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Sunday April 14th, 2024

Sri Lanka 2019, 2020 budget deficit data controversy hots up

ECONOMYNEXT – Suddenly changing published data to overstating a budget deficit for 2019 and understating a deficit for 2020, flouting accounting conventions will undermine investor confidence and backfire on the country, opposition legislator Harsha de Silva warned.

Sri Lanka’s Finance Ministry in November suddenly submitted data to parliament claiming that the 2019 budget deficit was 9.6 percent of gross domestic product and not 6.8 percent as earlier reported and projected a 7.9 percent deficit for 2020.

“It is not possible to deceive international financial markets with this type of data,” opposition legislator Harsha de Silva warned.

“We ourselves will be deceived. Our people will suffer. Greece got into serious trouble by trying numbers magic. They mis-reported revenues and expenses. 2010 May Greece said the budget deficit was 7.5 percent of GDP.

“Later they said it was 12.5 percent. The International Monetary Fund later said it was 15.4 percent.”

De Silva said the numbers did not match with the data already published by the central bank.

The Finance Ministry had pushed back expenses of 421 billion rupees to 2019 though they were settled in 2020 to lower the deficit in 2020 and hike the deficit in 2019.

In a further complication on November 17, a budget for 2021 showed a deficit projection as 8.9 percent, worse than the 7.9 percent in 2020, which shows a reversal of fiscal management and not the fiscal consolidation usually expected in budgets.

Related

Sri Lanka 2020 budget deficit projected at 7.9-pct of GDP, 2019 gap re-stated up

However Sri Lanka prepares budget on a cash basis, and over time the numbers balance out.

Gona, Mee Haraka budget

“There is a recognized accounting convention in making fiscal data,” de Silva said. “The data is prepared on a cash basis. It is not done on an accrual basis.

“It is done in the same way every year. For example in 2015 when the new government came, I asked the Treasury how much arrears there were. I was told there were over 240 billion rupees on unsettled bills.

“But that government did not put them into 2014. They were accounted for in 2015. The revenue is recorded that way so is revenue.

“In that case revenues should also be put back because the taxes came from the previous year.

“There is no hybrid accounting system here or anywhere else. There cannot be a cow and buffalo (ela harakai mee harakai) budgets.”

Education Minister Bandula Gunewardene charged that in 2016, then Finance Minister Ravi Karunanayake had also mis-represented data.

He said non-existent data had been presented.

Related

Sri Lanka finance minister in hot water over creative budget

De Silva said the projected nominal GDP for 2021 of 16,030 billion rupee also did not gel with growth projections and expected inflation. He said it was not possible to fudge numbers for a long time.

He said the 2020 deficit would be higher if the GDP number is lower.

“Investors go to know about it,” de Silva said. “That is why they exited Greek bonds. I am not equaling Sri Lanka to Greece but there are lessons to be learnt.”

Sri Lanka’s sovereign bonds are also selling at a discount now.

Analysts have warned that Sri Lanka has a Latin America style central bank where the effects on the economy of a sovereign default could be different to Greece.

Monetary instability and currency falls in 2018 and 2020 had earned the country two downgrades including a total of three notches to Caa1 (CCC+) by Moody’s which has virtually locked the country out of capital markets.

Greece could not depreciate the currency as it was part of a Euro monetary union and bank deposits, salaries or most pensions of the people did not melt away.

But in Latin America all debt, public and private as well as salaries are melt as currencies fall, making vast swathes of people destitute.

The economic program of the former administration where de Silva was a state minister was also brought down by a two successive currency collapses, coming from call money rate targeting and Real Effective Exchange Rate Targeting, critics have said.

With the IMF coming up with never ending programs without fixing the central bank, a so-called backlash against what was called neo-liberalism – the type of economics practiced in East Asia with good central banks – emerged in the region starting from Chile. (Colombo/Nov18/2020)

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  1. Don says:

    Budget is a card game, always the general public are the only losers, politicians have their share.

