Friday 30th June, 2023
The government’s domestic debt restructuring plan is being revealed in dribs and drabs, and the public will have to wait until the weekend, when it is scheduled to be presented to Parliament, to see what it is really like. The Opposition has predicted doom, and the government has sought to make a molehill out of a mountain, so to speak. Both sides are notorious for terminological inexactitudes and mendacious propaganda. Therefore, one has to take their claims cum grano salis. The public has been left none the wiser, as usual. One can only hope that the domestic debt restructuring proposals will be discussed at length in Parliament and amendments made thereto, if necessary, to make them less painful.
There is no gainsaying that Sri Lanka has to achieve debt sustainability urgently if it is to restore its creditworthiness and sort out its economy. Its debt-to-GDP ratio, which is as high as 128%, has to be brought down. Debt restructuring is an effective way of achieving this end; otherwise, the state revenue will have to be boosted by other means, which are equally painful, to lessen the country’s debt burden. Governments usually increase taxes and tariffs to increase their revenue. Taxes have already been increased exponentially. Increases in indirect taxes have sent the prices of essential commodities and services into the stratosphere so much so that many people cannot feed and clothe their families. If the government resorts to further tax hikes, the public will riot, plunging the country into chaos again.
In bringing down the debt-to-GDP ratio, the government can lessen its dependency on tax and tariff hikes and extremely burdensome debt restructuring if it cares to adopt measures such as casting the tax net wide and taking action to eliminate corruption and curtail the waste of public funds. According to media reports, many businesses still do not pay taxes, and among them are a large number of traders who are making unconscionable profits at the expense of the public. Many professionals do not issue receipts for the fees they receive from their clients, and dodge taxes. Prominent among them are lawyers, who claim the moral high ground and pontificate to politicians about the virtues of good governance! Customs and Excise rackets are said to cost the state coffers billions of rupees a year.
A great deal of foreign exchange continues to be channeled via informal, trust-based money transfer systems such as Hawala and Undial. These systems, which have stood in the way of the government’s efforts to shore up the country’s foreign currency reserves, are also associated with illegal activities such as drug trafficking. Strangely, successive governments have baulked at going all out to stop these unlawful operations.
Government politicians are more airborne than ‘chairborne’, as it were. One can understand the Head of State and those who are involved in negotiations on foreign aid and external debt restructuring, etc., going overseas. But a ban has to be imposed on others’ foreign junkets. The Treasury should be made to reveal how much the wanderlust of ministers and public officials has cost the public. The internal travel of these worthies must also be costing Citizen Silva an arm and a leg.
A lot of public money goes down the gurgler due to serious flaws in social welfare programmes. It has been revealed that even middle-income earners have been receiving Samurdhi assistance. The government has, in its wisdom, sought to introduce a new social protection scheme, Aswesuma, which is also riddled with irregularities. If social welfare expenditure can be rationalised, the government will be able to make a dent in the country’s debt burden.
Corruption in the public sector has cost the economy dear. Trade unions have alleged that some panjandrums and politicians are making a killing by purchasing substandard pharmaceuticals and equipment for the state-run hospitals at higher prices. Perhaps, with the funds spent on the construction of three expressways, a highway could have been built around the country. If public sector corruption could be eliminated, it would be possible to save a lot of state funds.
Fairness demands that the government adopt measures such as broadening the scope of taxation, ensuring tax compliance, the elimination of bribery and corruption in the public sector, the curtailment of waste, and the prevention of the movement of forex via illegal channels, instead of going hell for leather to exploit the captive superannuation funds to lessen the country’s debt burden.
Saturday 30th September, 2023
The government and the Opposition may be at daggers drawn, but they do see eye to eye on matters that are mutually beneficial to them, such as the MPs’ perks and privileges, which they jealously guard. Such concord and coadjuvancy, however, are conspicuous by their absence where issues that affect the national interest are concerned. Not even the country’s worst-ever crisis has prompted them to make peace and put their shoulders to the wheel jointly to drag the nation out of economic morass of their own making.
The Opposition has gleefully declared that the IMF bailout programme is dead in the water. It would have the public believe that the IMF delegation, which was here for a review of their programme, left unsatisfied with the government’s revenue shortfall, and the next tranche of the lender’s extended fund facility is not likely to be unlocked. Acting Finance Minister Shehan Semasinghe has denied the Opposition’s claim, insisting that the next installment of the IMF loan will be released soon, after some issues are hashed out with the IMF headquarters.
