20 September, 2020

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The Opposition Manifesto Is A Mere Shopping List

By R.M. B Senanayake

R.M.B. Senanayake

R.M.B. Senanayake

The Opposition Manifesto is a mere shopping list. It does not reflect any understanding of the problems likely to be faced in 2015. MR understood these problems – the vulnerability on the foreign debt repayment, the increasing current account deficit in the balance of payments, the need to borrow to fund it from foreign loans and the failure of the infrastructure investment program to improve the living standards of the people. So he decided to hold the presidential election in 2015, two years before it was due.

Flawed Economics

Perhaps the Opposition thought the primary goal should be “Carthago delenda est.( Carthage must be destroyed).So it seems to match or outdo the giveaways promised by President MR in his last budget. So the economic aspects of the Manifesto are badly flawed and inadequate. It promises to raise the salaries and pensions of government employees; increase Samurdhi by 200% which is paid not only to the genuinely poor but to over 50% of the population. These salary increases to government employees are not linked to any measures to increase productivity. Increase of Mahapola Scholarship by Rs 500, pension schemes for 3 wheeler drivers, carpenters, farmers’ fishermen etc (hopefully they will be contributory pension’s scheme.) are other goodies. The present non contributory pension scheme for government employees is a huge burden. MR recklessly converted the contributory pension scheme for new employees to the public service to the present unaffordable non-contributory pension scheme in 2009. What is required is to restore the contributory scheme. The losses in State owned undertaking must be eliminated either by eliminating the inefficiencies and corruption, either sold to the private sector or closed down altogether if there are no takers. This is what China did in the 1990s. She closed down the loss-making enterprises and sacked a large number of the government employees. There is no other way to promote economic growth. The Manifesto says the allocation for Education will be increased to 6% of GDP– impossible without cutting elsewhere and there is no scope for cutting since the entire Tax revenue is not enough to pay the salaries and pensions and the interest on the outstanding debt.

MaithripalaAll these giveaways will cost extra money and not a word about how the government revenue is to be raised to fund them. Instead there are to be reductions of taxes on essential commodities and a reduction of the levy on fuel. The Governor of the Central Bank pointed out that the CPS owes a large amount of money to the state owned banks which could have been repaid from the savings in the oil subsidy. This manifesto removes the only way out for the recovery of the debts due to the State banks from the CPC. It risks a banking crisis.

Fiscal Reform

The urgent need is not to increase the giveaways but to contain the budget deficit to 5% of the GDP. To achieve this and maintain the standards in public administration and the quality of the public services like free education and free health care, the minimum desirable level of Government Revenue should be at least 14% of the GDP as computed by development economists for a developing country. But despite the alleged high growth rates Government Revenue has fallen and in the current year it is likely to be less than10% of GDP. We are already in a serious budgetary crisis and these giveaways of the recent budget and the Manifesto of the Opposition will mean that these measures will have to be funded by printing even more money than presently printed by the Central Bank. The result is not necessarily higher inflation but a worsening current account deficit in the balance of payments which has to be funded by more foreign borrowing. Since our Foreign Reserves are largely borrowed and they have come down in a futile attempt to maintain the Rupee, recourse to the IMF will be inevitable if extra government revenue is not raised to contain the budget deficit. MR if re-elected would have to go to China for a bail-out. If Sirisena is elected we will have to go to the IMF which will insist on austerity measures.

