Presenting a Budget is not an easy task at any time, but this year it proved to be a particularly gruelling task given the country’s precarious economic situation which actually led to the ouster of a President. One does not have to be a genius to comprehend that Sri Lankans will have to undergo some painful reforms before the economy can be turned around. This cannot be done overnight as our overall foreign debt exceeds US$ 51 billion, with almost no foreign reserves to speak of.
Hence President and Finance Minister Ranil Wickremesinghe’s decision to ditch populist measures in favour of pragmatic ones, which may, of course, be unpopular and even unpalatable. This is exactly why the Budget President Wickremesinghe presented last Monday contained no sweeteners. On the other hand, the Budget had plenty of bitter pills of the non-sugar coated variety. But this is just what the doctor ordered to cure our present ills.
For the past 74 years, we have been living in debt, oblivious to the danger that this could pose to our economy and the social fabric. No one envisaged a situation where we would be unable to pay those back. Unfortunately, we are facing exactly that predicament today, having defaulted on our loan obligations for the first time since 1948.
Certainly, in this backdrop, we cannot go on living the way we did previously. Pragmatism should be the order of the day and as President Wickremesinghe has said previously, it could take a generation to put things right. He has since enunciated a 25-year plan to make Sri Lanka a developed nation by 2048, the Centenary of Independence.
In the meantime, Budget 2023 has laid the groundwork for this initiative with several long-term plans. As this exemplifies, we have to become a nation that does not expect things to fall into place, but rather one that aspires to reach greater heights. Other countries such as Japan, South Korea and Singapore have already taken this path with success and we see no reason why Sri Lanka cannot.
It is clear that we have to let go of some preconceived notions as we embark on this difficult but rewarding journey. For example, should the State alone run all important businesses and services such as fuel, electricity and transport? The clear answer in the present context is ‘No’. Nationalisation may have been in vogue a few decades ago, but today it is passé and generally viewed in a negative light. Thus the President’s proposal to restructure several loss-making State-Owned Enterprises (SOEs) including SriLankan Airlines makes perfect sense. Some SOEs are a huge drain on the public purse, which will stop if they are privatised or reformed.
Besides, the opening of sectors such as petroleum to more players will ensure a better choice for the buyers. In fact, there would have been no fuel queues in the country if there were several foreign companies in this sector. In an encouraging sign, several Opposition lawmakers have pledged their support to the restructuring effort, notwithstanding any protests from Leftist or extremist political parties. It is vital that the Opposition extends their support to this endeavour, since they too will face the same issues when they take over the reins one day if these SOEs continue in the red.
“Youth are the future” sounds like a cliché, but it is not. President Wickremesinghe went so far as to characterise his Budget as a youth-oriented one, with many proposals that would benefit them. It was indeed fitting that hundreds of schoolchildren were in the Public Gallery when he presented the Budget.
One Budget proposal calls for the granting of foreign scholarships for selected youth, which is a timely initiative. But the Government should put in place a mechanism to ensure that they return and serve their motherland, instead of getting Permanent Residency (PR) in those countries, as it happens often now. If that happens, the scholarships would have been in vain. It is no secret that many professionals are leaving the country due to the economic crisis and this measure detailed in the Budget must not add to that brain drain. While the proposals to increase the State university intake is welcome, the Government must also expedite the establishment of private universities, which can potentially save the billions of dollars remitted each year for Sri Lankan students studying abroad.
The envisaged construction of medical faculties in more universities will also help increase the number of doctors in a situation where around 800 doctors retire per year, not to mention the migration of doctors.
Remarkably, the Budget has managed to offer a number of significant concessions for the poorer segments of society, despite fears to the contrary. This is a commendable initiative in the face of an acute economic crisis. Economic reforms and social welfare measures are not incompatible per se - even the International Monetary Fund (IMF) has said that Sri Lanka should continue to offer a cover of protection for the vulnerable sections of society as it undertakes crucial and long overdue economic reforms.
The proposed IMF facility of US$ 2.9 billion has itself been the subject of intense debate in the media and in political circles, with many arguments in favour and against. But what is generally accepted by all is that Sri Lanka is in dire need of these funds in order to tide over the present difficulties. As previously mentioned in these spaces, IMF loans do come with certain conditions which may not be easy to implement. This Budget has, however, shown the way to a better future through a difficult path.