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Budget 2020: Govt. hails economic performance, opposition says Govt. is heartless
Prime Minister Mahinda Rajapaksa presenting the second reading of the 2020 Appropriation Bill. Pic by Parliament photographer
Parliament on Thursday passed with amendments the delayed 2020 Budget which the opposition called illegal and one that violated the Constitution.
Presenting the second reading of the 2020 Appropriation Bill was Prime Minister Mahinda Rajapaksa in his capacity as Finance Minister. He made a proud declaration that despite the Opposition and its local and foreign advisers painting a “gloomy picture”, the Government was able to settle the debts for 2020, including the foreign currency loans.
The premier told the House the Government was able to meet the current year’s debt servicing commitments amounting US$ 4,200 million by avoiding unnecessary foreign borrowings and controlling imports. He described the achievement as a major feat that spoke volumes of the Government’s economic management during this difficult time.
The Premier said that the previous Government sold Hambantota harbour for US$ 1200 million and the money was used to meet the day-to-day expenditure, instead of settling in full the debts incurred in connection with its construction. As a result, the Government still pays a US$ 90 million annually to China as loan instalments.
Continuing his attack on the “neo-liberal” economic policies of the yahapalanaya government, Mr. Rajapaksa said that not a single major infrastructure project got off the ground during the past five years. The economic growth, which was 6 percent in 2014, declined year by year and the country recorded its lowest economic growth of 2.3 percent and became the slowest growing economy in the South Asian Region last year.
Explaining further, the Prime Minister said the economic setback was largely because the previous government’s blind pursuit of neo-liberal policies with more imports than exports and this led to a massive trade deficit of US$ 8 billion.
The Premier said the country’s budget deficit for 2019 was 9.6 percent of GDP – an increase from 5.7 percent in 2014.
When the debate proper began, the main opposition Samagi Jana Balawegaya, whose members were part of the yahapalanaya government, questioned the premier’s claims.
“History is in the making,” said SJB fronliner Kabir Hashim, the first to speak from Opposition ranks. He added: “Post-independent Sri Lanka for the first time ever is witnessing two budgets being presented in one year.”
He pointed out that having been elected in 2019, the President managed to appoint the Cabinet, but failed to present a budget though he was all powerful. “This House is asking for a covering approval for the expenditure already incurred. This has never happened,” Mr. Hashim said.
For any government institution to function, it must have its budget approved by Parliament, before the beginning of the financial year, he said. “It could be an Appropriation Bill or a Vote on Account. Although the Government had approved two Votes on Accounts, there was no approval for government expenditure from May to August,” he said
Mr. Hashim said that according to Central Bank reports, people had pawned gold jewelleries to the tune of Rs. 643 billion and unpaid credit card bills during the second quarter alone amounted to Rs. 15.8 billion. These figures reflected the difficulties the people were going through under this Government, he said.
Mr. Hashim also said the loans the Government had obtained this year were a record since independence and if at least part of this money had gone to people, they would not have to pawn their jewellery to find money to survive or defaulted on their credit card payments.
He said that more than 1.7 million private sector employees had experienced wage cuts and were without any government help.
State Minister Ajith Nivard Cabraal joining the debate said that the figures Mr. Hashim cited with regard to pawning and credit card defaults were wrong. The current year had been affected by a global pandemic, and it was a challenge to manage the country’s economy, Mr. Cabraal said.
“There are allegations of debt traps. During the Yahapalana Government, public debt, which is expressed as a ratio of Gross Domestic Product (GDP), was increased to 87 percent as a result of the devaluation of the rupee, decreased capital expenditure and increased recurrent expenditure,” he said, The state minister said that through fiscal consolidation, the Government is aiming to lower the budget deficit to 4 percent in the next four years and decrease public debts to 70 percent of GDP.
He expressed hope that implementation of major projects would increase the growth rate. “Revival is finally visible, and the stock market is up,” he said, adding that exports had been increasing and the Port City project would attract more investments.
