Sri Lanka’s national budget process ranked among the worst

Published : 10:40 am  September 11, 2015 | No comments so far |  |  (972) reads | 

Bangladesh shows improvement becoming the best in South Asia

 Verite

From left: Verite Research Economic Research Head Subhashini Abeysinghe, Verite Research Executive Director Dr. Nishan De Mel and Verite Research Assistant Analyst Nilangika Fernando

By Chandeepa Wettasinghe
The national budget process of Sri Lanka is one of the worst in the world, and is only above Nepal in South Asia, Verite Research Executive Director Dr. Nishan De Mel said at the global launch of The Open Budget Survey 2015.
The survey shows Sri Lanka getting a score of 39 out of 100 due to a lack of democracy, transparency and accountability, and ranked 69 among 102 countries whose average is 45.


“The fundamental expression of democracy is that the government is representative of the will of the people, which means the budget plans must also represent the will of the people,” Dr. De Mel said.
According to the survey, public participation scored 15 out of 100, while parliamentary oversight over the process scored just 37, and the audit scored 67.


However, he said that institutions which contain and express public knowledge such as civil societies, trade chambers, researchers and media were kept silent in the past, not taking into account their advice or publishing information for them to analyze and decide whether budgets are successful.


“Evaluating the way the government has done that (implemented the budget) leads to budget transparency. But citizens have minimal budget information.The chambers feel that they are silenced and their reasoning is not valued unless there is some private influence,” he added.

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He noted that while Sri Lanka performed better in The Open Budget Surveys of 2008 and 2010 due to the government trying to woo the International Monetary Fund (IMF) to return to the country, once such international leverage passed, the process succumbed to past practices.
“When the government is not motivated to work in the interests of its own citizens, international organizations can help, but Sri Lanka can do it on its own. Bangladesh shows improvement becoming the best in South Asia, and even Afghanistan is better than Sri Lanka,” he said.


The past regime had adhered to publishing pre-budget statements, executive budget proposals, the enacted budgets, citizen’s budgets, in-year reports, mid-year reviews, year-end reports and audit reports in the two particular years, of which only 3 were made public in 2015.


“When the budget is announced, public and the media think that the spending is committed, but there’s a huge mismatch between what was said and what was done. The Auditor General reports show the mismatch of funds, but that’s public one year later after all the horses have bolted,” Dr. De Mel said.
He cited the worst case of agriculture and irrigation which has been continuously victimized.
“The government puts an average Rs.70 billion spending in agriculture and irrigation. In 2010, they spent 9 percent less than they said they would. In 2011 they spent 23 percent less, in 2012 34 percent less and in 2013 67 percent less. The government shouldn’t just say, it should also do,” he said.


Verite Research Economic Research Head Subhashini Abeysinghe said that the cause is due to the government lacking the revenue it projects in a budget, but said that it leads to the rural agrarian community—which is a massive vote base—becoming positively disposed to the government.


“This is deceiving the public. When read, it looks like a rural and agriculture-friendly budget, and people feel good,” she said.
To improve the situation, Dr. De Mel recommended that budgets should be made people-friendly, regular budget monitoring documents should be made public, and stronger controls should be placed on contingent funding.
“Things won’t change just because governments change. Things might change if people are more aware,” he said.

Slush fund in the budget?

Sri Lanka’s 2015 national budget contained a Rs.446 billion ‘potential slush fund’ named ‘Development Activities’ which Parliament has no control over, Dr. De Mel said.
“There is a heading called “Development Activities” in the Department of the National Budget. So this money should go to development activities, but actually, with the way the law has been amended, the Treasury Secretary has the power to use it for just about anything,” he said.


He said that Parliament is only informed of spending after the fact, and no Member of Parliament has ever raised the issue in the past.
“So this ‘Development Activities’ in the budget becomes a slush fund of sorts that can be exploited for whatever purposes,” Dr. De Mel said.


He expressed that the people are mislead into to believing that such funding is for infrastructure development.
He noted that the fund had Rs.62 billion in the 2014 budget—equivalent to 7 Samurdhi funds—and Former President Mahinda Rajapaksa—as the Finance Minister—increased the fund to Rs.446 billion for the 2015 budget in November 2014.
 “This is discretionary funding, and proper planning would avoid discretionary funding elements. The role of the government is to plan its spending,” Dr. De Mel said.


However, Abeysinghe noted that the loophole was created in 2002, as the UNP regime amended the Appropriation Act No. 36.
Dr. De Mel said that this is a ripe opportunity for the new UNP regime to correct its mistakes.
“This is an opportunity for the government to say now that it will be reallocated to ministries,” he added.
He noted that the existence of such a fund perpetuates corruption.


“Because discretionary funding is not given oversight, that’s why even corruption is so hard to detect. When it is tracked, it may look innocent, and it may be legitimate. I’m not saying everything it spends on is illegitimate, but how it is handled is,” he said.