Financial Times

National policies for development
The United Peoples Freedom Alliance (UPFA) government is putting together a set of specialists from the public and private sectors to prepare a national policy framework for development, informed sources told The Sunday Times FT.

While the Regaining Sri Lanka document presented by the former United National Front regime to the donor community is unlikely to be proceeded with in its full implementation, parts of it considered to be useful to the people are expected to be included in the new policy framework.

“We are not going to re-invent the wheel. However policies would be devised to cater to rural needs rather than have an urban bias,” one government planner noted. One of the key elements in the new policy is to change the focus of the Treasury to a development-oriented institution instead of one “obsessed” with fiscal deficits, budget targets and reduced spending on infrastructure and other development.

This point was clearly emphasised by new Finance Minister Dr. Sarath Amunugama during a meeting on Thursday with Treasury officials and senior economists. The minister was also quoted as saying that the government while considering people-friendly policies from the World Bank and the IMF, will not pander to the wishes of the financial twins.

Government planners said already the international agencies had “verbally” expressed a note of caution to stick to budget targets and fiscal deficits. Officials said the Finance Minister and his officials are likely to discuss revised or fresh targets with the World Bank and IMF in view of the need to resort to speed up rural development, create jobs and restore fertilizer subsidies.

The Sunday Times FT learns that among the priorities also in line with the thinking of UPFA partner, the JVP, are to improving the paddy purchasing process for desperate farmers, improve the milk and livestock industry and initiate public investment programmes similar to the rolling plan programmes during former Finance Minister Ronnie de Mel's tenure in the 1980s.

Government spending under the new government is expected to rise. Little revenue will come from privatisation proceeds with the new regime putting brakes on selling off stakes in state banks, buses and other state sectors. The Finance Minister has also indicated that he would stick with the former UNF s reduced-spending 2004 budget till the end of the year, which leaves little manoeuvrability to the government to increase spending. Some economists expect the government raise funds through a cess on imports of milk food and canned fish, among other items.

The government is also likely to sell off large tracts of state land for commercial use as a fund-raising mechanism. Meanwhile among the set of experts groups is one dealing with tourism, headed by Board of Investment Chairman Lalith de Mel. Other experts groups are reviewing sectors like foreign aid, SME, some agriculture areas and transport.

These high-powered committees that include university professors and private sector specialists are mobilising “good” ideas from past policies by the former government and incorporating new ones. Policy papers would be presented on each sector and then discussed with President Chandrika Kumaratunga and the minister concerned, planners said.

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