The newly appointed cabinet of ministers should be given certain targets to meet every quarter and then assessed on their performance in order to build accountability, good governance and increase public confidence in the government.
At a panel discussion organized by the Business Times on Tuesday, Ceylon Chamber of Commerce (CCC) Chairman Anura Ekanayake, Chairman of Laugfs Holdings Ltd W.K.H. Wegapitiya and Associate Vice President of Frontier Research Diniki Jayamaha all agreed that not only politicians but senior bureaucrats such as the Inspector General of Police (IGP) and the Commissioner of Elections should also be made accountable.
Accountability from Ministers
Panellists - (from left) Diniki Jayamaha, W.K.H. Wegapitiya and Anura Ekanayake. Pic by J. Weerasekera. |
The discussion, in a regular series on national issues organized by the Business Times for its in-house staff, focused on the priorities and challenges of the newly-elected government.
Dr. Ekanayake said the instruments that are already in law should be properly enforced so that further improvements and changes can be made. He explained that in countries like Malaysia, ministers are evaluated on a quarterly basis and if they miss their targets, they must quit. “There are also positive achievements,” he said. “If we can also set targets, those achievements can also be published.”
Mr. Wegapititya said ministers should first be given a job description. “They should be accountable but we have to tell them what to do. Without giving a job description, they cannot be made accountable.” He also spoke on a bringing about a fundamental change on the part of the public by raising their voices on corruption. “Until today, only a few people have had the courage to blow the whistle on corruption. Corruption is around and people should be held accountable but everyone has a role to play. We can eliminate corruption to a certain extent.”
Excerpts of the discussion:Non-budget, private sector role
Dr. Ekanayake said the delay in announcing the budget by the government until July is not necessarily negative but does not allow the country to reap its full potential as fast as possible. “We were hoping that the proposals made by the Presidential Tax Commission would be incorporated in the budget so from that point of view, the sooner there is a budget, the better. In a Vote-on-Account, there is no room for that.”
However, Dr. Ekanayake said this time should be put to good use by setting up the types of structures that make it easy for people to invest and carry on with their business. There should be clustering of certain institutions and functions. If slow and cumbersome procedures currently in place can be sorted out, it can make a huge difference.
Dr. Ekanayake said the government can also invite external infrastructure private funding entities to work out some instruments. “Not having the budget as early as we could may not be negative but may reduce what we can gain on the growth side. However, there are other things that can be done outside the scope of the budget so that time will not be wasted.”
He added that the government cannot allow the budget deficit to expand further. Dr. Ekanayake said Treasury Secretary P.B. Jayasundera recently addressed the shipping and logistics sector in which he acknowledged for the first time very clearly that it is not possible for the required increase in capital investment from 25% to around 35% to 40% to come from the government side. “The budget deficit which is now around 10% of GDP only leads to a 6% investment in capital.”
Investment decisions taken until the end of the war in May 2009 were made in a war scenario with enormous amounts of instability, he said. “I think we need to recognize there is a huge paradigm shift. Now we have the opportunity to get the private sector involved.”
Dr. Ekanayake said the private sector must commend and encourage the government to set high goals which can only be achieved through more liberal and open policies. “The private sector must stop begging the government for incentives and subsidies and should just tell the government to take away impediments. The media should also support the government and not criticize everything. There is scope for a paradigm shift while holding on steadfastly to our core values.”
If Sri Lanka is to become a proper middle income country, old paradigms based on economic realities which are old and not valid have to shift. “We still have people talking about how we are an agricultural country. Only 20% of GDP and 33% of employment comes from agriculture. We are not an agricultural country and we are not even rural in the sense that we imagine but we still cater our policies and systems to an imagined rural society.”
Failing to plan or planning to fail? - Wegapititya
“Failing to plan is planning to fail,” said Mr. Wegapititya. “We always fail because we have never had proper plans.” The first priority of the government should be to have long term political stability. The present election system requires a constitutional change and the government and policy makers have a strong role to play with the support of all the stakeholders. Sri Lanka needs plans that are simple, target driven, measurable, realistic and time driven. “All stakeholders should align towards that common goal because so far, there has been no coherence and no proper planning.”
Mr. Wegapititya noted that Sri Lanka’s trade deficit is around US$3.2 billion and the gap between export earnings which grew far less than imports is widening. Sri Lanka imports and exports some of the same products such as vegetables, turmeric and even salt. The Export Development Board doesn’t have a clue of what is being imported. He suggested that exports need to gain cost leadership and focus on niche markets and import substitution.
The private sector is expected to be the engine of growth but there aren’t any development banks so far or a conducive environment for investors. “We also have strong capable local entrepreneurs but the necessary environment has not been created.”
Mr. Wegapititya said he also doesn’t believe in a level playing field. In countries like India, local investors are recognized and given an edge over foreign investors who come and go. He added that the government must focus on removing all the red tape for investors.
Reforms based on strategic goals are needed across all different sectors such as health and education. He said there are old fashioned and obsolete ways of teaching. Students are sent to countries such as Nepal and China for higher studies because there are no foreign universities in Sri Lanka. “If kids can study here, foreign exchange will stay in the country.”
Fiscal deficit a problem -- Jayamaha
Mr. Jayamaha said the greatest weakness in the Sri Lankan economy is the fiscal deficit which was nearly 10% of GDP in 2009. The deficit will lead to inflation and will also affect Sri Lanka’s ability to borrow cheaply going forward in the future. A high fiscal deficit is a sign that the government does not have control over its finances which will lead to debt rating agencies downgrading ratings on sovereign debt. Interest costs will increase and borrowing becomes much more expensive. Mr. Jayamaha said interest payments were 44% of total revenue in 2009. He added that a further constraint on future growth is recurrent expenditure which was 125% of total government revenue in 2009. He also said the tax system should be simplifies and made pragmatic.
Mr. Jayamaha said there are external weaknesses in the economy, especially regarding exports. Sri Lanka’s foreign currency inflows are through remittances, capital inflows and exports. Remittances are the most stable in the long run but still have risks. Capital inflows are also risky because they are subject to investor whims. The key is to focus on exports. Policies should assist exports by providing financial assistance. The Central Bank (CB) and the government have stated that exporters should be able to compete with GSP+ concessions but they should be given advice on how to increase their exports. He said that talk of creating an export/import (EXIM) bank is very encouraging but that policies have to target the people it is meant to reach and not simply add to the bureaucracy.
Mr. Jayamaha said policies should be aimed at not just achieving high growth rates but also good quality growth that trickles down to all segments of society. He pointed out that even though per capital income in 2009 grew to US$2000, real wages have been decreasing from 2000 to 2009 and income inequality has been widening from 1996 to 2003. |
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