Budget Deficits

Presently the Recurrent Account as well as the Primary Account of the budget are in deficit. The former means that there will be borrowing for current expenditure which is a violation of the golden rule of budgeting that money should be borrowed only for investment. The latter means that there will new borrowing to repay the debt falling due during the year whereas borrowings should be repaid from revenue. Both are unsustainable practices and demand corrective action. Since Independence our politicians have given the impression to the people that there is a free lunch to be had from the State. But there is no free lunch and the people have paid for them by way of higher inflation and Rupee depreciations. The Dollar which was Rs 6.95 in the early 1950s is today Rs 130. It is still over-valued and in a free market will probably be Rs 135 –Rs 140. By holding the dollar constant when it is strengthening against all other currencies the Central Bank has been covering up and delaying the Day of Judgment. The urgent need is not for more giveaways but to contain the budget deficit and carry forward the projected fiscal consolidation announced earlier but from which the President has departed in his latest budget. It is only fiscal consolidation that will lower market rates of interest and contain the deficit in the current account of the balance of payments and preserve the value of the Rupee in the foreign exchange market. Instead we are living in a fool’s paradise and will have to go to the IMF sooner rather than later and will be forced to comply with its conditions of austerity.

The problem of high Recurrent expenditure is immense and these giveaways will make it worse. The entire government tax revenue is not enough to pay the public service salaries and pensions plus the interest on previous borrowings. This leaves no room for any more giveaways in the budget unless there are corresponding increases in government revenue. Otherwise the budget deficit will increase. But it is already high and even this deficit is achieved by creative accounting by the Treasury which includes running up payment arrears. The urgency of resolving the budgetary problem is great and these measures without compensatory revenue increase will drive the economy to a financial crisis if not a recession unless the IMF comes to our rescue. It is naïve to assume that there will be savings through removing corruption, waste and ostentation alone. The Fertilizer subsidy costs Rs 30-40 billion and needs to be abolished.

Foreign Debt Service

There is no mention of how to deal with the large foreign debt servicing costs in the budget. Since Ronnie De Mel did away with the provision of debt repayment in the budget, the annual debt repayment has to be borrowed. But the foreign debt repayment has to be in U. S dollars or other foreign currency and our Foreign Reserves are not enough to fund both the debt repayment and the buffer of at least 3 months imports. There is also no mention of how to correct the current account deficit in the balance of payments, a matter which cannot be postponed any further without total erosion of our Foreign Reserves leading to a foreign debt default position.

New Legislation

The new legislation promised in the Manifesto, are most welcome. Yes we badly need a Freedom of Information Act. But what about the proposed Public Finance Act suggested by a UN organization several years ago. Also needed is a new audit Act to safeguard the Auditor General’s independence from the Executive branch of the State. The Parliamentary Powers and Privileges Act also needs to be amended to allow for greater public access to the hearings of COPE and COPA.The U. S Constitution provides Congress with the power to impeach any public officer elected or appointed on tenure. Similar provision is required to haul Ministers and Secretaries before Parliament and impeach those found guilty of financial malpractice. It is the lack of financial accountability of the Executive to Parliament that has led to the President treating public funds as his personal funds. This must be stopped and abolishing the Executive Presidency alone is not enough to do so. The President or the Prime Minister must be accountable to Parliament. Hiding under Cabinet responsibility will not do. The Cabinet is a collective deliberative body to decide on new policies and not an executive body to cover up for financial malpractices and fraud. The Minister responsible should be accountable and he should not be permitted to take cover under Cabinet decisions to evade responsibility.

New Growth model

We also need a new growth model. When China wanted to launch its export growth strategy it set up several Free Trade Zones and invited foreign companies to set up there and export to their home countries. Most of the exports of China are carried out by them and not by the State owned enterprises. We should finalize the Free Trade pacts with China and India and ask investors from both countries to invest and export to their home countries without any taxes. Export supply is short and hence free import and export should be permitted along with freedom to bring in foreign labor on contract.

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Latest comments

  • 5
    4

    Curtailing waste by stopping corruption is the only way to bring back the economy to a sound state. Maithree has very clearly indicated that one of his priorities is to stop corruption and make use of the 2/3rd of the money wasted on corrupt practices for the benefit of the people. RMB Senanayake should not have written this article at this critical juncture of the fate of Sri Lanka.

    • 1
      1

      Even 50 years back (when SL people are more civilized) Senanayake’s gave two “Hal Seru” (1 kilos of rice) and won elections..That was the reality. Dese Hatiyata Baase.. General public can not really understand the importance of their own human rights, value of law, but they should be feeling it, They have to feel it. It is people like RMB Senanayake’s responsibility to teach people to listen to their inner heart, teach them to listen to God within them ..

