By Rathindra Kuruwita
The Sri Lankan government was not allocating funds to ensure the availability of essential public goods despite the gradual stabilisation of the economy, Prof. Priyanga Dunusinghe, of Department of Economics at the Colombo University said addressing the media.
“The government has to maintain roads, provide healthcare and education, security, etc. I don’t see the government allocating the required funds. On the other hand, the prices of goods and services are high, and interest rates are high. So, despite the stabilisation of the economy compared to 2022, the policy makers have a lot to do to ensure that the outlook remains positive in the medium and long term,” he said.
Prof. Dunusinghe said that the Central Bank had played a key role in reducing inflation. The interest rate increase had been painful but necessary to put an end to runaway inflation, he said.
“The government’s tax policy is also important in increasing its revenue. I know that tax hike has impacted a lot of people adversely, and they are angry. However, these hikes were necessary.
He said that the Customs, Inland Revenue Department and the Excise Department had remained inefficient for a long time.
“However, recent declarations by ministers in charge of finance about special acts and regulations are mere rhetoric. However, they have not done what’s needed to reform these institutions. It is obvious that the Central Bank and Finance Ministry is doing the heavy lifting when it comes to economic stabilisation, under IMF conditions. Other ministers have done precious little to help. What has the Export Development Board, Tourism Authority or the Board of Investment done? Without everyone doing their part we can’t overcome this crisis in a sustainable manner “he said. (RK)
Prof. Dunusinghe said most MPs have no interest in reducing the perks they enjoy. In fact, some of them are only interested in profiting from the current crisis. The onus of austerity is on the people and that this has created anger, he said.
“We are taking some steps because the IMF asks. However, there is no discussion or consideration of how these policies will affect the development trajectory of the country. There is no plan. For example, we need to think about reforming the Ceylon Electricity Board in a manner that contributes to the national economy better. However, we are trying to reform the Board so that the burden on the government lessens. There is no consideration of the bigger picture,” he said.
Parliament needs to come up with more stringent fiscal and budget regulations , so that governments can’t deviate from the set path.
“We must use the crisis to bring about a rules based order when it comes to fiscal and monetary affairs. It’s not possible to separate the economy and politics. Politicians and senior bureaucrats have become a privileged class, and this unfortunately has attracted undesirable people. We need to get rid of these privileges, if we want to bring in honest people,” he said.