The government has resorted to ‘creative’ accounting to show a budget deficit of 9.7% of GDP when the actual figure should have been 10.2% while increasing debt, cutting public investment in education, health and agriculture, an economist said this week.
Speaking at a UNP press conference this week on the economic situation of the country, UNP National List nominee and economist Harsha De Silva said that according to the Treasury’s Pre-Election Budgetary Position Report 2010, the UPFA government has increased each family’s debt by Rs.100,000 in 2009 and has increased each family’s total debt to Rs.835,000 by the end of last year.
Dr. De Silva explained that wasteful expenditure and mismanagement of the economy resulted in a loss of Rs.495 billion in 2009 which is Rs.25,000 per person or Rs.100,000 for an average family of four. The government has increased the total debt to Rs.4,160 billion which is Rs.209,000 per person or Rs.835,000 for an average family of four. Dr. De Silva said the government is fond of expensive commercial loans from commission agent arranged ‘foreign fund managers’ such as the case with the HSBC bond and the Templeton deal. Last year alone, high cost commercial foreign loans increased by 151% to Rs.411 billion from Rs.164 billion in 2008.
He added that the total debt service (capital and interest) for 2009 was Rs.824 billion which is 17% more than the total revenue for the year of Rs.702 billion. “This is totally unacceptable,” Dr. De Silva said. “Are we mortgaging our country to HSBC and Templeton?”
The government cut public investment in education by 26% to Rs.17 billion in 2009 which Dr. De Silva describes as ‘unbelievable’ considering the cost on Education Minister Susil Premajayantha’s upkeep and tuition for children is increasing. “No wonder education is such a mess.”
He added that the government has cut public investment in healthcare by 32% to Rs.13 billion in 2009. “It is unimaginable that more than 50 have died from dengue just in January and February of 2010. According to the Country Head of WHO dengue has now started to spread in to the rural areas of the country.” The government’s public investments in agriculture have decreased by 35% to Rs.17 billion in 2009. Dr. De Silva said the government talks about supporting agriculture and about its ‘Api Wawamu Rata Hadamu’ (Let’s Grow to Develop the Country) policy but their actions do not support it. “They talk about building warehouses to help farmers store their produce but it is only empty talk.”
However, Dr. De Silva pointed out that the government has increased public investment budgets for roads and bridges by 35% to Rs.86 billion while investments for ports increased by 149% to Rs.24 billion. “We know that Sri Lanka has the world’s most expensive roads and flyovers.”
Cost of living has doubled between April 2004 and now. The cost of the consumer basket that the Department of Census and Statistics uses to calculate the cost of living, the CCPI or the Colombo Consumer Price Index increased by 97% between end March 2004 and end February 2010.
Dr. De Silva said the public sector will not get a salary increase in 2010 as there is no provision for the promised increase of Rs. 2,500 and Rs.750 in cost of living allowance per month amounting to Rs.47 billion. In 2009, expenditure on salaries was Rs.268 billion and is expected to increase to Rs.297 billion in 2010.
He said the Treasury Report shows that in the vote on account from January 2010 to April 2010, the salary bill is Rs.98 billion but the interest bill is Rs.141 billion, amounting to Rs.239 billion. However, total revenue of the government for this period is only Rs.228 billion. (NG)