Overall budget direction clearly one of restraint: IPS
View(s):Dushni Weerakoon, Executive Director, IPS on Macroeconomic Stability and Growth:
“The 2019 Budget offered some pre-election ‘relief’ as anticipated; a consistent downward trend in current spending is set to reverse for the first time since 2015. However, the overall direction is clearly one of restraint in order to retain the fiscal consolidation gains made since mid-2016, most notably a surplus on the primary account.
Nonetheless, the 2019 Budget estimates will test macroeconomic stability in the months ahead. Space to maneuver has been carved out by setting overly ambitious revenue and public investment targets. A similar exercise in 2018 saw a revenue forecast of 15.6 per cent of GDP materialise to an actual 14 per cent, with public investment spending cut as a result to 4.4 per cent of GDP from a forecast of 5.4 per cent. 2019 is likely to be a repeat of this familiar exercise.
Thus, tighter macroeconomic conditions expected in 2019 – following a spike in public debt to 84 per cent of GDP and low growth of 3 per cent in 2018 – will leave little room for missteps in setting monetary and exchange rate policies in tandem with fiscal policy. With domestic financing of the fiscal deficit set to double to 4 per cent of GDP in 2019, tight monetary policy conditions will keep the overall growth outlook to a modest 3.5 per cent.”
Nisha Arunatilake, Director of Research, IPS on Enterprise Sri Lanka:
“Enterprise Sri Lanka is a good initiative. However, it does not give preference to those with National Youth Council certificates. It is important that all proposals are evaluated for their merit. Also, bankers should be trained to evaluate projects for their feasibility and profitability. Rather than reprimanding bank officials who do not provide loans, the capacity of the bank officials should be improved to assist potential entrepreneurs to develop their business plans and benefit from this initiative. It is also encouraging to see that this initiative goes beyond just improving access to credit.
Female Labour Force Participation
The 2019 Budget proposes to improve female labour force participation through several approaches. First, it proposes to improve child and elderly care facilities. In addition, the Budget proposes for schools to have child care facilities in schools. Giving multiple options for child care facilities is a welcome move. Not all female workers are able to take their children to work, to be put in child care facilities offered by the employers. Many low skilled workers travel long distances in public transport to get to work. In such instances they might prefer to have child care facilities closer to home.
It is also encouraging to see that the government is subsidising the wages of mothers on maternity leave. Many small firms can afford to pay wages to mothers on leave and continue with their business activities.
Education
Giving a few students opportunities to study in top universities in the world is not a favourable proposal. For one, only a few will benefit from this. Also, there is no guarantee that these students will return to the country. Even if they come back, whether there will be jobs for them to do in Sir Lanka is a concern. It is better to facilitate top class educational facilities within Sri Lanka, and give scholarships for more students to attend those facilities.
The ‘my future’ initiative in the 2019 Budget is a good proposal. Many who pass A Levels are unable to attend university. This initiative will provide opportunities for students to engage in high quality tertiary education activities outside the universities.
It would have been better to see more initiatives to improve the skills of teachers. The present Budget has allocated money for training in-service teachers. But, the need is also for improving teacher training before individuals are recruited to the teacher service.
Bilesha Weeraratne, Research Fellow, IPS on Migration:
An emerging trend observed in departures for labour migration in recent years is the decline in placement by licensed recruitment agencies and an increase in the ‘on own’ placements. The increase in ‘on own’ placements tends to raise departures unregistered with the Sri Lanka Bureau of Foreign Employment (SLBFE).
The 2019 Budget proposal to offer a loan of up to Rs. 10 million, where the government would bear 70 per cent of the interest cost, with loan tenure of 15 years and a two-year grace period, would encourage migrant workers to register with SLBFE prior to departure.