The Opposition seems to be deriving some perverse pleasure from the fact that the IMF has not announced the release of the second tranche of its loan immediately after the conclusion of the review meeting. It is bashing the government for the revenue shortfall, which the IMF has frowned on.
Taxes and tariffs have already been increased exponentially so much so that many professionals have left the country in a huff never to return; the Ceylon Electricity Board is reported to have asked the Public Utilities Commission’s nod for another price hike. How does the Opposition think the government could increase the state revenue further?
The Opposition insists that it will be able to resolve the economic crisis in next to no time when it forms a government. In other words, it will not reveal what it claims to be its secret formula for economic recovery until such time, regardless of the woes of the hapless public.
Elections are not likely to be held until the latter part of next year, and the Opposition cannot topple the government by parliamentary means anytime soon. Supposing its claim of being able to turn the economy around is true, then one can accuse it of cruelly perpetuating the suffering of the public to advance its political agenda.
The government ought to explain why it has failed to meet its revenue targets in spite of the unbearable economic burden it has heaped on the public by way of unprecedented tax and tariff hikes, which have brought about significant increase in the state revenue, compared to 2022.
This situation may be due to defects in the tax collection process, and the government’s failure to curtail its expenditure and prevent waste, losses caused by corruption and the mismanagement of public resources. If action is taken to sort them out, among other things, it may be possible to turn the economy around sooner than expected.
The Opposition, for its part, ought to keep a watchful eye on the economic recovery process while keeping pressure on the government to ensure frugal management of public resources and make a serious effort to curtail waste and corruption. Regrettably, instead of acting as an alternative government and facilitating economic recovery for the sake of the public, the Opposition has chosen to settle old political scores with some government leaders, bellow rhetoric and cry wolf ad nauseam. It claims that the government has failed, but the question is whether it has not.
The brainless and brain drain
Friday 29th September, 2023
The Rajapaksa-Wickremesinghe government continues to be at loggerheads with irate professionals, who are demanding solutions to their problems. Many of them have already left the country never to return thanks to the government’s callous disregard for their grievances.
University teachers staged a protest in Colombo the other day in a bid to jolt the government into addressing the various issues that affect the education sector, but it is doubtful whether they succeeded in their endeavour. Instead of heeding the voice of the educated Sri Lankans on the warpath, the government has chosen to unleash its propaganda hounds on them.
One of the main issues that drive resentful professionals to street protests is the unbearable personal taxes. They have made it abundantly clear that they are not refusing to pay taxes; they are only demanding some relief, given the unexpected circumstances that have left them struggling to make ends meet. They are also demanding that the country’s tax revenue be properly utilised.
The government does not care to curtail the waste of state resources, as can be seen from the sheer number of politicians and officials junketing overseas at the expense of the public. Why should millions of dollars be spent on their pleasure trips which are made out to be official visits? The Health Ministry has become a metaphor for corruption, but the government continues to defend the Health Minister and corrupt officials. The same goes for all other ministries.
The government is sure to use the IMF’s recent statement that Sri Lanka’s tax revenue is very low to justify its refusal to grant any relief to the protesting professionals. But if it streamlines tax collection, it may be able to increase its tax revenue without squeezing the fixed-income earners dry.
Parliament has reportedly decided to take up the multi-faceted problem of brain drain for debate––at last. The fact that it has not already had an extensive discussion on brain drain, much less striven to find a solution thereto, is proof of the appallingly low priority it has assigned to this vital issue, which will have a bearing on the country’s future.
Regrettably, some government members do not seem to have realised the gravity of brain drain. If their unintelligent utterances in Parliament are anything to go by, they are labouring under the misconception that the exodus of Sri Lankan professionals is not something bad; they have said it will help boost the country’s inward remittances! They have mistakenly equated the mass emigration of the country’s best brains for good with the migration of unskilled workers. Figuring out the gravity of a problem is half the battle in finding a solution.
The worst that can happen to a country is for its educated youth to think they have no future at home, for their disillusionment manifests itself in brain drain, reduced innovation and socio-political unrest. True, brain drain is a global phenomenon that affects all countries to varying degrees, but it becomes a crisis when it assumes exodus proportions, as has been Sri Lanka’s experience. The ever-increasing human capital flight, which has adversely impacted all sectors here, is bound to make the task of resolving the country’s economic crisis even more uphill.
