Address military spending in Budget 2023

President Ranil Wickremesinghe as the Finance, Economic Stabilisation and National Policies Minister, is scheduled to deliver the opening speech of the Second Reading of the Appropriation Bill to Parliament on 14 November. 

It is a critical budget that will set the stage for economic recovery and possible stability. The Government would have to demonstrate courage and make tough decisions on cost reductions and generating higher revenues. Wishful figures of income and impractical figures on expenditure will only further deteriorate confidence in the financial management of the country.

One of the main priorities of the Government should be to reduce public sector expenditure. It will however have to be done cognisant of the tremendous hardships faced by the public. The need would be to prioritise the sectors that require expenditure while curtailing those that are not.

The initial indications however are not promising. The Appropriation Bill tabled in Parliament has allocated a massive amount of money to the defence sector. It has allocated Rs. 613 billion to the Finance Ministry and a whopping Rs. 410 billion to the Ministry of Defence.  The Ministry of Public Security which oversees the Police department has been allocated Rs. 129 billion. The total expenditure allocated for the military and police therefore is Rs. 539 billion. 

The figure represents a nominal year-on-year increase of 10% on defence expenditure. The proposed MoD allocation for 2023 includes Rs. 360 billion for ‘recurrent’ expenditure for military operations, salaries and maintenance activity. A total of Rs. 50 billion has been proposed for ‘capital’ expenditure including procurement.

As Sri Lanka embarks on this difficult economic recovery it must rein in on military expenditure and address the more dire needs of a suffering population. Sri Lanka which ranks at 58 according to the size of its population size, has the 17th largest military in the world. As a percentage of GDP, Sri Lanka spends nearly 2% on military expenses, an extraordinarily high amount for a country that does not face an existential security threat. 

In addition, unlike other countries, Sri Lanka does not have a military industrial sector that produces weapons or ammunition, either for itself or for export. Therefore, much of the capital expenditure incurred by the military is primarily for imports that hardly create any economic activity within the country other than for commissions for a selected few.

Even 13 years after the end of the separatist conflict, the military has not significantly reduced its numbers, nor restructured itself to suit the different challenges and realities of a post-conflict, democratic country. The Tri Forces and paramilitary groups such as the home guards total more than 350,000 according to publicly available data. It is because of these bloated numbers that the military has ventured into areas that curtail competition and healthy economic activity. 

From agriculture, construction, retail businesses to civil aviation, the military today has expanded its role. Other than the trickle-down effect of salaries, the military hardly contributes to the economy. On the contrary, by encroaching into economic activities that would otherwise create private sector jobs, it stifles competition and growth.

As Sri Lanka faces its worst economic crisis in history, it is essential to drastically curtail military spending and prioritise expenditure to ease the burden on the public, by providing them essential welfare such as education and health and reducing the tax burden by reducing unnecessary spending. The 2023 Budget cannot be business as usual.