A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
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Back to 500BC.
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Thiranjala Weerasinghe sj.- One Island Two Nations
?????????????????????????????????????????????????Monday, March 18, 2019
A budget whose policy side does not matter
What counts in the next six months will be concessions and handouts
Kumar David-March 16, 2019, 7:15 pm
"Our determination to pursue a liberal outward oriented economy is more
steadfast than ever. . . We are creating a new breed of private
enterprise, where success is through merit and the market operates on a
rules-based level playing field. Sri Lanka needs a private sector free
from the protectionist mind-set that continues to hold back our
country’s development and modernization". MangalaSamaraweera, Budget
Speech, March 2019.
Fat hopes! Finance Minister Samaraweera bathed his budget in a plethora
of oxymora; on the one hand panegyrics brandishing liberalism and
capitalism as in the quoted words, and on the other,promises of handouts
and goodies for the masses. Poor sod! A sombre missive of frugality to
charm business, to pacify the IMF and to soothe the nerves of
fuddy-duddy economists; but oh dear there is a presidential election
later this year, so populism to the fore!
A Rajapaksa nominee, and perhaps a flapping buffoon of a disoriented
scarecrow, will take on the UNP contender; so Samaraweera has a problem.
It has obviously been made clear to him that his task is to help the
UNP win the presidency, not fertilise capitalism for future decades.
Securing the presidency and keeping the Rajapaksa nominee and the
delusional coot at bay will also be key to the parliamentary and
provincial elections. In a word the pledge of a free and open market
economy counts for much less than election winning populism. In any
case, policies announced in March 2019 will not show results for two or
three years, and that too only if the UNP wins and sustains its policy
commitments. To put it in a nutshell, verbal liberalism counts for
nought, it can bear zilch fruit in six months. What may (or may not)
work are populist offerings.
Vote catching allocations
Allocation under the Gamperaliya Scheme to address critical
infrastructure needs in villages and cities is to be increased from
Rs.200 million to Rs.300 million per electorate. This will delight MPs
and consolidate votes in parliament; Rs.48 billion has been earmarked
for this and a further Rs.10 billion allocated for rural roads through
the "Ran Mawath" programme. (Rs.1 million = US$5,600 and Rs.1 billion =
US$5.6 million).
The Minister has copied Indian PM Modi’s lead in promising sanitary
facilities and allocated Rs.4 billion to ensure that all homes have
lavatories. And there was a sting in the tail: "Mr. Speaker, in spite of
the country reaching middle income status and millions of rupees
invested in sophisticated expressways and city development, 260,000
houses in the country are without sanitary facilities. The Hambantota
District, which saw a splurge of mega projects in the form of California
style highways, Chinese style conference halls and sports stadiums (he
forgot to add airports without airplanes) has left 15,000 people without
the most basic sanitary facilities".
The monthly salary of lower grade state employees will increase from Rs.
11,730 (in 2015) to Rs. 21,400 in 2020 incurring a recurrent annual
expenditure of Rs 20 billion. There are 560,000 pensioners who retired
before 2016 and 71,000 retired in 2016-2018. There is a disparity in the
pensions of these persons and those who benefited from later salary
increases. "I propose to allocate Rs.12 billion (recurrent) to rectify
these anomalies. . . In 2017 and 2018, allowances to the police were
increased, but commando, uniform, rent and good conduct allowance of the
armed forces have not been increased, in some instances for over 20
years, and will be increased from 1 July 2019".
The
housing needs of "the most vulnerable sectors of society, including low
income groups in urban, rural and estate sectors and the North and the
East" will be allocated Rs 24.5 billion. "At the same time work on
15,000 brick and mortar houses in the North and East will commence with
an allocation of Rs 4.5 billion" in addition to the Rs 5.5 billion
previously allocated. This is expected "to address issues of
re-settlement of Muslims who were forcibly evicted from the North".
I am not sure whether Tamils will think the Rs 5 billion ($30 million)
spread over two years as a "Palmyrah Fund" for restitution of war
ravaged areas, adequate. However it will cement TNA support, vital for
passage of the budget through parliament. Gajan Ponnambalam and
Wigneswaran who prefer hemlock to the TNA may find this reason enough to
throw their weight behind Gotabaya rather than a UNP presidential
candidate. Human psychology works in inexplicable ways!
Disabled persons now get an allowance ofRs.3,000 per month which will
increase to Rs.5,000 and the fund will be expand to accommodate 72,000
more individuals. The allocation is Rs.4.3 billion. Private entities
that recruit at least five persons with disabilities, will get a salarys
ubsidy of 50% of the salary per person up to an limit of Rs.15,000 per
person per month for two years. At present 21,000 CKDu patients are paid
an allowance of Rs.5,000 per month. The Minister promised to expand
this by a further 5000 patients, thereby eliminating the waiting list,
for which Rs.1.8 billion was allocated.
