Full-time Finance Minister a welcome change for public finances: Advocata

13 July 2021 04:04 am Views - 512

• Says role needs undivided attention
• For last 30 years, SL had independent finance minister for only 7 years

Sri Lanka finally having opened up to appoint a full-time finance minister could be the solution to iron out the issues faced in the country’s public finance management, according to Colombo-based think tank Advocata Institute, as the role requires undivided attention for the overall state of the economy to improve.

In the last three decades, for only seven years in total, Sri Lanka had an independent finance minister. For as long as 23 years, the role was taken over by the head of government, which Advocata pointed out as a “big mistake”, as both roles are crucial in steering the economy towards progress.

Highlighting that the job of the head of government is already highly demanding, Advocata said it is almost impossible for any one person to fulfil that role being an effective finance minister since the tasks associated with the former would almost always gain priority. 

“An effective finance minister needs to maintain fiscal discipline by resisting pressures from the political office. The head of government, who is also the head of a party or coalition, cannot simultaneously meet this requirement, due to such conflicting priorities,” Advocata said in a statement to the media yesterday.

The think tank added that analysis of Sri Lanka’s public finances further provides convincing evidence that the absence of a dedicated finance minister has undermined revenue collection.

Sri Lanka’s tax revenue composition and collection remains grim and stood at an average of 11.4 percent of GDP for the past 10 years, which is much lower compared with the other low-income nations. Post-independence to around 1990, Sri Lanka’s tax revenue averaged over 20 percent of GDP.