did not appoint someone like Tissa Vitharana to lead the Task Force is inexplicable; maybe his proclivity to use a military approach to all things. Now with a harsher second wave sweeping the country the “Yes Sir, No Sir, Three Bags Full Sir” approach is coming a cropper. My political differences with Prof Vitharana are beside the point, it is still not too late to put a subject expert in charge.

This notwithstanding it is incontestable that GR, MR and the government cannot be blamed if a global pandemic engulfs this country as it marches roughshod across the world. The economy took a hit in the first three months till well past Vesak but by July curfew was relaxed, garment factories were coming up to steam and industry gearing up. The harvest was good. It seemed that a sharp V-shaped upturn was on course and the fourth quarter would bring encouraging numbers and 2021-22 would bring above 5% growth. But a far more severe second wave hit Sri Lanka like a sledgehammer. The economy is now hurtling down even more rapidly and as it is unlikely that a vaccine will become widely available in the country before about September 2021. It’s not a pretty picture – decline, momentary flip-up, plunge!

This is happening in the context of global debt crisis and pandemic of monumental proportions. Global government debt now is about $50 trillion, corporate debt $30 trillion and households may globally be indebted to the tune of $20 trillion. Capitalist economists who proliferate in Western media speak in hushed tones of the possibility of the deepest recession since WW2.  Sometime next year the world will pass 100 million covid-19 cases and two to three million deaths globally. No one can predict whether the six or so vaccines in development will turn things around dramatically; let’s hope so. Nevertheless, the economic consequences may be very painful though there is a possibility of a rapid upswing (China is expected to grow 18% in Q1 2021) after the pandemic passes when suppressed demand and supply-side strength is unleashed. 

We cannot hold this government, in its current avatar, responsible for a calamitous debt scenario. Except for NM’s short stint as Finance Minister when the economy was salvaged to a degree (he overdid it and angered people by excessive austerity) every post-independence govt. has screwed the economy and pushed Lanka ever deeper into debt. The 2005-2015 government was corrupt to the core and sank Sri Lanka into a huge hole of indebtedness so as to execute prestige projects since they were avenues for daylight robbery. But let’s be generous and say GR is not to blame for that.

So, a fair critique of the 2021-Budget should be premised on accepting the debts the country faces as a given. The GR regime should be faulted not for this but for grossly bad decisions in the budget itself. Two are glaring; the huge amount set aside for Highways and the continuing massive allocation for the military. Highways is the mulch cow that corrupt politicos and the clan used from 2005 to 2015 to siphon off millions and billions, respectively. Autocracies and dictatorships the world over lean on force to keep the yakos in line, hence the swollen military budget.

I am of the view that fiscal deficits and economic stimulus is unavoidable and I have said before that Sri Lanka is headed for an unavoidable and deepening debt crisis; these are unusual times. However, if those making policy are incompetent – no more experienced in planning, policy and theory than Caabral – then one cannot expect anything better than the budget on the table. Contrast the top-notch team of liberal economists that Biden has put together. On Sundays 22 and 29 November I critiqued liberalism as inadequate to America’s problems, but that’s a different matter. 

Print Friendly, PDF & Email

Latest comments

  • 1
    0

    “Budget & The Virus”
    Prof Kumar
    for the “Pandemic Corona Virus” there are few vaccine with promising results awaiting clearance form various authorities to go to in to mass production.
    Almost all countries in the world are setting aside budgets/funds to buy the vaccine for the logistics of distributing the vaccine around the country and for the medical personnel required to administer the vaccine to their citizens

    Prime Minister Mahinda Rajapakse’s budget there was no special fund allocated for the Covid Vaccine. The word covid-19 was missing from the Budget speech on the contrary the health budget was slashed and the defence budget increased many fold.

    However beg , borrow or steal Sri Lanka will get the vaccine for all its citizens and the Covid virus will go away.

    Now “The Budget” .
    This is a virus unique to Sri Lanka. There is no cure for it. Year after year ordinary people are hit with inflation and price increase in basic necessities. People are dying of starvation/malnutrition/committing sucideere is a virus for which in the pipeline developed in the UK, Germany, Russia etc and eventually there will be a ho

    • 1
      0

      2. not sure what is wrong with my keyboard.
      anyhow let me continue.as I said
      “The Budget” .
      This is a virus unique to Sri Lanka. There is no cure for it. Year after year ordinary people are hit with inflation and price increase in basic necessities. People are dying of starvation/malnutrition/lack of income etc etc.
      The Rajapakses in crisp white outfit prostrate at the feet of yellow robed monks living a luxury life.
      The photo is flashed for the consumption of the rural Sinhala people.
      and what did we see
      ordinary Sinhala people prostrating at the feet of a hapless policeman
      Sri Lanak Sinhala Buddhist Racist virus – there no cure. fortunately its confined to Sri Lanka