The crucial point that will matter is how many of these promises the
government gets moving within the next six months. A playful Churchill
mused "The best argument against democracy is a five-minute chat with
the average voter". The Rajapaksa bandwagon is on the back foot; it
besmirched its copybook in the 51 day fete that our national pantaloon
enacted. But the UNP is on a sticky wicket too; rising inequality and
slow growth are factors behind public discontent. Its liberal economic
game of three years has been starved of success. This populist
extravaganza is the UNP’s last fling; whether Churchill’s prescience
will pay off remains to be seen.
The small and medium
(SME) sector
Samaraweera promised better opportunities for the SME sector and
instructed all ministries and departments earmark "at least 10%" of the
value of procurement to SMEs. This is a healthy and progressive measure.
It is also a vote-puller if effectively and quickly implemented within
six months. SMEs, more than big capital, have been an engine of social
advancement. He added "(the) private enterprise I mean is the genuine
entrepreneur who uses ingenuity to compete in a fair market, small and
mid-size businesses that embody the spirit of trade and companies that
compete on the global stage". One cannot fault these sentiments.
Interestingly he also cussed:"There is the other segment of the private
sector which is averse to competition and fair markets. The
beneficiaries of crony capitalism that thrived in a kleptocracy which
enriched those connected to the previous regime. These companies grew
rich on rents from walls of tariff protection driving up costs for 20
million citizens. They benefited from inflated government contracts the
costs of which are still being paid-off. These oligarchs, a small but
influential part of the private sector, yearn for the return of
dictatorship". Endorsed!
The macro-economy
The 2019 budget expects total revenue and grants of Rs.2.5 trillion and
estimates expenditure at Rs.3.2 trillion (one trillion = 1000 billion).
The budget deficit of Rs.685 billion (4.4% of GDP which is on the high
side) is to be financed by foreign sources, Rs.55 billion, and domestic
sources, Rs.630 billion.
FDI inflows have increased in recent years encouraged by the end of the
war. Lanka received a high influx of FDI in 2017 of US $ 1.4 billion
(excluding foreign loans of BOI companies); 53% more than in 2016. But
FDI as a percentage of GDP remains low, below 2%, compared to 6% for
Vietnam. The IMF and the EU are putting their best foot forward to
support the government, but post-war Rajapaksa governments kept up GDP
growth rates of 6% to 7% compared to, disappointing for an Asian
country, 3.5% growth expected in 2019.
I will not discuss the capital budget, GDP and manufacturing outlook, or
the long-term impact of macroeconomic and fiscal policy since these are
stuff of the imagination for a government stuck in an election cycle
with a presidential challenge breathing down its neck. I would also have
liked to discuss the proposed Colombo Light Rail Transit system; Rs.5
billion has previously been allocated to the Fort-Malabe section and the
first tranche will be released in 2019. A Colombo-and-environs suburban
railway is of paramount importance and decades overdue. Again and
again, promises and promises, will anything ever happen?
Mangala means Delight
Samaraweera has long cherished this: "Mr. Speaker, I am delighted to
launch the Scholarship for Educational Excellence Fund to enable top
students in the Physical and Biological Sciences, Technology, Commerce
and Arts at the ‘A’ Levels to pursue undergrad studies at top
universities such as Harvard, MIT, Oxford and Cambridge. The first group
will be chosen from the results of the 2019 ‘A’ Levels in August. Those
selected will be required to return and serve at least 15 years in Sri
Lanka". But first Mr Minister, teach them English, or they will waste
their first year abroad.
Advanced facilities were promised for local universities. Rs.25 billion
has previously been allocated to meet infrastructure gaps by provision
of theatre complexes, professorial units and libraries. Professorial
units are promised for Kuliyapitiya and Ratnapura Hospitals (supporting
Medical Faculties at Wayamba and Sabaragamuwa Universities) and a
Faculty of Allied Health is earmarked for Ruhuna University.A state of
the art laboratoryfor research in cancer, diabetes and infectious
diseases was promised for Jayawardenapura. These are good intentions and
one wishes them well.
What is more important is to flood the market with doctors to break the
unscrupulous influence of the GMOA. Contingency measures must be
prepared to bring retired local doctors into service and to hire Sinhala
or Tamil speaking overseas medics. Preparations to break that
oft-threatened GMOA strike, that intends to hold the public and the poor
to ransom, is an important reserve power in the arsenal of every
government.