{"id":215043,"date":"2020-12-02T02:50:02","date_gmt":"2020-12-01T21:20:02","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=215043"},"modified":"2020-12-08T02:23:39","modified_gmt":"2020-12-07T20:53:39","slug":"the-budget-the-virus","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/the-budget-the-virus\/","title":{"rendered":"The Budget & The Virus"},"content":{"rendered":"

By Kumar David<\/a> –<\/strong><\/span><\/p>\n

\"\"<\/a>

Prof. Kumar David<\/p><\/div>\n

It is not fair to blame the government for the Covid-19<\/a><\/span> 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\u2019t Gota<\/a><\/span> appreciate that you can\u2019t 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 \u201cYes Sir, No Sir, Three Bags Full Sir\u201d 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.<\/p>\n

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\u2019s not a pretty picture \u2013 decline, momentary flip-up, plunge!\"\"<\/a><\/p>\n

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.\u00a0 <\/span>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\u2019s 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.\u00a0<\/span><\/p>\n

We cannot hold this government, in its current avatar, responsible for a calamitous debt scenario. Except for NM\u2019s 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\u2019s be generous and say GR is not to blame for that.<\/p>\n

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<\/i> in line, hence the swollen military budget.<\/p>\n

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\u2019s problems, but that\u2019s a different matter.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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