The task of having a comprehensive debate on so complex an issue as brain drain, with emphasis on its causes, consequences and a potential solution, requires brains.
What the so-called people’s representatives on both sides of the House, maintained with public funds, ought to do is to have a decent debate on the issue, confess collectively to having ruined the economy, show some remorse for their wrongful actions and dereliction of duty, resolve to avoid their past mistakes and make a concerted effort to sort out the economy.
If they are going to play the blame game once again, resort to slanging matches replete with invectives and raw filth, and drag one another’s names through the mud, as they often do, they might as well forget about the debate they are scheduled to have on brain drain.
Stats, confusion and contradictions
Thursday 28th September, 2023
Power and Energy Minister Kanchana Wijesekera is reported to have said at a conference held by the Finance Ministry, on Tuesday (26), that there are more than 4,000 vacancies in the Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC). According to media reports quoting him, the vacancies at the CEB and the CPC number 1,192 and 3,000, respectively. He is said to have added, in the same breath, that both institutions can manage with the current workforce; his statement must have struck a responsive chord with the public, who must not be made to pay through the nose to maintain overstaffed, inefficient state-owned enterprises (SOEs).
Minister Wijesekera has left us puzzled, though. In August 2022, he tweeted that there were basically eight reasons for losses incurred by the CPC, and one of them was that it was overstaffed and inefficient, and its workers were overpaid. He reportedly said in a separate tweet that 500 workers could manage the work done by 4,200 workers at the CPC and the Ceylon Petroleum Storage Terminals Ltd. (CPSTL), and the CEB did not need more than 50% of the workers currently on its payroll to function efficiently. In April 2023, the media, quoting from an Auditor General’s report, said the CPC and the CPSTL had 4,200 workers whereas the need was for only 500.
How could an institution which is overstaffed have vacancies? Is it that the CEB and the CPC/CPSTL have recruited workers haphazardly for political reasons instead of hiring personnel for the posts that fell vacant? An explanation is called for.
Minister Wijesekera said at the aforesaid conference that he could take advantage of the situation and employ about one thousand people from his home district, Matara, in the CPC/CPSTL and the CEB, but he would not do so. Let him be told that the public is not so naïve as to buy into his claim; he and other government politicians, especially the members of the Rajapaksa family, would have provided employment to their henchmen in the debt-ridden institutions but for the IMF strictures, and the fear that such action would stand in the way the restructuring of the SOEs. Even the worst critics of the IMF must be happy that it has put the government in a straitjacket of sorts.
Surplus staffing in the public sector is a drain on the state coffers, as is obvious. The COPA (Committee on Public Accounts) has recently revealed that the Health Ministry has more than twice the number of doctors required for administrative work while many hospitals are experiencing a shortage of doctors. It is hoped that the government will have the cadre requirements of all state institutions properly assessed and take action to sort out the issue of overstaffing.
A request to Susil
Education Minister Susil Premajayantha has said early childhood education will be made compulsory for all children above the age of four. This, we believe, is a welcome move. According to UNESCO, early childhood education ‘provides learning and educational activities with a holistic approach to support children’s early cognitive, physical, social and emotional development and introduce young children to organised instruction outside the family to develop some of the skills needed for academic readiness and to prepare them for entry into primary education’.
The adverse impact of the neglect of early childhood education on Sri Lankan society is reflected in the behaviour of some adults, especially those in key positions, the deplorable conduct of the Members of Parliament being a case in point. If the behaviour of most MPs during the past few months is any indication, something has gone wrong with their cognitive, social and emotional development. Otherwise, they would have behaved well at least during the country’s worst economic crisis, which they themselves have contributed to, albeit to varying degrees. They cannot even have a decent debate on a national tragedy such as the Easter Sunday terror strikes, which claimed more than 270 lives and left over 500 people injured. They have turned parliamentary debates into slanging matches and punch-ups. There are some decent politicians, but sadly they are the exception that proves the rule.
Thus, we request Education Minister Premajayantha to take steps to ensure that our elected representatives, save a few, are provided with early childhood education, which they have missed. Better late than never. That may be considered what is known as ‘second chance education’ for them.
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