Editorial

The ‘new normal’ budget

Published

4 years ago

2020/11/22

The run-up to the 2021 budget which Prime Minister Mahinda Rajapaksa, wearing his finance minister’s hat, presented to parliament last week was obviously “new normal” as the post-covid minted cliché goes. There was no dramatic build-up to it with people rushing to buy vehicles, electronics, appliances or whatever as was often the rumor-fuelled case in the past. As has been inevitable in every past budget in the medium, if not the long term, the price of arrack and cigarettes routinely thrashed with a price stick, will go up once more. But nobody knows by how much and smokers and imbibers continue to pay the old price for their bad habits. But they have the certain knowledge that Christmas will soon be over on the authority of the budget speech.

This 2021 budget was crafted, as Dr. Dushni Weerakoon, head of the Institute of Policy Studies, said in a post-budget commentary, “under an exceptional level of uncertainty.” Obviously the crisis measures now in force will remain with us for a long time and it will be unrealistic to assume that fiscal policy will revert to its “pre-crisis setting anytime soon.” This must influence both spending priorities and what Weerakoon called “the slow burn scenario for revenue generation.” It is common knowledge that revenue has already slumped, and not only because of covid and its consequences. Assurances of boosting the country’s growth rate and narrowing the budget deficit, which has for too long burdened the country’s fiscal policy as well as its macro economy, have been repeated. These are old stories that have been heard before and few will buy them.

A persistent criticism of the budget is that it did not say enough about how the government is going to deal with the covid crisis, and the consequences arising from it, by taking the people into its confidence. This, more than all else, is the greatest danger confronting not only Sri Lanka but also the whole world. Neighboring countries is South Asia, including India, Pakistan and Bangladesh, have been much more transparent than we with Pakistan even going as far as labeling her next year’s budget as a “covid budget.” Former Central Bank Governor Nivard Cabraal, now the deputy in the finance ministry, who will be the key speaker for the government in the budget debate, has already said at one of the regular remotely held post-budget seminars that the timing was not right for declaring a covid-19 austerity year. But belt-tightening all round will be inevitable. Protecting the very large numbers of daily wage earners and others deprived of their livelihoods by the present crisis must remain high priority. Money printing alone to tide over cannot be the solution. Budgetary provision would have been appropriate.

There was a lot of old wine in new bottles in the 2021 budget speech including self-serving (or should we say government politician serving) measures announced. One of these is the raising of the private sector retiring age to 60-years for both men and women. Currently women working for private employers can retire at 50-years of age and men at 55 and gain access to their EPF benefits. Now both genders will have to wait longer – as many as 10 years in the case of women and five where men are concerned. There is no need to labour the harsh reality that the EPF is the only social security net that private sector workers have for their retirement. Government servants have had their pension benefits from colonial times, a cushion that served them well over a long period and a major attraction of a government job.

This raising of the retirement age of private sector employees also has the undisclosed benefit for the government of slowing EPF payouts and enhancing available funds for government borrowing. We all know that the EPF is the major captive lender to the government and the billions or trillions in its books is always on call for government expenditure. Given the overload of foreign borrowing that has long burdened this country and made the possibility of repayment default an ever-growing risk, postponing the payout of a looked forward to EPF nest egg to private sector employees, confers a substantial benefit on big brother. The private sector generally did not enforce the minimum retirement age rule but allowed employees to formally retire and gain access to their EPF with the assurance of an employment contract to keep them in harness post-retirement.

Let us not forget previous efforts made to convert the EPF to a pension fund that was abandoned due to massive resistance. Even if these attempts succeeded, the new pensioners paid from a contributory scheme – both employer and employee make monthly contributions to the EPF – would not have received the same benefits as their government counterparts enjoying non-contributory pensions. These matters, no doubt, will be raised during the ongoing budget debate which has been abbreviated because of the covid issue. It has up to now been lacklustre with the press and public galleries closed when the prime minister made his budget speech, a necessary precaution in the present context. But it has elicited, as budget debates must do, matters of widespread public interest. One of these relates to Dr. Anil Jasinghe, the previous Director General of Health who was highly regarded for his leadership in handling of the covid emergency. Health Minister Pavithra Wanniarachchi told parliament on Thursday that Jasinghe, currently Secretary Environment, was now attending covid meetings at her ministry. That sounded apologetic to most people not appeased by the suggestion that ‘kicking him upstairs’ was just a promotion issue.

It is clear from the budget that policies of curtailing inessential imports and import substitution would continue and a conscious effort appears to have been made not to heap new burdens on ordinary people for revenue reasons. But the impact of the Goods and Services Tax that has been announced have not yet emerged. It is unlikely that this will not leave people altogether unscathed. And that too not only with regard to their booze and fags.

