The budget revisited for the umpteenth time!

So much good and bad has been said about the Mangala Budget of Mangala Samaraweera delivered on the 9^th of November 2017, both positive and negative.

I am now convinced that even the FM and his deputy the State Minister of Finance had no clue about what they were on about, as conceptually they are completely out of touch with the ground situation, and so delivered a budget not in keeping with reality, but in keeping with their imagination, severely tampered by the Prime Minister’s notion of the state of the Economy.

So let us debunk most of the myths on which this budget is based. The biggest myth is the fact that we need to create a million jobs. That is a canard that is now so out of date as to be a joke. With a million vacancies, there is NO point talking about creating even better paid jobs, as it is well known now that FDI will not come to SL because the investor is all too aware that the economy has NO slack, and does not have ANY labor to carry on their investment.

FDI will NOT create any new jobs, as all they will do is poach the best with even higher salaries, and leave companies from which they arrive, in a holy mess, unable to fill the vacancies created by the loss of key personnel, to whom they could not match the offer that they received.

Then what do you do? Well the idea in the budget was to spend a lot of money in retraining and vocational training to make a new generation ready and able to fill the vacancies coming on stream. Here is the second canard. There are NO takers for these places in the Vocational Schools or Universities. There simply is NOT enough people who aspire to get the jobs created, even if it is paying well, due to mindset problem that has been drilled into them that the Public Service is the way to go, despite everyone knowing that this sector is far too overstaffed, under utilized and inherently inefficient.

With both the job creation opportunities debunked here, there is NO way to grow except by incentivizing the highly protected private sector to invest more, and spend more on capital goods rather than consumer goods, like cars, which all extra funds seem to go into, as even entrepreneurs have identified few opportunities for growth and invest surplus cash NOT in the business, but in buying a property, condominiums to be more precise, which have just received a slap with a 15%VAT imposed on their sales as new apartments.

The budget has NOT changed the dynamics of this, and only tinkered on the obvious like getting rid of para tariffs. So a little liberalization does NOT spur growth unless the investor believes all the other risks are neutralized. For example power cuts to the business, inflation, corruption. We are still waiting for change! 

Despite all this criticism, this is still the best budget for decades, except for the fact that there is NO growth in the horizon as all expenditure is matched by taxes from April 1st to suck up any chance of growth this year at least.

It goes to show how much further we have to go, and I wont belabor this point as it would bore the reader, Till next time then