By Shabiya Ali Ahlam
Despite the government having expressed keenness in tackling the debt issue, authorities are far from finding a systematic solution as a number of elements pertaining to the issue have gone completely unnoticed when drawing up the national Budget, a leading economist in the country said.

Referring to the public service pension, a debt the government accrues year by year, Verité Research Executive Director and Head of Research Dr. Nishan de Mel said, “We pay a lot of attention to debt and even though we are not keeping up with the plan, the debt to gross domestic product (GDP) ratio has been reducing. However, the problem is that some debts are not even calculated and have gone completely invisible when budgeting.”

Dr. de Mel pointed out that not only it is important to take into account public sector salaries paid but also the pension scheme, where there is no obligation to take into account the debt that is accrued in the future of the pension promises made today.

When increases in pensions are proposed, he stressed the need for relevant authorities to share the future cost and the present discounted cost of that announcement.

While the government has yet to analyse the pension debt as a percentage of GDP, calculation by Verité sets the current pension debt at approximately 25 percent of GDP.

Highlighting that by including pensions the nation’s debt in reality is close to 100 percent, Dr. de Mel opined that the effective debt to GDP is much higher.
Because of how global monitoring, including that of the International Monetary Fund (IMF), works, Dr. de Mel asserted there is no necessity to internalise the pension cost, resulting in poor planning and poor adjustment in this regard.

“Moving toward a more professional way of managing the economy should make it mandatory to at least publish the recent discounted estimates of pension debts, and even publish revenue and expenditure of all government promises on Budgets.”

He elaborated that the changes in Budget and policies should always come to parliament with an estimate of revenue or expenditure consequences with professional independent calculation.