President Ranil Wickremesinghe is due to present an Interim Budget to Parliament on Tuesday (August 30) in his capacity as the Finance Minister. This is a step in the right direction because many of the factors that drove out former President Gotabaya Rajapaksa from power still exist in one form or the other, though their severity may have lessened following President Wickremesinghe’s assumption of office.
This will no doubt be a very challenging Budget, as the people expect swift deliverance from the many travails they have been experiencing for the past few months, including acute shortages of many essential items. But this may not be possible immediately, given the perilous state of the country’s finances. The President himself has outlined a two-year framework for recovering from the current economic predicament, with a 25-year plan for reaching economic emancipation and developed status.
Tuesday’s Budget has been predicted in many quarters as a Relief Budget, with good reason. People are grappling with the soaring Cost of Living (COL) with the prices of many everyday items reaching the stratosphere. Many items have become out of reach of most segments of the population. Some industries have been disproportionately affected by shortages and prices – for example, the fisheries industry, which has been hard hit by the shortage and the price hike of kerosene. In turn, this has hurt the consumer, with prices of some varieties of fish reaching Rs.4,000-5,000 per kilogram.
Even outside of the proposed Budget, steps are apparently being taken to afford relief to the affected segments. Power and Energy Minister Kanchana Wijesekara, who displayed his dynamism and innovative streak through the QR Code solution for dispensing fuel, has promised a viable mechanism for granting kerosene at a subsidised price to fisheries and estate communities. This must be done without delay, as fisheries is a vital industry that not only feeds the nation but also earns a considerable quantum of foreign exchange. If our fishermen cannot go out to sea due to the high prices of diesel and kerosene, foreign poaching vessels will have a field day in our Exclusive Economic Zone (EEZ) sea area, which is at least eight times larger than our land area of 65,610 Sq Km.
The Budget, or any other suitable mechanism, must also address issues facing agriculture. The overnight switchover to organic agriculture was one of the factors that led to the former President’s downfall. President Wickremesinghe has since taken measures to address the shortage of chemical fertiliser and agrochemicals and India has also provided a consignment of urea fertiliser. Still, there is a vast disparity between the farm gate price and the retail price. According to reports, traders and rice mill operators buy paddy at just Rs.120-130 per kilogram, but the consumers pay around Rs.280-290 per kilogram for any rice variety.
It seems that the middlemen are making a killing at the expense of both the farmer and the consumer. A similar tale of woe can be heard from vegetable and fruit farmers too. The Government should step in to regulate rice prices in a more effective way, as previous efforts by the Consumer Affairs Authority (CAA) to rein in the rice mill cartel proved to be ineffective. The CAA should be given more teeth to impose price controls even if that goes against the very concept of the Open Economy, as consumers cannot bear the high COL burden any longer.
Rationing is also incompatible with the concepts of the Open Economy, but the Government has been compelled to go down that path for fuel and some other items, at least until the foreign exchange situation returns to normal. The rationing of fuel via the QR system has reduced the monthly fuel import bill to around US$ 280 million, from the usual US$ 500 million. It is also time for the public to realise that we may never get back to an era where we could get any amount of fuel on demand. Our lifestyles may have to undergo a seismic shift as a result, with more emphasis on public transport.
In this context, we hope that tomorrow’s Budget will lay the groundwork for a revitalised public transport system helmed by electric buses and trains. The Government plans to allow the import of electric bikes and scooters on a permit basis and we feel that the import of electric passenger vehicles too should be allowed in limited numbers from next year.
Just before the Budget presentation, the Government has published a list of over 300 “non-essential” items which will not be permitted to be imported. This can be deemed prudent under the present circumstances, but the authorities must bear in mind that people, especially those in the middle class, take many of these items for granted and local alternatives may not be available or could be inferior in quality.
Besides, certain sectors such as the beauty culture industry which employs thousands across Sri Lanka depend mainly on imported products. A dire and prolonged shortage of such imported products could sound the death knell for these industries. This list should be reviewed periodically and adjustments made, taking such scenarios into consideration until our foreign reserves stabilise and strict import controls are no longer necessary.
The Interim Budget will perhaps focus on austerity in these troubled times, but politicians must set an example for the public in this regard. All perks and privileges enjoyed by Ministers, MPs and other politicians must be withdrawn. They do not need to travel in V8 behemoths in a fuel-starved country. The people’s needs must come first, for once.