Budget 2018: Why and how is it different?

The budget for the year 2018 that was presented to parliament by Finance Minister Mangala Samaraweera was totally different from the others that we saw during the past few years.

A budget that indicates economic direction in a country has to be drafted as per economics but not politics. However, what could be seen here in Sri Lanka over the years has been that people were used to expecting budgetary reliefs under whatever economic situation.

It was even before the budget was presented that the economists warned of a politically-motivated budget giving reliefs, as an election was being planned to be held next year. Nevertheless, the budget doesn’t seem to have given the reliefs that the people were seeking but presenting economically viable suggestions that will hopefully take the nation forward. Hence, this may not be a popular budget among the public that are only focused on price reductions.

The budget proposals appear to have left many to be discussed in an economic sense. People should avoid discussing on the budget in a political perspective because it is likely to hide not only certain strong points but also weak points from you, although it is something hardly seen in the Sri Lankan context.

Blue-green economy

It is ‘blue’ because we plan to integrate the full economic potential of ocean-related activities in formulating the overall growth strategy.

It is ‘green’ because we build our economy on an environmentally sustainable development strategy, stated Samaraweera starting his maiden budget speech that explained the relevance of the blue-green economy concept to Sri Lanka.

A criticism cannot be avoided that almost every budget presented thus far weighted the resources in the land more than the resources in the ocean. That’s why we still import canned fish from abroad.

As the development didn’t comply with the green concept, we had to face some tragic incidents like that in Meethotamulla. Consequently, the economy has to be green, so that sustainable development can be achieved. Even if new laws were imposed on those that dump garbage into rivers in the past, it was suggested to financially help them to buy new equipment to mitigate the situation. This new approach is highly commendable.

Entrepreneurship

Sri Lanka can be named as one of the countries with a lowest rate of entrepreneurs mainly due to two reasons: lack of capital and knowledge. As a remedy to this, priority has been given to create entrepreneurs that create employments, identifying the small and medium enterprise (SME) sector as the backbone of the economy.

It’s a challenging task for entrepreneurs to find collaterals requested by commercial banks for granting loans. Furthermore, start-ups are too risky in their first five years. Banks hesitate to put their money at risky start-ups. However, these are the identified impediments that kill entrepreneurial ideas with potential to blossom.

Under the Enterprise Sri Lanka credit scheme, those engaged in the SME sector will be provided with low interest rate loans. Hence, the budding entrepreneurs can put their business ideas into practice.

When it comes to female entrepreneurship, the state of affairs goes from bad to worse because women that actually support for domestic enterprises are marginalized from entrepreneurship as usual. It has dragged the nation back since skilful labour is not blended with the production.

Steps have been taken to encourage female entrepreneurs in order that hidden labour comes up to lead the business. The Enterprise Sri Lanka Credit Scheme will make available credit facilities with the interest subsidy being at least 10 percent more for women entrepreneurs relative to others.

Education

Education is a very sensitive area that can be considered an investment in the long run. It was suggested to set up state medical faculties at Wayamba, Sabaragamuwa and Moratuwa Universities to expand medical education, especially at a time when medical education is a hot topic among the public.

If there will be a surplus of medical doctors in the country, they can be sent to foreign countries, as if India does with its IT professionals. This is of course better than sending housemaids to the Middle Eastern countries.

The mismatch between the job market and university education is identified as the root cause for the problem of graduate unemployment that always takes people to the street. Even though the intellectuals raised the need for reforms in the higher education sector, particularly introduction of employment-oriented courses at universities, nothing significant happened.

It was suggested to expand the technology degree programmes in subjects such as information and communication technology, engineering technology and bio systems technology, further adding seven new technology faculties to the university system.

Conclusion

The budget speech is said to be the shortest in Sri Lankan history, having valid points to be widely discussed. Unlike the other budgets that reduced prices on dhal, dry fish and sugar, this is capable of taking the nation forward, if the proposals are put into actions.

A budget implementation unit has been established to monitor the implementation process, the most important part in a budget. This unit will be headed by Finance and Mass Media Ministry Senior Advisor Mano Tittawella and the ministry’s Economic Advisor Deshal de Mel.

It is up to the government to properly communicate the long-term plans to the public, convincing them to differentiate an economy-friendly budget from the other people-friendly budgets that focused on the cheap things at the cost of the most expensive and important things in the economy. (Amila Muthukutti is an economist)