    • 4
      3

      Why should RMB not write this at this juncture?

      He is asking questions that people should be asking.

      Its better to know that you will be disappointed IF the new regime comes than to have unrealistic expectations.
      These promises are all the more shocking given the UNP’s claim to be “superior” when it comes economic activities !

    • 2
      1

      “RMB Senanayake should not have written this article at this critical juncture of the fate of Sri Lanka”. Why do you say this? Is freedom of expression and criticism already curtailed by the people who want change? Are the public prevented forcibly to not to comment adversely on theses lofty impractical proposals?

  • 4
    2

    IT may be a shopping LIST that could take YOU by surprise… BUT YOU are going shopping for MR… its a sad life for YOU I believe… Stop being a frog in the well, come out of it and see that there is a wider world out there… IF you wanna explore… or be like the village folks of Sl who could be herded like obedient sheep…

  • 4
    4

    The Jekyll and Hyde thing RMB here does is quite interesting. It must be like the homosexual living in a closet.

    Just be yourself buddy. No one is going to call you a “Tamil terrorist” or anything of that nature. At least I wont.

    There are many openly Tamil nationalist supportive nut jobs out there like Wickramabahu et al. People understand and accept diversity. So just be yourself openly.

  • 11
    0

    If opposition manifesto is a shopping list. MR’s one is a clear cut broad day robbery. DO not you know how much many is wasted for the last 5 years by MR and co?
    Look his Matala Air port is a disaster?
    His Ports in Oluvil and Hambanthota are disaster/
    He and his cabinet members are thieves: they have got all commissions in all these mega projects?
    china is not doing charity for you rather it makes money: do not think it doing a favor for you.
    All crook, drug dealers with MR.
    They know well that if they are defeated all their files will come out.
    What do you have MR’s manifesto nothing eye wash.
    20 Millions people suffer and yet, MR and co jolly riding at public expense
    Government is a trust, MR failed to honor that trust

    You look like his agent to speak out and tell lies
    do not worry Sri Lanka has a lots of good economists they know what is going on
    they Will come out and speak with statistics all the corruption that has been done by MR and co for the last 10 years,
    Look at some of the people around MR today
    Karuna, Deva, Hisbollah. Aswr, Ataullah and Attanayake, and so on.
    Either these are thieves or drug dealers or people killers or some notorious people who have been robing public funds and look at children of MR and How they lead life at expense of public money
    Today nearly 3 million workers in the Middle East and Europe
    Today Sri Lanka income depend of the remittances of these people
    Not Tea or not our local product that bring money and yet, look at the way these so called rulers enjoy life with the public money while farmers and poor people suffer a lots across the country
    To any one vote for MR will be from these thieves or someone who support these thugs
    Any one who votes for MR is really supporting his nepotism and corruption

  • 7
    0

    I am reminded of “පඬිතයාට ඒදන්ඩෙ යන්න බැහැ”. You are that!

    This is election manifesto to be read by simple citizens. Not for professori digestion. Topics like “Fiscal Reforms”, “Growth Model” etc are not general public knowledge. Hence the this manifesto is a election communication to the general public to understand and be informed to come to a voting decision.

    You are a පඬිතයා! Keep it simple.

  • 6
    0

    Oh dear!
    I never knew there are ‘Idiot’ Senanayakas’ in Sri Lanka. How much did you get paid for coughing for the regime?
    By the way, for your information, it is not Maitree who is going to implement the introduced manifesto but the elected parliament. The president will be another William Gopallawa.

  • 2
    2

    I agree with RMB. This is a wishlist, not an explanation of the current situation and how it can be remedied. Some people say ‘the priority is to get rid of MR’. Well and good but you need more than that to run a nation. I am reminded of that Sinhala saying hisay kakkumata kotte maru karanawa (changing your pillow to cure your headache). MR or My3, disappointment and recrimination is certain. I shall be saying “I told you so” in late January.

