Budget 2025: Expectations galore with 76 years of waiting

To realise expectations of not only the President but also 6.8 million voters who placed their faith in him, the need of the hour is being a “Task Master”

Introduction

The maiden Budget of the NPP Government was tabled in the Parliament on 17 February. The third Reading of it was concluded on 21 March with the President’s speech.

There have been many opinions expressed within and outside the Parliament during this 4½ weeks period. They were primarily focused on Government proposals for generating revenue, spending it and bridging the deficit.

But, as the President mentioned in the Budget speech, “A budget is not just a set of revenue and expenditure proposals for the upcoming year, it is also a reflection of the Government’s approach to building the economy and overall policy.” One has to look at the 2025 Budget from this perspective. The Government’s approach to building the economy and overall policy reflects in the expectations and the proposals spelt out in the Budget.

Expectations galore

There are expectations galore in the Budget. These expectations are laid down in the section titled ‘Medium Term Macroeconomic Direction’:

“We expect economic growth of over 5 percent real GDP growth over the medium term.”

“Accordingly, we expect the currency, which is based on market fundamentals, will no longer experience spells of substantial volatility.”

“Through our measures to improve supply capacity in the economy, we expect price shocks to be minimized, … Macroeconomic policy path will also be supportive … Accordingly, we expect the currency, which is based on market fundamentals, will no longer experience spells of substantial volatility … where we expect exports of goods and services to reach an all-time high of close to USD 19 billion in 2025 … we hope to see a reversal of this trend by 2025, followed by a persistent decline in poverty.”

“…we expect to better use the post-crisis opportunities to create a transformative change in the Sri Lankan economy to achieve long-term economic stability and prosperity.

Realisation of expectations

The realisation of these expectations and the proposals depends on the results. Results are a product of implementation. Who is responsible for implementation? It is the public sector. The President has cast doubts on the efficiency of the public sector on several occasions. In his Policy Statement to the Parliament in November last year, the President stated: “No matter how ambitious the goals and expectations of political leaders may be, those goals can only be realised if there is a well-structured and responsive public service to implement them.”

While addressing the District Secretaries and Divisional Secretaries Conference on 20 December, the President has expressed concern over current inefficiency and lack of public trust and emphasised that the public service has deviated from its intended objectives and must undergo significant reforms to restore its effectiveness.

Moreover, Sri Lanka’s government performance is considered ‘poor’ as per the Worldwide Governance Index (WGI), with the government effectiveness being negative 0.65.

Policy-practice gap

I telephoned a few senior officials in the public sector while the Budget debate was on. Some did not answer. Some were at interview boards or at meetings, or in the Parliament or with the Minister. Others were having lunch or had gone abroad and hence couldn’t be reached. A few responded. I asked those unlucky ones who responded, “The Budget has provided an increased allocation to your Ministry. You must be happy. What are the plans in place?” The response was, “We have got an allocation more than requested; we do not know what do with it.”

There is always a gap between policy and its practice. Those who are responsible for practicing policies use many ways to please the policy designers. They make statements full of expectations and wishful thinking. If the expectations are realised, they claim the credit for their foresight and prudent policies. Otherwise, they provide excuses and explanations. They fabricate performance. Let me explain.

There are 45 proposals in the 2025 Budget. First proposal is ‘Expanding Exports of Goods and Services.’

The President in the Budget speech states, “we expect exports of goods and services to reach an all-time high of close to USD 19 billion in 2025”. The Export Development Board (EDB) is the agency responsible for realising the President’s expectations.

Exports to reach all-time high

Following the 26th Presidential Export Awards Ceremony organised by the EDB, a senior officer of EDB was interviewed on Sri Lanka’s export growth, challenges, and the role of the EDB in driving the sector forward. His response was:

“Our goal is to bridge this gap by scaling up micro and medium level exporters to the large scale category and our aim is to achieve a 30 percent improvement in this transition. Our approach for this focuses on value addition, innovation, and integration into global supply chains. Several high-potential sectors have been identified for development, including gem and jewelry, Food and Beverages (F&B), electrical and electronics, ornamental fish, spices, boat building, and marine exports. In the services sector, ICT is emerging as a key contributor and we have a target of generating US $1.9 billion in export revenue this year. Transport and logistics, as well as the construction industry, are also priority areas. With these initiatives, we aim to achieve US$18.2 billion in export revenue by 2025.”

The President expects exports of goods and services to reach an all-time high. EDB aims, approaches, targets, and initiates to reach all-time high exports. Unfortunately, a word about a well-targeted marketing plan drawn with all relevant agencies in public, private and financial sectors is not mentioned. What products would be in the export basket? Who will ensure the availability, regularity and quality of those products? What would be the destinations for exports? How will the Government policies and changes and restrictions imposed in importing countries affect our exports? Has EDB foreseen any obstacles, barriers, or any other impediments? EDB is silent.

