State Minister of Urban Development, Waste Disposal and Community Cleanliness Dr. Nalaka Godahewa said that the Government through the Budget 2022 has not passed the burden on to the people. In that sense, the people must be happy even though the Government is going through a difficult period in managing finances, it has been quite careful not to burden the people.
The State Minister in an interview with the Sunday Observer said the money has been reserved to implement the Government’s policy manifesto. Finance Minister Basil Rajapaksa had to prepare the Budget allocating money only on essential items while at the same time he had to look at ways of curtailing funds in many areas. In this Budget he has achieved both aspects to a very great extent. However, the Finance Minister has taken a lot of care not to put a burden on the public.
Excerpts
Q: What are your views on the Budget 2022?
A: We have to look at the Budget based on the present circumstances. We started the year with several problems. Last year the Government’s revenue came down significantly. Most of the areas where we were generating money had got affected due to Covid-19 pandemic. On the other hand the expenses had gone up. Finance Minister Basil Rajapaksa has to take this into account and prepare the Budget allocating money only on essential items while at the same time he has to look at ways of curtailing funds. In this Budget he has achieved both aspects to a very great extent. The costs have been curtailed in many areas. At the same time, the Finance Minister has taken a lot of care not to put a burden on the public.
Many people expected the Government to raise taxes. But the Government has not increased taxes except from special taxes and they are one-time taxes. The Government has not passed the burden on to people. In that sense, the people must be happy even though the Government is going through a difficult period in managing finances, it has been quite careful not to burden the people. The money has been reserved to implement the Government’s policy manifesto. For example, if we look at the priority areas, they were exactly what were there in the manifesto such as roads, railways, energy and education. So, the focus is very much there.
Q: The Opposition says the Budget has failed to provide any relief to the people who have faced severe economic hardships. Your views?
A: We must ask the Opposition because they also submitted Budgets from 2015 to 2019. Didn’t the economic hardships go up? Wasn’t the economy in a crisis by 2019? Were the people happy about the outcome of their Budgets? The people got into a worse situation in terms of their living standard. Today they can’t turn back and accuse the current Government. They had a Government which was a total failure. They took over an economy which was thriving. They handed over a failed economy to the current Government. So, the current Government is in recovery mode.
First of all the Opposition has no right to come back and complain like that. Secondly, from where does the Government earn money? In any year, 90 percent of the Government revenue comes from taxes. In order to give concessions to the people, money has to be earned from the people. If we want to give concessions to one set of people, another set of people have to pay. Sometimes, the very same people have to pay to increase the taxes on goods and services. They are just trying to hoodwink the people who don’t understand the Budget. Concessions means additional burden on the public.
Q: Do you think the Government has taken adequate steps to reduce state expenditure through the Budget?
A: Very much. If you look at the current Budget, there are certain things the Government cannot remove. For example, if you take the salaries, we cannot do anything about the salary bill of the state. That is a very large component of our annual expenditure which is more than Rs. one trillion. So, that remains as it is. In addition to that, increments have to be given to the teachers. Finally the Government agreed to increase the salaries of teachers because that was a long overdue thing. The public sector salaries are borne up that cannot be reduced.
Then the Government has to save from other expenses. So, the Government has tried to curtail other expenses in certain areas which are already explained in the Budget such as reduction of the petrol quotas of Ministers and Government officers and other office expenditure. At the same time, if you look at the development, expenses in certain areas have been reduced. There are some essential areas of our manifesto such as roads, water, and energy supply and in those areas you can’t reduce the expenses. However, in some areas, certain reductions have taken place. If you take my own Ministry, the Urban Development budget has been cut by one fourth. It is the same in many other ministries. Though it is not the most preferred thing, it has been done given the difficult circumstances.
Q: Has the Government given the right signal to potential investors to attract much-needed Foreign Direct Investments to Sri Lanka?
A: I think the Finance Minister made it very clear in his speech that now the Government has to look at attracting investments. A good example is what is said about Railway Department lands. If you look at Sri Lanka’s lands, there are lots of lands belonging to the Railway Department. Originally when the railway lines were planned lots of lands were allocated for future development.
Today, most of those lands are underdeveloped or unutilised. You find even in the cities there are a lot of valuable lands under the Railway Department. So, the Finance Minister in his Budget speech said these unutilised lands of the Railway Department must be used for productive purposes such as shopping, housing and commercial purposes and various other things in collaboration with the private sector which will involve local as well as foreign investors. So, that itself is a good signal as a Government there is a policy to invite foreign investors.
Q: Do you think the Government would be able to rectify salary issues of teachers and principals with the funds allocated by the Budget?
A: There were negotiations going on. In the several rounds of negotiations, finally whatever agreed between the Government and the trade unions have been given.