  • 3
    0

    The derogatory heading of the article itself indicates its aim. This really is nothing but malicious and destructive criticism. Maybe the writer is trying to promote MR`s manifesto and his Chinthana- Naya!

  • 1
    0

    The country is indebted to the hilt to China – who is the Economic Hitman for sri lanka today.
    This commenced with the ‘free’ BMICH in “memory of SWRDB, which so enraptured Sirimavo that she acceeded to all Chinese proposals – she even ordered Mig 17s from China,totally unsuited to control the JVP insurrections.
    China recoped the cost of BMICH many times over with may deals later.

    None of the mega projects awarded by MR government, were advertised internationally, and were given to China ‘on a platter’.
    Elimination of corruption and waste will cover most of the welfare measures promised by the Common Candidate.
    We have to pull out of this rut which daily makes indebtedness worse.
    Our children will have to bear the cost and brave the coming economic “crash”, by which time, MR & family and henchmen would be millionaires and will migrate abroad.

    None can deny that the state and economy are controlled by the Rajapakse Family which is now similar to the Nazi dictatership.
    The people supporting this have earned enough for generations.

    Rule of Law and Human Rights have become mere words – the massive flouting of election laws will end with the most flawed election in history – unless the people rise up to protest.

  • 0
    1

    Holy father your eminent grace! Do you not understand that this opposition is just Mahinda with another face? They will make all sorts of promises just like Mahinda and then when Maithri comes to power we will all face the same treatment meted out to Asela by Maithris son and his thuggish “friends”.

    Rape and murder. They are just a few short steps away.

  • 0
    0

    What the author fails to realise is, as he himself says….. There are 2 objectives….
    1. Remove the family mafia!
    2. Restore democracy by throwing the executive presidency out!

    Others in the shopping list are as in traditional Sri Lankan poi – tricks which the common man wants and MR will have in his extravagant list. Distributing “badu Malu” thro Sathosa or Samurdhi is practically not possible for the common candidate. Face reality….get out of the box!

  • 1
    0

    Unfortunately some voters in SL, mainly in the villages (which constitutes a fair %) are not sophisticated voters. The Manifesto caters to all voters and so it should be written in layman’s language and in a form that is easliy understood. Technical and Policy issues need to be covered only in brief. Voters are easily swayed by ‘goodies’ included in a manifesto. The task at hand should be first and foremost driving this Demon out of Office. Do what needs to be done (withour deceiving the voters)to achieve the main objective. The rest can follow. Since it’s a broad alliance for the first 100 days to achieve specific goals, no unilateral decisions can be taken by any one group to further their narrow interests. Voters will be given an apportunity thereafter to vote in the representatives they wish to govern the country for a period of time in accordance with the Constitution. Driving this Dictator out and re-establishing democratic practices is paramount.

  • 0
    0

    RMB should know by now that if Maithree says that the coming years will be one of austerity and that everybody will have to tighten their belts and work hard,the chances of throwing out MR will be zero. I think the opposition is right in taking a pragmatic approach.

  • 0
    0

    The foremost priority is to get rid of the executive presidential system to be accomplished within 100 days of Sirisena’s election. The details, such as the new growth model etc. could be worked out consequently. Bensen

  • 0
    0

    RMB is nothing but a stooge of the government. He sits in the Monetary Board Consultative Committee and has approved EPF investment in zero return shares, Greek bond investment, sri Lanka’s application to host the Commonwealth Games under the leadership of the Central Bank and so on. Wait till the first week of January 2015 when the so-called Road Map on Monetary Policy is launched. RMB will be seated in the VIP row clapping the Road Map presenter every 5 to 10 minutes.

    Does rMB expect the opposition candidate to put out a non-populist manifesto and lose the election as was the case with Ranil in 2005 ? As many commentators have said he has timed this article with [Edited out]

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