Are we all jelly fish or humans with a back-bone

How much of the growth of 7% achieved in 2006 was fuelled directly by increased spends on security, humanitarian relief, and spends that are not directly growth oriented and productivity enhancing?

The recently observed behaviour of civil society, led by business leaders, begs one to ask whether these leaders of society are men and women with back-bones or mere jelly fish? The judgement on the above is not too difficult and can be arrived at by asking a few simple questions?

The leaders of business were fast to praise the budget proposals and its value to business and the nation. Did they do so having objectively reviewed, with the support of their economic intelligence units, the macro economic performance of the past 10 months of 2006, the expected year 2006 compared with the budget 2006, expected 2007 and the three year projections forward paving the way to achieving the targets set in the Fiscal Responsibilities Act?

Did they in this process carry out a macro risk review and identify the risks with the greater propensity to crystallize, the resultant severity and probability of identified risks? Did they evaluate the comparative competitive position of the expected Sri Lankan macro economy with that of the nations competing with Sri Lanka for investment, trade, technology and resource transfers? Did they merely look at the micro benefits as announced in individual proposals to selected sectors? Did they even praise it to get due recognition in the eyes of those who matter, for future favours?

Was the budget full of small privileges and concessions to almost all sectors of the economy sufficient to focus the positive attention of business leaders? Were some of the personal and sector related requests in pre budget submissions accommodated and did this mere serving of a spoonful satisfy these leaders?

Did business leaders attend the budget presentation in Parliament merely to be able to shake the hand of the magician with the magic wand and personally congratulate him before any detailed review of proposals and its impact long term on the macro economy? Did many business leaders who having accepted an invitation to a budget impact presentation by a professional firm of accountants, get excused or be absent without notice from the function, merely to be able to attend an alternate presentation later that morning by another firm, at which the star presenter was the magician himself?

Of priority importance, did these business leaders examine the following issues they should have pondered over before comment;

* Will the planned estimates be realized and the budget deficit be 7.2% of GDP in face of the performance track record of the past and when even in 2006 the deficit was Rs 40 billion more than planned and that also achieved at the expense of an under spend Rs 41 billion on public investments?

* How much of the planned infrastructure spend of Rs 240 billion will be curtailed in 2007 in the face of defence, humanitarian, unplanned revenue spends and other subsidies and underperformances, leakages and inefficiencies?

* How much of the growth of 7% achieved in 2006 was fuelled directly by increased spends on security, humanitarian relief, and spends that are not directly growth oriented and productivity enhancing?

* What will be the impact on developmental aid, direct foreign investments and interest costs of foreign borrowings as a consequence of the break down of the CFA and the negative security and humanitarian record of Sri Lanka in 2006 and will the surplus of $200 million balance of payment surplus be realized?

* Based on the exchange depreciation seen in the past few months, despite significant resource allocation to defend the currency, what will be the impact on inflation, cost competitiveness and operational efficiencies of the private sector based on a depreciated rupee?

* How much of the credit availability for private sector growth be restricted by government borrowing and directed investments by the EPF and ETF and government controlled banks?

* How much of an impact on budgets would be commercial borrowings of government entities in arrears to the banking system?

* Will the inflation target of 9% for 2007 be realistic? Growth Target of 7.5% achieved? And what will the year end 2007 exchange rate be?

* How much of borrowings of government would be inflationary?

* What is the short term foreign exchange debt service ratio, if all commercial borrowings with short term interest commitments (through long dated paper) are accounted as well?

* Have the true costs of pensions and future pay as you go commitment related contingencies supported in this budget?

Do private sector leaders believe that the content and level of information and their transparency demonstrated in the budget presentation, the 10-year national development strategy presentation, and sometimes conflicting information released by the Ministry of Finance, other ministries, Central Bank and Census and Statistics are sufficient for long term planning and investment for growth?

If not what action are they willing to take to become effective partners in the macro economic management? Are they not willing to canvass to bring back to track the process of enacting the “Right of Information Act”?