Q: What impact will the Budget have on the cost of living issue in 2022?
A: If you look at the cost of living issue, in my view the only solution to escalation of costs is to go back to the old mechanism that many previous Governments adopted to control demand and supply through importation. When the prices go up in a particular item, you have to import and increase the supply to manage the supply and demand situation. In order to do that, you have to have a strong foreign reserve situation.
Right now, the problem faced by the Government is the shortage of foreign reserves which has come down to nearly US$ 2.8 billion. This is sufficient only for a couple of months’ imports. As a result, we are unable to import goods. In order to overcome the situation, the Government has to increase the financial reserves which can be done by bringing some foreign investments and negotiating sums of loans with some other countries or institutions. We have to find a solution for this Dollar crisis. That only will provide a solution to the increasing cost of living.
Q: The Opposition and certain other sectors attempt to portray that the Budget has undermined public servants. Would you like to elaborate your views?
A: The Budget has not undermined public servants. Actually, it has done a lot of good things for the public servants. For example, the salary issue of the teachers has been addressed and the public servants will be given motorcycles which were stopped by the previous Government. So, the Budget has not done any injustice to public servants. The retirement age of public servants has been increased from 60 to 65 years. So, why should the public sector complain? Some people are talking about a point made by the Finance Minister in his Budget speech. Actually, that is not the policy that he presented to the country in his Budget.
Q: Some people are under the impression that the Budget has not presented any program to address the shortage issues of essential commodities such as gas and cement in the market. Would you like to comment?
A: As I mentioned earlier, all these issues such as cement, gas and oil go around the Dollar crisis. So, the best solution is to increase foreign investments to the country. That is an immediate thing that we can do.
The Budget has already outlined it. The Government is already working with foreign institutions and Governments to negotiate some loans. So, that area is being addressed. There is no need to specifically mention it again and again.
Q: UNP Leader Ranil Wickremesinghe told Parliament that the framework agreement between the Government and US based New Fortress Energy had been entered into in violation of the powers and privileges of Parliament. Your views?
A: If there is anything illegal they can go to courts and challenge. If the Government or somebody does something wrong, there is a legal remedy. Without doing that, why are they making these noises? Can you just believe what these people say? They didn’t point their fingers at anything. I think the Ministers involved in this area would be in a better position to answer. But as far as the Opposition allegations are concerned my suggestion is to go to courts and initiate legal action if there is something wrong.
Q: However, a couple of weeks ago 11 coalition party leaders of the Government at a press conference criticised the agreement that the Government signed with New Fortress Energy. Is there any conflict of ideas within the Government regarding this issue?
A: One thing that we have to accept is this is a coalition Government. Within a coalition Government different segments have different qualities. They all came together to support the common manifesto of the President.
They all contested under one umbrella, SLPP for the election but they have different ideologies. So, they are speaking in relation to those ideologies. I think they have a democratic right to do so. But at the end of the day a final decision has to be made by the Cabinet. If the Cabinet makes a decision, that is the final.
These coalition party leaders are also in the Cabinet. If there is an issue, they can fight in the Cabinet and get it changed. I think they have the right to come out and talk about it. But we can’t comment just because they make some statement. There are always true views. I am not fighting with any of them. What I am saying is there are always two sides. However, one thing I know is that we need investments at this stage. There is a crisis in the country and it needs foreign investments. So, if the Government thinks these foreign investments are worthwhile, I think that also must be given some hearing.
Q: The Opposition has raised concern regarding the reversal of several gazettes issued by the Government. Would you like to respond?
A: The Parliament Finance Committee which I also represent has pointed out some technical errors. These technical errors were due to the officers who prepared those documents. Therefore, we ask those technical errors to be corrected but there were no policy changes. If there is a technical error in a gazette, that must be changed. There is no reversal of any policy decisions. We ask the Opposition to highlight even a single policy decision that has been reversed. It is not so. I think if there is an error and correcting it is something that we must commend.
Q: How do you view Tuesday’s protest organised by the Samagi Jana Balawegaya in Colombo against the Government?
A: I would say in a democratic country, the Opposition has the right to protest, voice their opinion and can do anything under normal circumstances.
I don’t think anybody must challenge that. At a time when we just came out of the Covid-19 third wave and trying to raise our heads and turn the country normal, I think it is very bad timing for the Opposition to organise a protest of that nature. What are they asking for? They are asking the Government to be changed. Now we must ask the Opposition, can the Government be changed like that? There is a Constitution in this country.
Even if they want, Parliament cannot be dissolved and there is a timeframe for that. If the Opposition Leader and Opposition members don’t know the Constitution, it is a bad state of affairs. If they know and do this, then it is obviously with some ulterior motive in their mind.