    • 0
      1

      Dear Rajash,
      .
      As you say, we will somehow get a vaccine for the COVID, the question is when. Will half of us be dead by then?
      .
      I know that you are honest, whereas the Rajapaksas are not. However, it is always difficult to use language unambiguously and with clarity. There already are three caveats by SJ among the six comments displayed right now. But Prof. Kumar has already dispensed with some by saying that he has “political differences” with Prof. Vitharna, but he’s the most “acceptable” man available.
      .
      A friend had already sent me an email after that difficulty we had linking up with Prof. Vitharna’s article which was cited by Rajan Philips in a recent article. She, too, had spoken of all the compromises made by Vitharna. He’s also old. However, that still doesn’t mean that we shouldn’t have him as the person in Parliament monitoring what’s happening.

  • 4
    1

    Dear Mr KD,
    thanks once again for coming back with your analyses about the current situation in my home country.
    :
    As you articulated it as no others, that Sri Lanka is headed for an unavoidable and deepening debt crisis; This crisis woudl have been much earlier if GG did not block it. Rajapakshes have wasted collosssal amounts of state funds by 2015. We attack yet today that Polonnaruwa Donkey but his adminstration saved lot more funds during the last 4.5 years. Cabral the master mind of Rajakashes financial crimes, should be the reason for the mess. See, looking back all is clear that ACabral led groups together with Mahinda Jarapakshe were instrumental in CB bond scam since 2008. But they later used to marginalize UNP s RW. Thta was their target and consequently, Gotler led groups grabed the power. Today nothing is turning out to be fine, people are speechless. Even those stupid men and women voted for Gota would utter a single good word about Rajapkashes today.

  • 2
    0

    “Except for NM’s short stint as Finance Minister when the economy was salvaged to a degree”
    *
    Some of us still remember his demonetization of 100/- and 50/- notes soon after becoming the Minister of Finance and the subsequent nationalization of key economic ventures including Muslim Hotel in Kandy and the ‘more impressive Prince Hotel’ in Penideniya.

  • 5
    0

    “My political differences with Prof Vitharana are beside the point, it is still not too late to put a subject expert in charge.”
    *
    Can anyone count on the integrity of Prof. TV?
    I have first hand experience of the dubious politics of Prof. TV that Prof. KD would not know.
    Having a subject expert as minister guarantees nothing.
    What is needed is a person of integrity backed by a team of people sufficiently informed on the subject.
    There are plenty available, perhaps more competent than Prof. TV, who probably has not practiced the profession for a long while.
    The will of the President to do the right thing in good timer is where questions arise.

    • 5
      0

      The will of the President to do the right thing in good time is where questions arise.

  • 1
    2

    Mulch cow, highways is only the usual windfall, but Covid-19 will be Puravi Cyclone_fall for Royals, like Tsunami and Hambantota Help. The good times of vaccine yet to come. A vial is 30,000 Rs in Lankawe. 20 Millions X 30,000 X 40%

  • 0
    0

    Didn’t Gota appreciate that you can’t give a virus marching orders and expect it to disappear into the twilight? Why Gota did not appoint someone like Tissa Vitharana to lead the Task Force is inexplicable; maybe his proclivity to use a military approach to all things.

    Kumar David

    This government is a military dictatorship. Not only Shavendra Silva, but there are also more than 40 others currently or retired appointed to key administrative positions. The thinking is that military officers are best suited to clean the Augean stables. Unfortunately, this is not true. If it is then Pakistan would be a regional superpower in Asia. That country was under military dictatorship most of the time since independence.

    Soldiers are trained to kill others and not to get killed themselves. This is what they are capable of doing. They are unfit to govern a country, especially a country like Ceylon steeped in corruption, waste and inefficiency.

    President Gotabaya Rajapakse himself owes Rs.47.9 million to Sri Lanka Land Reclamation and Development Corporation (SLRDC) for the construction of the ‘D A Rajapaksa Memorial and Museum’ at Medamulana. This project was approved while Gotabaya Rajapaksa was the Secretary of the Ministry of Urban Development. Any clean-up should start from Medamulana.

Leave A Comment

Comments should not exceed 200 words. Embedding external links and writing in capital letters are discouraged. Commenting is automatically disabled after 7 days and approval may take up to 24 hours. Please read our Comments Policy for further details. Your email address will not be published.