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Editorial

A welcome judgment

Published

22 hours ago

2025/04/3

Sahan Weerasooriya

Thursday 3rd April, 2025

Justice finally caught up with former North Central Province Chief Minister S. M. Ranjith and his sister-in-law Shanthi Chandrasena yesterday, when the Colombo High Court (HC), which heard a case filed by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) against them in 2021, sentenced them to 16 years RI for having misappropriated Rs. 2.6 million between 2012 and 2014. They were also fined Rs. 200,000 each. The HC judgment must have gladdened the hearts of all those who long for an end to corruption.

The criminal misappropriation of state funds at issue happened during the heyday of the Rajapaksa rule, which became a metaphor for corruption and abuse of power. When politicians are intoxicated with power, they become blind to the consequences of their actions, and enrich themselves as if there were no tomorrow. They usually cover their tracks, but the January 2015 regime change may have prevented CM Ranjith and his sister-in-law, who was his private secretary, from doing so. Their offence, however, pales into insignificance in comparison to what some other members of previous governments have been accused of. Unfortunately, most of those allegations have gone uninvestigated, or escape routes have been opened for the accused in some high-profile corruption cases, which were made to collapse, much to the dismay of anti-corruption campaigners and the public. Thankfully, most of those characters failed to get re-elected last year, and this is something the NPP government can flaunt as an achievement.

Another former Chief Minister––Chamara Sampath Dassanayake––has been remanded for causing a huge loss to the Uva Provincial Council by withdrawing six fixed deposits prematurely in 2016. It is hoped that all allegations of corruption, abuse of power and serious crimes such as murder against the members of previous administrations will be probed thoroughly and the culprits prosecuted expeditiously.

Corruption usually thrives under powerful governments in this country because huge majorities tend to nurture impunity. Integrity of most Sri Lankan politicians is a mere result of the unavailability of opportunities to line their pockets rather than an unwavering commitment to moral principles. Power tends to have a corrosive effect on scruples, and many self-proclaimed champions of good governance, who come to power, vowing to rid the country of corruption, end up being as corrupt as their predecessors. What we witnessed following the 2015 government change is a case in point. The ‘paragons of virtue’ in the UNP-led Yahapalana camp committed the first Treasury bond scam a few weeks after being voted into power. The present-day leaders who are campaigning hard against corruption were on a political honeymoon with the UNP at that time, and their alliance lasted until the end of the Yahapalana government in late 2019 despite very serious allegations of corruption against that administration.

There is nothing stupider than to rely on individual politicians to rid the country of bribery and corruption. They may have allegations of corruption against their political rivals probed, but it is doubtful whether they are serious about eliminating bribery and corruption. One may recall that having come to power by campaigning mainly on an anti-corruption platform, in 1994, the SLFP-led People’s Alliance government, ably assisted by several other political parties, including the UNP and the JVP, effectively deprived the national anti-graft commission of its suo motu powers, making it dependent on formal complaints to take action. Hence the need for anti-corruption laws with stronger teeth and robust institutional mechanisms to battle bribery and corruption. All existing anti-corruption mechanisms should be given a radical shake-up.

Editorial

Another Mafia

Published

2 days ago

2025/04/2

Sahan Weerasooriya

Wednesday 2nd April, 2025

Petrol was unavailable at some filling stations yesterday as their stocks had not been replenished in anticipation of a petrol price reduction. The government reduced the prices of petrol by Rs. 10. Long lines of vehicles were seen near the fuel stations where petrol was available. Some people delayed refuelling their vehicles until the announcement of the monthly fuel price revision, expecting substantial fuel price reductions in view of the upcoming local government (LG) elections. That too may have led to a marginal increase in the demand for fuel yesterday morning.

There have been numerous instances where speculation of downward price revisions led to fuel shortages. Fuel retailers have become a law unto themselves and do not care to maintain adequate petroleum stocks. A similar situation is bound to occur early next month as the government is expected to decrease fuel prices in view of the upcoming local government elections. So, precautions will have to be taken to foreclose such an eventuality.

There is a pressing need for stringent regulation of fuel retailing to ensure that all filling stations maintain petroleum stocks at the stipulated levels. Noncompliance should result in penalties. Previous governments gave filling stations owners kid-glove treatment for obvious reasons; it was only the businesspeople with political connections who could establish fuel stations, and some of them were family members of politicians. Those who voted the NPP into power expected their interests to prevail over those of unscrupulous businesses, such as rice millers, and fuel retailers, but sadly the status quo remains. NPP leaders flex their muscles and order pre-dawn raids on peaceful protesters just like the Rajapaksa-Wickremesinghe government, but they have no qualms about kowtowing to the exploiters of the public!

Meanwhile, filling stations, save a few, have earned notoriety for various malpractices such as meter tampering and pumping in bursts. Regulatory authorities do precious little by way of conducting regular inspections and calibrations of fuel dispensers, making one wonder whether they are in league with the unscrupulous fuel retailers. The government must put its foot down and take action to safeguard the interests of the public and ensure that fuel consumers get their money’s worth without hassle.

