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.
Wednesday 25th November 2020
The UNP has not yet been able to appoint its National List MP. There are many contenders for the post, but the UNP old guard wants party leader Ranil Wickremesinghe appointed; he, however, seems to be in two minds.
Former Minister Arjuna Ranatunga has said the country will gain if Wickremesinghe enters Parliament via the National List because the latter will be able to help the government save the economy. The immediate task before Wickremesinghe is to save the party and not anything else. Charity, they say, begins at home. Nevertheless, the fact remains that Wickremesinghe is an experienced politician, and, therefore, better qualified than anyone else to represent the UNP in Parliament.
Even if Ranil were to be brought back to Parliament as the Opposition Leader, he would not be able to influence the government’s economic policy. The current regime, intoxicated with power, is obdurate and impervious to reason; and not even Sakra will be able to knock any sense into its grandees who are full of themselves.
The Opposition, however, may benefit if Ranil returns to Parliament, for it is short of good debaters to take on the government. The Opposition is apparently all at sea; it could have scored heavily in the ongoing parliamentary debate on Budget 2021, which has some gaping holes, which need to be highlighted. Most of its MPs have been barking up the wrong tree; it is doubtful whether they have even read and understood the budget properly. They, save one or two, confine their remarks to generalities instead of addressing specifics, and the vital aspects of the budget have, therefore, gone unaddressed. What really matters in parliamentary debates is not the numerical strength of a party, but the quality of arguments its members put forth. How legends like Sarath Muttetuwegama held out against the mighty JRJ government, which had a five-sixths majority in Parliament, comes to mind.
Is Ranil capable of helping the government save the economy, as Ranatunga has claimed? If so, why couldn’t he straighten up the economy when he was the Prime Minister and de facto head of state? If he had developed the economy in keeping with his pre-2015 promises, the UNP would not have been in the current predicament. The blame for the failure of the yahapalana government cannot be laid entirely at the feet of former President Maithripala Sirisena.
True, Sirisena, as the President, sought to settle political scores with the UNP and threw a monkey wrench in the works towards the latter part of the yahapalana government, but the UNP had time from January 2015 to mid-2018, to develop the economy. Instead of doing so, it got embroiled in various frauds such as the Treasury bond scams, which led to its undoing.
All politicians look capable when they are in the Opposition. They tell governments what to do and how to do it, but when given mandates to govern the country, they fail miserably. The leaders of the current dispensation, during their Opposition days, ridiculed the yahapalana government for its failure to tackle the country’s burning problems, which are legion, and undertook to magic them away immediately after capturing power. People gave them three huge mandates at the local government, presidential and parliamentary elections in 2018, 2019 and 2020 respectively. They are now ensconced in power, living high on the hog, but the country’s problems are far from over. They cannot even ensure that the gazettes they put out at a rate are implemented. It looks as if we had another NATO (No-Action-Talk-Only) government.
Governance in this country has been a process of self-proclaimed messiahs becoming failures and vice versa. Regrettably, people have had to replace one set of failed messiahs with another, hoping for deliverance. Madness has been defined as doing the same thing over and over again, expecting a different result.
Govt. gazettes and Jothi’s cassettes
Tuesday 24th November, 2020
The present government has so far published more gazettes than the total number of cassettes released by H. R. Jothipala (Jothi) during his lifetime, as someone has rightly said, but most of them have not had the desired impact, at all. The recent one stipulating maximum retail prices (MRPs) for some varieties of rice is a case in point. Trade Minister Baundula Gunawardena has recently told the media, in Dambulla, that the consumer should exercise patience and wait until the commencement of the next harvesting season to reap the full benefits of the gazette at issue. Been there, done that, Citizen Perera may say, gnashing his teeth. Many harvesting seasons and gazettes announcing MRPs have come and gone, but he has never had rice at the prices determined by governments. He knows he is in for a big disappointment once again. The reason? The government is too impotent to enforce the MRPs, and the powerful rice millers who control the rice market always have the last laugh.
Minister Gunawardena has said the present administration, unlike its predecessors, does not intend to import rice and distribute it at lower prices as it feels for the paddy farmer. The government must not import rice at this juncture. If it does, it will play straight into the hands of unscrupulous rice millers who want it to do just that. The present shortfall in the supply of rice is due to market manipulations and nothing else. The Millers’ Mafia, creates a shortage of rice and drives governments to import rice ahead of harvesting seasons, thereby causing prices to drop, so that they can buy paddy at lower prices. After collecting paddy for cheap and storing it in their silos, they release some of their old stocks to the market, making the public stop consuming imported rice, which does not suit their palates. Thereafter, they jack up prices slowly, and the imported rice remains in government warehouses to be sold as animal feed in the end. This is the name of the game, and we have written extensively about the strategy adopted by the Millers’ Mafia, but the powers that be do not care to do anything about it because the wealthy millers have political connections and are known to bankroll election campaigns.
