Editorial

Editorial

Budget eggs in peace basket

Most thinking people will share the pessimism of the Ceylon Chamber of Commerce that the long-term objectives presented in last week’s budget will not be realized. There is good reason for this gloom - all budgets in recent years failed to hit their vital targets. Revenue fell far short of expectations, expenditure (both capital and recurrent) zoomed way above budgeted levels and the overall deficit was well above what it was supposed to be according to the budget planners.

So what grounds are there for anybody to expect anything better this time? Despite the claims that the economic fundamentals are sound, it is now well known that the country’s foreign reserves are in a parlous state. The stock market is in shambles and anybody expecting foreign investors to flock in like swallows in the springtime surely needs his head examined. Given the way that the rupee has been depreciating, interest rates shooting and law and order deteriorating, not to mention the war, the country risk here which any investor would carefully assess is surely against us.

Although negotiations with the LTTE will probably begin within a couple of months, there is no assurance that they will succeed. The only assurance we have is government’s determination to keep fighting even as the talks proceed. Everybody knows that there will be no quick fix to the war and no dramatic savings on military expenditure can be realistically expected in the short term. There are grounds for optimism only in one area: some kind of lifebelt from the IMF is possible. But these are loans and not grants and must be paid back by a country whose debt servicing obligations are rising sharply not only because of government’s pressing need to borrow but also because of a rupee that is not just floating but already appears to have sunk.

What happened in April last year when the LTTE captured Elephant Pass and would surely have taken back Jaffna but for the emergency military procurements and the determined resistance of the troops led by Major General Janaka Perera necessitated the depletion of what reserves we had. The sophisticated weaponry that helped do the trick had to be acquired if a rout was to be stemmed. The bucks that were made during that critical hour for the nation is another story, but there is no gainsaying the need for the expenditure itself. Building up these foreign reserves again will surely be a formidable task and the budget certainly has not shown the way how this is going to be done.

The government has been accusing the UNP and the JVP of fomenting unrest at a time of grave difficulty for the country. It is easy enough to counter that with a "what did you do in your day?," but that is not going to solve the problem. Nevertheless, it must be asked of President Chandrika Kumaratunga and her government what exactly cabinet minister and People’s Alliance constituent Arumugam Thondaman is doing right now? We have it on the authority of the Ceylon Chamber of Commerce that revenue losses due to what it has responsibly described as "acts of disruption" in the plantation areas since February 19 to March 5 have led to a "staggering" loss of approximately Rs. 400 million. The so-called satyagraha continues with even vote-hungry opposition politicians leaping aboard the bandwagon.

Professor G. L. Peiris struggled manfully to present a budget into which he would have had little input. No wonder then that he is the butt of cartoonists as the real author, Finance Minister Kumaratunga, wings abroad as parliament begins the talkathon that is the annual budget debate. People groaning under the weight of prices that have shot up in response to various pre-budgetary measures including the sharp depreciation of the rupee, the customs duty surcharge and perhaps other measures that will come in gazettes that have a habit of following (and nowadays preceding) budgets, have been asked to "bear with us" till next year for a wage increase. But how the economy is going to recover sufficiently to deliver on this promise has certainly not been indicated.

Having said this, we must give President Kumaratunga the credit for skilfully declaring in the budget that the gravy that has for too long been immorally ladled on to the plates of politicians and other privileged persons in the shape of duty free or concessionary duty vehicles are being stopped. But an ‘escape clause’ has been retained. Those who will profit from this much-resented perk who have already established letters of credit will not be deprived. It would have been certainly more transparent if the people were told how many of their MPs elected last October will still get their duty free vehicles. Better still if some serious economies such as on the presidential palace were announced.

All the budget eggs seem to be in the peace basket. No real improvement in the living conditions of ordinary people will be possible without a peace dividend which will surely create the conditions for economic development. This budget has certainly not kick-started the economy which will continue to trundle on at the accustomed bullock cart pace. While the people wait for peace, the politicians are not demonstrating any will to do what is necessary even within the existing constraints. Have we got the government we deserve? And do we deserve the opposition?

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