‘How come the Chinese suddenly became good"

Economists dissect manifestos


by Shamindra Ferdinando

Pics By Nimal Dayaratne

Prof. Sumanasiri Liyanage yesterday warned of the danger of heavy dependence on foreign investments and loans, particularly from ‘Western sources’ vis-a-vis the unprecedented financial crisis experienced by Greece.

Prof. Liyanage, Dean, Faculty of Management and Finance SANASA Institute of Business and Development Studies particularly frowned on German ultimatum to Greek government. He expressed concern over tough conditions imposed by Germany and other international lenders on Greek struggling to meet its obligations.

Prof. Liyanage was discussing ‘election manifestos of UPFA and UNP’ at a media briefing called by Voice of Intellectuals and Professionals (VIP) at the Sri Lanka Foundation Institute.

Several political parties including the SLMC and JHU are in the fray at the August 17 parliamentary polls on the UNP ticket.

Pointing out that the UNP was dependent heavily on foreign investment, Prof. Liyanage cited Greece as a glaring example of a small debt-ridden country under pressure to give up its sovereignty to obtain foreign financial assistance.

Pointing out that the Chinese capital market wasn’t free to operate, Prof. Liyanage said that the state as well as state-run institutions managed the funds.

Recollecting severe criticism of the previous government’s relationship with China, Liyanage pointed out that the President Maithripala Sirisena-Wickremesinghe administration, too, had launched Chinese-funded mega Colombo-Kandy highway project a few days back. The then Opposition had portrayed China as an enemy, he said.

Sri Lanka couldn’t obtain Western capital under favourable terms and it might end up losing not only financial sovereignty but political sovereignty as well, Prof. Liyanage warned, noting that promises made by major political parties couldn’t be met without a complete overhaul of state tax structure.

Commenting on the 100-day programme of the Sirisena-Wickremesinghe administration Prof. Liyanage alleged that the new government hadn’t been able to increase state revenue at least marginally. None of the proposals made in the mini-budget including the mansion tax had been implemented, he said.

Prof. Liyanage said that the UNP manifesto was silent on how it intended to raise funds required to implement its promises. He dismissed much repeated UNP declaration that it could find the required funds by taking tangible measures to stop waste, corruption and irregularities. Funds so saved would not be sufficient to finance the project the UNP had undertaken, he said, pointing out that Indian Prime Minister Narendra Modi’s plan to locate and bring back black money stashed abroad had come a cropper.

Prof. W. D. Lakshman examined UPFA and UNP manifestos. Commenting on the ground situation, Prof. Lakshman asserted that the JVP was seeking to establish itself as the third player while the main point of contention was former President Mahinda Rajapaksa entering the fray as the leader of one group.

Prof. Lakshman said that the two major parties had taken politics of promises to a new level. The expert said that recently presented manifestos should be examined against the backdrop of the conduct of particular political parties. The issue wasn’t whether the state had the wherewithal to implement promises but whether it remained committed to its policies, Prof. Lakshman said.

The UPFA was focused on relatively smaller projects aimed at strengthening the economy whereas the UNP believed in mega projects with Western Province as the area of operations, Prof. Lakshman said. He briefly discussed the possibility of privatisation of state ventures such as Colombo Port, the CEB, the CPC, the Mattala Airport, Mihin Lanka, the Water Board, the SLT, planation companies as well as government shares in Colombo Hilton to raise required funds. Prof. Lakshman asserted that funds to the tune of US 50 bn could be raised in that manner.

Prof. Lakshman recollected a discussion he had had with the then Treasury chief Dr P. B. Jayasundera regarding 200-300 small ventures which strengthened the national economy.

Retired Brigadier Ranjan de Silva, Director, Prestige Automobile (Pvt) Limited warned that Sri Lanka was heading towards a catastrophe unless those responsible for national economy took immediate remedial action. Brig. Silva said that Sri Lanka was behaving exactly like Greece and rapidly moving towards a debt-crisis. He claimed that instead of blaming Germany and Europe for demanding Greece to address their concerns, Sri Lanka should learn from the Greek experience. Silva said that Sri Lanka couldn’t afford to squander her meagre revenue on luxuries.

Asked by The Island whether the experts could comment on one-time Chairman of the Committee on Public Enterprises (COPE) D. E.W. Gunasekera’s challenge to the caretaker government and the SLFP-led UPFA to reveal how they were planning to increase state revenue needed for implementing a range of promises made by them in the run-up to the Aug. 17 parliamentary polls, Prof. Liyanage admitted that political parties should explain how they intended to obtain the required funds.

He said that the issue of sharp disparity between direct and indirect taxes (ratio 20:80) should be addressed to enhance state revenue.

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