The government would have us believe that it refrains from importing rice because it wants to protect the interests of the local farming community. It has also stopped turmeric imports for the same reason, we are told. If so, will it explain why it slashed the import levy on big onions, recently, bringing down their prices while onions were being harvested here? Local onion cultivators are in tears as their produce fetches low prices, as a result. Was the government move aimed at helping its cronies engaged in onion imports?
If Minister Gunawardena or any other government grandee, bellowing pro-people rhetoric, is desirous of making rice available at reasonable prices, he ought to take steps to stop the big-time millers from hoarding paddy and manipulating the market; the Consumer Affairs Authority must be given clear orders and a free hand to conduct raids to prevent hoarding. Paddy farmers find themselves in a debt trap, as we argued in a previous comment, citing research findings. They have to sell their produce at very low prices to the millers who give them loans for cultivation purposes. They are also exploited by other loan sharks such as micro finance companies. The state banks must take the lead in liberating these hapless cultivators from the clutches of usurers. Many small rice mills have gone belly up, unable to compete with the stony-hearted buccaneers in the garb of rich millers. They should be given a financial leg-up urgently, and the Paddy Marketing Board developed as a national priority.
The government, which is not short of politicians who wrap themselves in the flag, ought to listen to all stakeholders, especially those fighting for the rights of the farming community, and work out a strategy to protect the interests of consumers and farmers.
Who handled Zahran?
Monday 23rd November 2020
Investigations are still being conducted to ascertain whose lapses helped the National Thowheed Jamaath (NTJ) carry out the Eastern Sunday terror attacks with ease. All indications are that they will go on until the cows come home. What we have witnessed all these months is a shameful blame game. Some politicians, former defence officials and police officers have been trying to absolve themselves of criminal culpability for failure to prevent the Easter Sunday carnage though they had been warned of possible terror strikes, days, if not weeks, in advance. They were as thick as thieves during the early days of the yahapalana rule, but they have now fallen out and are accusing one another. All those who failed to prevent the terrorist attacks, despite intelligence warnings, must be prosecuted. But that alone will not help ensure national security, for it is believed that Zahran Hashim, who led the NTJ and died in a suicide bomb attack, was not the real mastermind of the carnage. A prerequisite for ensuring national security is to find out who handled Zahran.
Former SDIG Ravi Seneviratne, who was in charge of the CID, has told the Presidential Commission of Inquiry (PCoI), probing the Easter Sunday attacks that the person who got Zahran to launch the suicide attacks has to be traced if threats to national security are to be neutralised effectively. He, however, is not alone in arguing that Zahran had a handler.
Testifying before the PCoI, intelligence bigwigs who were in service at the time of the Easter Sunday attacks, have said the NTJ was planning a second wave of attacks. In July 2020, a senior intelligence officer, whose identity was not divulged, said the NTJ had planned to attack the Kandy Dalada Perahera, in 2019. No less a person than former Director of State Intelligence Service, SDID Nilantha Jayawardena, has told the PCoI that the real mastermind of the Easter Sunday bombings was not Zahran, but his mentor, Naufer Moulavi, who has been living in Qatar for several years and is known to have various foreign links.
One may argue that the police as well as state intelligence officials, having failed to prevent the Easter Sunday attacks, are now trying to have the public believe that they succeeded in thwarting a second wave of terror, which would have been far worse than the first one. But if their claim that Zahran had planned a second wave of attacks is true, then the question is why he opted to die in the first wave. If he had been the real mastermind of the Easter Sunday attacks, he would not have blown himself up in the first wave of bombings because he would not have been unaware that his death would render his outfit rudderless and too demoralised to carry out attacks ever again. He had seen that following Prabhakaran’s death, the LTTE suicide cadres who survived the war did not carry out any attacks.
SLMC leader and former Minister of Justice Rauf Hakeem has told the PCoI that the mastermind of the Easter Sunday attacks was a different group that wanted to destabilise the country, and they achieved their objective. Insisting that Zahran and the NTJ had been used as pawns by that group, he said he would name the outfit, in camera. In fact, he is reported to have done so. The public has a right to know what that group is.
One can only hope that a separate probe will be launched to find out who handled Zahran and whether there was a foreign hand in the attacks, as claimed in some quarters. Whoever handled Zahran, the fact remains that all those who had links to the NTJ, which carried out the terror attacks, must be brought to justice. Unfortunately, dirty politics has taken precedence over the legal process; under the incumbent government, which came to power, promising tough action against the backers of the NTJ, some suspects are receiving kid-glove treatment despite incriminating evidence against them.
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