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| Sunday, 10 November 2002 |
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Budget 2003 : Focus on development, reducing expenditure by Surekha Galagoda Top economists welcomed the second budget of the United National Front Government, presented in Parliament last week, describing it as progressive and development-oriented. Senior Fellow Post Graduate Institute of Agriculture, University of Peradeniya Dr Nimal Sanderatne said the budget, projecting for a five-year period, discloses a strategy for development to achieve targets. "The budget has taken a definite move to curtail expenditure," he said adding that defence expenditure can be curtailed due to the Government's peace initiatives. However, moves to curtail welfare and public expenditure are still to be seen and there is a huge growth in public expenditure from last year. Dr Sanderatne said: "I am sceptic about the revenue targets set out in the budget as the deficit will be much higher, unless privatisation proceeds come in a big way". Deputy Director, Centre for Banking Studies, Central Bank, Vincent Mervyn Fernando said: "The budget has offered several solutions to burning problems in the country while continuing the proposals laid down in the first UNF budget presented in March". The budget is growth oriented and has spelt out measures to curtail public expenditure as well as solutions to face the challenges while accepting the government's role as facilitator and regulator. He said the economy is in bad shape with high expenditure and low revenue for which the budget has given several solutions. When public debt increases, the cost of interest also goes up. Therefore, the creation of a Public Debt Authority will help debt management, resulting in lower interest costs. At present the public debt is 105 per cent of GDP and the Government has set a target to reduce this to 90 per cent of GDP by 2005. The Government aims to increase growth to 5.5 per cent while creating an environment for achieving long-term growth. "This can be described as a capitalist budget, but by providing relief to the rich, the benefits can be passed on to the poor," he added. He also welcomed moves to establish a Road Fund, human resources endowment fund, credit rating agency and multi-fibre association as well as the moves for regional development. Mr Fernando said the budget aims to reduce debt and unemployment while increasing the growth of the country in the long term. Research Fellow Institute of Policy Studies Dr Dushni Weerakoon described the budget as "investor friendly". She said: "Although there is nothing new, it has ensured continuity of policies to enable macro-economic stability". "The Government is trying to reduce the budget deficit at the expense of capital expenditure which is a cause for concern," she said. Capital expenditure will be 4.6 per cent of GDP in 2003, but to revive growth, capital expenditure is needed. Dr Weerakoon said public sector reforms should be implemented fast to reduce current expenditure and divert this to capital expenditure as the Government has to spend on infrastructure to increase growth. |
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