|
|
 |
 |
| Sunday, 29 August 2004 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
Govt. to maintain budget deficit at 7% of GDP by Gamini Warushamana
"They have already said that they are ready to study our policies and assist the government." Minister said. Here are an excerpts from his interview. Q. Minister, you are one of those who highly criticised the economic policies of the previous UNF regime and now a part of the responsibility lies on you. How are you going to change the track and what are the differences in your policies ? A. UNF announced its policies in their Re-gaining Sri Lanka and ours are in the Rata Perata policy statement. They wanted to sell or privatise all State-sector enterprises and national resources, stop or reduce social welfare programs and weaken the government service. They had stopped all recruitment in the government services, stopped or reduced subsidies and so on. But our policies are totally different and now we have stopped all of them and started to implement our policies in an economy in which the private sector as well as the State sector are playing an important role. Accordingly we have stopped privatisation of State enterprises and have started to strengthen the State sector, and now people are being recruited to fill the existing vacancies. Government has recognised the provision of social welfare for the poor and marginalised groups in society. The government knows the difference of the real value and the financial value of the national heritages (the previous government saw the financial value) and we are committed to protecting them. Q. There are various criticisms against the graduate employment scheme handled by your Ministry. What are the shortcomings in this program and will the government be able to provide 27,000 jobs in the government sector? A. Providing employment for 27000 is a challenge. There may be technical mistakes and anyone can criticise them. But we are fulfilling a responsibility of the government. If our private sector is not ready to absorb the young, educated sprit generated by our educational system, they should be placed at a proper point in the government sector and made use of. They are not just persons; They are the output of our investments in the public education system as well as their parents. Personally I know and have experienced the misery of an unemployed graduate. Possessing a B.Sc management degree, I had to work as a farmer in 1986. So I personally got involved in this process. I can assure you that no political or other influences were considered in the selection of graduates. It was carried out 100 percent by the computer division of the Colombo University. Most of the criticisms are based on some technical problems. Selection criteria is one. We give priorities to Class or Honours degrees. But some argue that the date of the graduation is more important. I can assure you that all the graduates will get jobs with the same recruitment date. The second batch will be published soon. All unemployed graduates will get jobs in the government sector. Q. What are the changes you are expecting in the State sector after recruiting these graduates? A. All these people will be placed in the existing vacancies in the government sector. We have taken the deatils of vacancies available in Ministries through Ministry secretaries and these graduates will be appointed to suitable posts considering their qualifications. The Ministry of Education is ready to recruit 10,000 as teachers. There are 700 vacancies in the health sector and about 1500 in the agriculture sector. Q. One criticism regarding the graduate employment scheme is that it is a political program that incurs a huge cost to the government. The State sector is already overcrowded. What is your response? A. Yes On one hand it is a political program. Absorbing the most qualified output of our educational system to the country economic development program is a political responsibility of a government. But we see more benefits than the cost. On the other hand the private sector of the country has neglected these young educated people. They are easily trainable and can be given any responsibility. The "Tharuna Aruna" program we started to get the private sector participation to solve the unemployed graduate problem has failed. The argument is wrong. Our State sector is very wide and has a well-stabilised administrative network to Grama Niladari level. It was used to provide various essential services such as health, social welfare,education, agriculture extension and Samurdhi. The social development we have obtained and reflected through the social indicators such as high literacy rate, low infant mortality rate, life expectancy, immunisation are the results of these services provided by the government. They are very important to economic growth. Q. All the projects you have started will incur huge expenditure for the government. Subsidies, government jobs, 10,000 tanks, milk for school children. How will the government finance these projects?. A. Even developed countries provide subsidies to protect their farmers. This was the major topic at the WTO's Washington Round held recently. We also have to protect our farmers and the agriculture in the short run and develop the sector to survive and compete in the long run. We provide subsidies with this aim. Building 10000 tanks is a financially and economically viable project. We hope to increase agriculture production on a large scale after completing this project. It has a very wide impact on the overall economy as well as to the environment.It will provide thousands of new jobs and reduce food prices. Providing a glass of milk to a poor schoolchild is also not wasteful expenditure. It is an investment in human capital. Healthy people are essential to economic development. We can't calculate the immediate profit of every project. As a government we have to invest in many sectors which are financially not profitable. During the tenure of the previous regime, government investment declined significantly. We know the UNF and their allies are criticising all these projects. But we also know that although they were reluctant to invest in these projects they did not hesitate to give tax amnesties to their political henchmen and gave up even the indirect taxes collected from the people! We have already initiated the reforms in the government tax - collection mechanism and we hope to increase government revenue. Q. What is the targeted budget deficit in the next year? A. Tax revenue in the first six months of the year has increased by 17.5% compared with the previous year. We hope it will increase further. Oil 'shock' and the drought has created some difficulties. Additional money has to be allocated for drought relief and subsidies. However the budget is focusing on long term growth and we are looking to maintain the budget deficit at 7% of the GDP. Q. The Cost of Living (COL) is increasing rapidly. Some factors are beyond the control of the government. But in some cases such as the high price of rice the government has failed to do anything effectively. What are the solutions you propose to provide relief to the people? A.The government has done everything to cushion the effects of the oil price and not to pass down the high oil price to the people in full. If the crude price increase was temporary we could have managed. But it is not so and the government cannot any longer subsidise the high oil price. We will have to adjust the price in the future. But we are thinking of ways of giving relief to the social groups that really need them. We will subsidise kerosene. There are 200000 vehicles in the country. Of them, 74% are diesel and 26% are petrol. Of petrol vehicles 180000 are threewheelers. If we can find a way to give petrol subsidies to these three wheelers it would be an effective way.But practically it is difficult. Our longterm plan of reducing the COL is by increasing production. Increase of agricultural production, development in the rural economy, the development in the Small and Medium Industries (SMI) sector will reduce the price of many consumer goods. In the case of reducing the price of rice, as you say, we could import and reduce the price as we did in the past. But we thought twice because the yala season harvest was to start (now it has started). If we reduce the tax and import rice our farmers will have to face the usual crisis they face every year. There is a large stock of paddy in the country and it is sufficient to cater to the demand. But there is a problem in the distribution mechanism. The whole rice market is controlled by the private sector. As you know, now the CWE, the retail arm of the government which could influence the market price is not functional. It was sold by the previous government. It is true that we have failed to act timely. Now the government is involved in the business and is providing rice at Rs.28.00. Rice prices will reduce in the future. If the Yala production is not sufficient we can import. Q. Will the salaries of the government servants be increased by the next budget as you have pledged? A. Yes. Considering the recommendations of the Tissa Devendra Salaries Commission we will increase government-sector salaries. Q.Is the government receiving financial assistance from international funding agencies and donor countries? Is there any reduction or change in donor funding? A. Before the elections there was a great deal of adverse publicity against the Freedom Alliance that the donor agencies and countries would not assist it if the Alliance came to power. It was the wish of some segments of society. But we have no problem and we are dealing with donor agencies and countries. This is an old argument. The World Bank has already said that it was ready to study our policies and assist the government. Its South Asia Director expressed this idea during his recent visit to Colombo. WB's new approach was expressed by its President at the Shanghai conference. Now they are not forcing countries to follow some pre decided policies. We expect to get donor assistance to implement our policies. |
|
News | Business | Features
| Editorial | Security Produced by Lake House |
Deputy Minister of Finance Ranjith Siyambalapitiya in an interview with
the Sunday Obsever Business said the international donor agencies
including the World Bank are ready to extend their assitance to the
Government's development process.
