Budget: Basil reins in

Finance Minister Basil Rajapaksa openly admitted that public service had been expanded beyond the means of the country

The government took a battering from the general public after the 2022 Budget was presented. The economy is in dire straits, probably the worst in the post –Independence era. People have felt the pinch in terms of lack of income sources, dwindling incomes, scarcity of some food stuffs and galloping living costs.   It is natural for people to expect relief to cushion their burdens when the annual budget is presented.  

Traditionally speaking, public perception is that the Budget normally contains a few surprises in the form of pay hikes for public servants, new welfare schemes, more and more subsidies and price reductions in addition to the outline of the incumbent government’s plan for revenue and expenditures for the coming year. Successive governments in the past had announced relief measures, more or less, in their budgets in this traditional approach.  As such, every time a budget is presented, people tend to keep an eye on concessions. However, the latest budget proved otherwise shattering traditional public expectations. It laid bare the depth of the economic crisis which Sri Lanka is presently engulfed in. It is a clear admission of the dire predicament. There was no budget surprise. People vented their anger by openly talking to the press against the government.  

While acknowledging the gravity of the economic plight, the tone of what the Government intends to do economically and politically runs through the budget. The Government has explored all possible avenues for reduction of state expenditures. Public service is the target
in this instance.

“The first one of which is to issue quarterly warrants instead of the annual warrant which is issued by the Minister of Finance authorizing the expenditure of government institutions for the entire year after the passage of the annual Appropriation Bill in Parliament. Accordingly, it is expected to instill financial discipline in the utilisation of the allocations by requiring all government institutions to prepare their plans relating to procurement, salaries and allowances, debt servicing, development and maintenance well in advance, “ the Minister said in his budget speech .

The Finance Minister added that there would be no more bonanza for public servants at the cost of public money.  Later, he openly admitted that the public service had been expanded beyond the means of the country.  Reforms in the public service to make it affordable to the state budget has been a topic discussed for a long time, at least for over two decades under different governments

He added that there would be no more bonanza for public servants at the cost of public money. Later, he openly admitted that the public service had been expanded beyond the means of the country.  Reforms in the public service to make it affordable to the state budget has been a topic discussed for a long time, at least for over two decades under different governments. Every time, it turned out to be a sensitive political topic taking a toll on the party that governed the country. The party that took office afterwards proceeded with further recruitment of public servants, an exercise driven by political reasons than economic logic.  

In some state institutions, there were not even enough chairs for the accommodation of some of the graduates who were absorbed into the public service in recent years. They did not even find work assigned to them.

For instance, the 2002/2004 UNP government initiated reforms in the public service with curtailment of recruitments. But, that government came in for huge criticism by the then opposition.  There were even sit- in protests urging the government to provide employment to 50,000 graduates in the state sector and to scrap plans for reforms. The United People’s Freedom Alliance (UPFA) that won the 2004 general elections provided them placements in the public service as the fulfilment of a campaign promise.  Recruitments continued without much rationale on their productivity to economic growth.    

Reforming the public service is an area proposed by the International Monetary Fund (IMF). One will wonder whether the rationale behind the IMF proposal in a free market economy has now dawned on the
current rulers.

In the overall content of the budget, the government has attempted to introduce a production driven economy with the focus on manufacturing import substitutes as much as possible. Revitalization of economic activities in the country has been a major focus in the budget. Economic and political thinking of the Finance Minister appears to be prevailing across the budget along with that for President Gotabaya Rajapaksa. In other words, Minister Rajapaksa is slated to assert himself in full measure in running the economic and political activities ahead of local and national elections scheduled to be conducted in the future. There is no doubt that the government’s popularity has dented. The opposition has started sticking the knife in. 

The main opposition ‘Samagi Jana Balawegaya (SJB)’ launched its public rally against the government in such a situation. The elections to the provincial councils are overdue since 2017. The elections to the local authorities are scheduled for early next year. Nonetheless, it is highly unlikely that the government will go for elections anytime soon since its popularity is on the wane over myriad reasons.  The farming community is despondent because of lack of fertilizer –be it organic or chemical- for cultivation. The increase in the prices of essentials has left consumers in the lurch.

Power Minister Gamini Lokuge said the provincial council elections would be conducted only after the new constitution was enacted. It means the government is not ready for elections any time soon. The budget includes proposals for rural, micro economic development. They may have been included in the budget with elections
in mind later.