Propaganda and reality

The NPP government has pulled out all the stops in a bid to win the upcoming local government (LG) elections. While it is leveraging everything at its disposal to achieve that end, its propagandists are claiming that it needs to have control of all local councils to be able to serve the public better. They would have the people believe that the JVP/NPP is not controlling the LG institutions at present. But this claim does not bear scrutiny.

Local councils have remained functional although they are without elected representatives. They have been under Special Commissioners (SCs). The SCs report to the Provincial Governors, who are appointed by the President. Thus, all local councils are currently under President Anura Kumara Dissanayake for all intents and purposes.

One can understand why the NPP is campaigning so hard to bag the local councils. It wants to win the mini polls and cement its impressive victories in last year’s national elections. However, the argument that unless the people vote for the NPP overwhelmingly again, enabling it to gain control of all LG institutions, it won’t be able to carry out its pledges, is flawed. That is a propaganda lie.

One may recall that the Colombo Municipal Council remained under UNP control during the UPFA and SLPP governments, but that did not stand in the way of the development of the City of Colombo. The JVP won the Tissamaharama Pradeshiya Sabha in 2002 while the UNP was controlling Parliament and Chandrika Bandaranaike Kumaratunga was holding the executive presidency. Governments have to come to terms with such situations.

All signs are that the government and the Opposition will have to cooperate in many LG institutions, after the upcoming mini polls, for those councils are very likely to be hung.

Editorial

Ground Zero of corruption

Published

3 days ago

2025/04/1

Sahan Weerasooriya

Tuesday 1st April, 2025

New laws will be made soon to facilitate the seizure of ill-gotten assets of the corrupt, President Anura Kumara Dissanayake has said at a recent NPP campaign rally. The government has chosen to crank up its anti-corruption campaign again as the local government polls are drawing near. Laws with stronger teeth to deal with corruption cannot be overstated.

Hydra-headed corruption can manifest itself in various forms at different levels, which can be individual, political, corporate, systemic and cultural. It has become extremely difficult to rid Sri Lanka of corruption because of the prevailing culture of corruption. The focus of all anti-corruption drives launched by some governments including the incumbent one has been on tackling corruption at the individual level, as evident from the cases filed by the Commission to Investigate Allegations of Bribery or Corruption against politicians out of power and state officials.

Much is being spoken about allegations of bribery, fraud, nepotism, cronyism, embezzlement, etc., against former government leaders and their bureaucratic lackeys. There is no gainsaying that corrupt individuals have to be brought to justice, but corruption at the political party level must also be addressed. Successive governments have failed to tame the rice millers’ cartel owing to corruption. Wealthy millers have huge slush funds, part of which they dish out to political parties and politicians of all hues so that their interests will be served whoever comes to power. This quid pro quo has stood them in good stead. Curiously, even the JVP/NPP leaders who roared like lions before last year’s elections, vowing to take on the so-called rice Mafia and safeguard the interests of farmers and consumers, are now mewing.

The questionable green-channelling of as many as 323 red-flagged freight containers in the Colombo Port in January can also be considered an instance of corruption, for they are believed to have carried contraband. Big businesses bankroll election campaigns of political parties and politicians of their choice and receive favours in return. The sugar scam is a case in point. Following the 2019 regime change, the SLPP suddenly reduced the special commodity levy on sugar imports from Rs. 50 a kilo to 25 cents a kilo for the benefit of some of its financiers who had ordered a huge stock of sugar. The state coffers lost billions of rupees as a result.

The NPP government is under pressure to have former Central Bank Governor Arjuna Mahendran extradited from Singapore to stand trial here for the Treasury bond scams. Strangely, those who are out for Mahendran’s scalp have stopped short of calling for a probe to find out how the UNP benefited from the Treasury bond scams. The UNP headquarters, Sirikotha, was struggling to pay its utility bills at the time of the January 2015 regime change. But it outspent its political rivals including the UPFA in the run-up to the August 2015 general election! It is believed that the UNP benefited from the largesse of the Treasury bond racketeers.

In Sri Lanka, which is known for the weak enforcement of campaign expenditure laws and a chronic lack of accountability, headquarters of political parties are believed to be built on foundations of undeclared funds, including black money.

The SLPP repaired its headquarters in record time following the 2022 mob attacks, which inflicted extensive damage on it. Where did funds for the construction of that place and repairs to it come from? Some Opposition politicians have alleged that the JVP is the richest political party in Sri Lanka, and cast suspicion on how funds were raised for the construction of its headquarters at Battaramulla. The SLFP, which was in penury for 17 years after its ignominious defeat in 1977, enriched itself after its comeback in 1994. The SJB has also spent huge amounts of funds on its election campaigns and social welfare projects. How has it raised funds?

It is believed that political parties are the ground zero of corruption in this country, given their undeclared funds, only a part of which they spend on their election campaigns. There is a pressing need to probe the assets of these parties, whose holier-than-thou leaders embark on anti-corruption crusades to garner favour with the public. That, we believe, will be half the battle in ridding the country of corruption.