The realisation of these expectations and the proposals depends on the results. Results are a product of implementation. Who is responsible for implementation? It is the public sector. The President has cast doubts on the efficiency of the public sector on several occasions. In his Policy Statement to the Parliament in November last year, the President stated: “No matter how ambitious the goals and expectations of political leaders may be, those goals can only be realised if there is a well-structured and responsive public service to implement them”

More weight on renewable energy

Let’s take another subject referred to in the Budget. “We will focus on diversifying energy sources with more weight on renewable energy and modernising infrastructure”. Minister downwards, corridors of both the Ministry and the CEB are occupied by engineers and technical staff. What did they do to place more weight on renewable energy? CEB disconnected rooftop solar generation during most potential days. CEB violated the agreement entered into with rooftop solar-generating households not only by disconnecting but reducing the tariff. CEB had the wisdom to realise more weight on renewable energy even before the conclusion of budget debate in the Parliament.

CEB has not paid attention and/or has not been proactive to have infrastructure in readiness to store and stabilise the power generated through solar, wind, and other renewable energy sources. They did not want to disrupt the thermal power generation for well-known reasons but defeated the Government’s intention of ‘more weight on renewable energy’ by disconnecting rooftop solar-energy generation... Humans can decide the availability of costly, imported, carbon generating, coal and fossil fuel paid with the meager Dollar earnings made by our slavering women in the Middle East. 

But, the availability and the timing of sources of renewable energy such as solar and wind is not decided by humans but hanumans, I am sorry by the nature. Humans can decide to tap it to generate energy. If we are unable to tap it at the time, the nature is more sensible than experts in the Ministry and the CEB, we lose it forever.

If the President wants to place more weight on renewable energy, modernisation of infrastructure is not enough. He has to hire some psychiatrists to modernise the Hanuman mindset of the humans in the Ministry and the CEB. Renewable energy is not rocket science. Countries such as Denmark, located close to the North Pole, are generating solar energy. They have improved the Battery Energy Storage System (BESS) infrastructure. When there’s an imbalance between electricity generation and consumption, it can lead to deviations from the nominal grid frequency. BESS can provide an immediate primary response by injecting or absorbing power to stabilise the frequency within milliseconds.

There is an “Offshore Wind Roadmap for Sri Lanka” developed by the World Bank in June 2023. It has identified three locations for offshore wind energy development. There are proposals made by foreign investors to CEB and the Energy Ministry for a BESS Project and Offshore windmill power generation. I am sure these proposals and the World Bank Roadmap are gathering dust in CEB shelves.

Reading in between lines

During the Budget debate, a Minister said, “IMF has dumped them and has accepted President Anura Kumara Disanayake as a more competent person.” “That’s why the IMF chief said ‘Bravo’ to him.” This reminded me of an email I received with the following message.

“Your consistent efforts are really paying off with each week that passes. Bravo.” This is not an appreciation but to lure me. Ministers or any other must not read only the words; they must read what is underneath and in between the lines and provide the correct advice.

People-centric Government

The President, delivering the Budget speech stated, “…we intend to set a foundation to create an economy where all citizens are active participants, active stakeholders, and active beneficiaries. The Government’s role is to facilitate and remove the impediments for people to fulfill their economic potential.” Which agency or agencies would play this role of facilitation? Unless a concrete well-targeted plan is designed, the intention will remain an intention, and next four Budget speeches would certainly repeat it.

Who will translate the President’s intention into a reality? It is the public sector. I cited only a few instances to explain how the public sector organisations would respond to accomplish the expectations laid down in the Budget. Public sector institutions get funds, keep on spending, and achieve what?

Conclusion

The warning issued in the Budget to the public sector comes in the form of a salary increase. “It is necessary to provide a decent living standard for public sector employees, enabling the Government to attract talented and skilled workers. Accordingly, we propose to increase the minimum monthly basic salary…”

I am not against the public sector or any salary increase to the sector. It is correct that “It is necessary to provide a decent living standard for public sector employees”. But, it is more than necessary to ensure a decent living standard to the general public i.e. the recipients of the public service.

Simplicity, honesty, integrity, righteousness, trustworthiness, and morality are certainly commendable virtues. But to realise expectations of not only the President but also 6.8 million voters who placed their faith in him, the need of the hour is being a “Task Master”.

(The writer is former Secretary to the Ministry of Plan Implementation. He is a Vice President of Sri Lanka Economic Association. He can be reached on [email protected].)