Monday, September 12, 2016

Budget 2017 – Hidden Underspend which makes it meaningless!

The massive disparity between what is proposed a (political statement meant to fool the people into believing that huge amounts have been allocated to worthy causes) and what is actually spent in the budget year is simply mindboggling!

This is the most significant dichotomy of SL Budgeting that has escaped scrutiny/ comment/revision/ and above all honesty on the part of the Finance Ministry, who must be smirking under their breadth each time a budget is presented, knowing it is full of half-truths, with billions that will never be spent.

The level of ignorance and incompetence on the part of the 225 lawmakers defies comprehension, as no one has picked up on this anomaly and addressed the problem openly, so people will understand the truth. They have a hidden agenda.

Furthermore, those with NO BRAIN CELLS also knows as the Media, do not know how to highlight this misnomer, to galvanize the public into action.

Apart from possibly the MOD, through its highly structured and overstaffed forces allocations and budgeting procedures, who make sure they spend their Rs350B even if it means doubling up on the alcohol to the officer’s mess, all other departments and ministries do NOT have competent budgeting systems, and accounting and organizational procedures in place to spend their allocation from the Treasury.

Ironically whilst this is going on, the treasury withholds allocations from already incurred expenditure keeping suppliers on hold to be paid causing much distress, and resulting in huge interest payments to Banks on loans and overdrafts, and our company is a case in point, of this treatment. They play this classic game of teaming and lading, possibly to show lower deficits and borrowings! If departments and ministries fail to spend allocations, future budgeting will also suffer the same fate, as allocations will be reduced resulting in a vicious cycle.

Little wonder then that in the last administration, the President’s office was the few who requested and received supplementary allocations, over and above the initial budgets, so they could waste the public purse, on taking plane loads of sycophants on junkets, and remember the plane load that went to the Caribbean on a fruitless venture to secure the Commonwealth Games for Hambantota. It shows what the priorities of Govt.’s are in spending the public funds. Waste in the midst of unspent allocations.
To illustrate this point more clearly, please remember the pledge and allocation made in the last budget to vastly increase the expenditure on education and healthcare, which were election manifesto promises. The columnists praised it as being long overdue in a Country that was really spending very little on Education in comparison to the GDP, and this needed expenditure was for the future investment in the Human Resources Potential of Sri Lanka, if it was ever to achieve a high quality of life and better living conditions for its citizens.

Lo and behold the reality was that the amount spent was even less than the previous year, and NOT double or more that was allocated. I have actually pointed this out last year as pie in the sky and only said that a maximum increase of 25% is practical as the infrastructure in NOT in place for a massive instant increase in spending. Well even I had overestimated the ability of the Public Sector to take up the challenge in this area.

So what gives? The Public Service infrastructure is incompetent. Public Servants whose pay is guaranteed no matter what, are simply NOT doing what is expected of them. The private sector does in one week what they do in a month, an indication of their efficiency or lack of!

This lackadaisical attitude means that few of the earmarked projects actually get started let alone completed. I recommend a two pronged approach. One where the public servants at the top three grades of the SLAS who are responsible for these projects, have a financial penalty for non-completion of Govt. policy spend. Secondly, an Independent Consultancy for each Ministry be set up, of private sector professionals to monitor how this money is spent, in conjunction with the Auditor General’s department which currently is too understaffed to manage such a system, independent of its current functions which are also overstretched.

Only then will the checks and balances of the Public Sector officials, their competence, procrastination, dedication, to their job and dereliction of duty become apparent to the public at large. Now with the FCID investigations in full force, they are even less likely to venture into spending, resulting in the Govt. getting the blame for DOING NOTHING. In short they do nothing.

The Govt. can then lay the blame squarely on the public sector for not carrying out its policies, as proposed to the people. I am surprised that up to date no one has picked this important aspect of budgeting. Therefore nothing is being done about it, the Govt. looks quite foolish and incompetent in everyone’s eyes.

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