Opposition and SJB leader Sajith Premadasa entered the debate by quoting Martin Luther King — “Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity.” Indicating this quote was a fitting response, Mr. Premadasa said, “We don’t need fortune-tellers to tell us what the next three years would look like.” He accused the Government of being heartless and said it was unable to give relief to people even though it was completing one year in office. He noted that the prices of essential items were skyrocketing, despite gazette notifications on controlled prices.
“Corona is fatal; so is the people’s hunger,” he said, adding the Government was insensitive to the suffering of the people.
The Opposition Leader queried as to why the Government had not come out with the growth rate for the second and third quarters and demanded that it published the statistics without attempting to hide the figures. He warned if the Government did not publish figures it would only lead to a credibility loss and a drop in international ratings.
Mr. Premadasa said if the Government had implemented the Rannuge report recommendations, public sector employees would have seen their salaries being increased as much as Rs. 24,000.
He said that while state sector employees and pensioners were deprived of their financial benefits, tax reliefs in billions of rupees were given to the rich.
ITAK frontliner M.A. Sumanthiran called the Appropriation Bill 2020 was an attempt to cover up various illegalities. This 2020 Appropriation Bill must have been debated and approved in 2019, he said.
Citing constitutional provisions, the MP said that when parliament stood dissolved, the Constitution gave the President power withdraw money from the Consolidated Fund only to meet expenditures such as payments of public sector salaries and he did so accordingly on two occasions to cover such expenditures upto September. But when there were no such resolutions by parliament, what had been spent during the period after that was “far beyond the authority that the Constitution gives the President and is therefore illegal.”
“What are we doing today? We are trying to legitimise grave illegal and unconstitutional acts that have been done in this country,” he said, “This Bill is not a covering approval, or it is not ratification, because covering approval or ratification of something can be done legally.”
“The very reason that the Government presented the Appropriation Bill 2020, confirms that the Government concedes that there is an illegality that needs to be covered up. If all of these periods are covered, as claimed by the PM through the two resolutions and two presidential authorisations, then why do you need an appropriation Bill?’ Mr. Sumanthiran questioned.
He also questioned the validity of what he described as Army Commander’s royal decrees, prohibiting people from leaving the Western Province on Wednesday Night. “We were told of a Royal decree last night. Under what law the army commander can make such an order,” he asked, demanding an answer from the government ranks.
He said that after the Covid pandemic struck in March, they petitioned the Supreme Court asking to reconvene Parliament to authorise government expenditure and to pass new laws to deal with the pandemic as the current quarantine law was 123 years old.
It was unfortunate that the Supreme Court having heard the petition “for full ten days” refused to grant leave to proceed, without assigning any reason, he added. “That was also unprecedented because within ten minutes the court could decide to grant leave to proceed in an ordinary case,” he said, adding that “such a joke! I regret to say. Unfortunately, the government stubbornly refused to reconvene Parliament.”
He charged that the Government not only borrowed without any authority but also printed money. “We have a rule by an executive dictate today,” he said.
The JVP’s Vijitha Herath said the Government had stopped the payment of retirement benefits for pensioners. He said that there were about 118,000 public sector employees who had retired during the past five years and among them was the former Director of Pensions. He brought to the notice of the House that the Government had broken its own promises by not increasing the estate workers’ salaries to Rs. 1000.
Chief Opposition Whip Lakshman Kiriella, countering a statement by State Minister Cabral by pointing to the Sunday Times’ Page One lead story last week. He said the Government’s revenue targets had stumbled as big companies were unable to pay taxes not only for this year, but even for next year.
He also said it was not the previous Government but this Government which discouraged investors from coming to Sri Lanka, by vesting in one person the powers to make appointments to all 75 key positions mentioned in the Constitution. “There is no separation of powers between the Legislature, Executive and the Judiciary, but one person does it all. There is no independence of the judiciary or the public service. Will the investors come to such a country?” he asked.
Referring to the Covid pandemic, he called on the Government to be cautious when importing new vaccines and urged the Government to desist from blaming the people for the second wave as it was not their fault.
(The Budget for next year will be presented on Tuesday.)