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  1. Don says:

    Budget is a card game, always the general public are the only losers, politicians have their share.

LGBTQIA+ Rights: Europe and South Asia See Similar Discriminatory Practices

ECONOMYNEXT – The rights and protections of the LGBTQIA+ community have been fraught with challenges and continue to be so, despite the many gains achieved in recent years.

Nor are those handful of rights universally applied, a recent discussion which looked at the European and South Asian perspectives on same-sex rights and unions revealed. Most developed nations have introduced protections for those identifying as LGBTQIA+, and a view from a distant lens paints a picture of tolerance. Yet, a closer look at the European arena throws up the many gaps that are evident in the application of the law.

In the so-called conservative South Asian nations, changes to legislation are slow to be implemented. That may come as a surprise, for, contrary to popular belief, same-sex relationships were culturally acceptable in the South Asian region and is not a Western concept points out Ruhaan Joshi, a Public Policy Practitioner from India.

Society’s view on same-sex relationships dimmed with the imposition of Western values and the criminalisation of such relationships with the advent of colonial rule.

While the LGBTQIA+ communities in South Asian countries currently battle to have same-sex relationships decriminalised and their unions legally accepted, the irony is that countries that first made such relationships punishable by law have moved on to be more welcoming, though some discriminatory practices continue.

Joshi was part of a discussion themed ‘On Being Queer and LGBTQIA+ in South Asia and Europe, held in Germany on April 9 this year. The discussion which included the release of two papers which examined the rights and protections of the LGBTQIA+ community in Europe and South Asia, respectively, was organised by the Friedrich Naumann Foundation for Freedom.

Joining Joshi in the discussion were lawyer and parliamentarian Premnath C Dolawatte from Sri Lanka, Milosz Hodun, President, Projekt Polska Foundation, Poland, Michael Kauch, a Member of the European Parliament and RENEW Europe Group and Inaya Zarakhel, a Dutch-Pakistani actress and an activist on Queer Rights, who moderated the discussion. The two papers were presented by Hodun and Joshi, respectively.

In his opening remarks, Kauch pointed out that while the view of the liberals is that the rights recognized in one member nation of the EU must be accepted by all member countries, that is not the ground reality, the issue of Rainbow families being a case in point.

In the context of the European Union, though the Court of Justice has ruled on the freedom of movement of those in same-sex partnerships and their families, the ruling is not universally applied by member nations.

In Italy, and some European nations, surrogacy which helps childless couples to become parents is illegal. In other situations where same-sex parents are of different nationalities a child in that union faces restriction of movement or the possibility of being stateless if one parent hails from a country where such parental rights are not recognised.

Hodun meanwhile stated that in Poland transgender persons must first sue their parents for the gender assigned to them at birth, to have their gender marker changed on documents.

Some countries such as Russia and Azerbaijan resort to State-sponsored homophobia, and in many instances politicians and political parties promote such biases to boost their voter base it was pointed out. Even where laws are in place for the protection of LGBTQIA+ rights, there is no political will to implement them.

In Europe where migrants arrive in droves seeking asylum, and are frowned upon by many of those countries, LGBTQIA+ members face even more discrimination Hodun says, both by other refugees and governments, where most often the state ignores the situation despite the guidelines issued by the UN and the European Court of Justice. Hate speech and hate crimes too are on the rise he adds stating that at least 80 per cent go unreported.

Increasingly the LGBTQIA+ community has experienced a diminishing of their safe spaces as right-wing and populist governments are elected across the globe. Taking a dig at feminism, meanwhile, Kauch states that though feminists uphold a woman’s right to opt for an abortion, they take a different approach on the topic of surrogacy.

Dolawatte who waded into unchartered waters when he presented a Private Member’s Bill to decriminalise same-sex relationships through an amendment to section 365 of the Penal Code and the repealing of section 365A in its totality, is hopeful that the Bill will pass its third reading. It’s been an uphill battle he says, referring to the case filed in the Supreme Court against the Bill. The court ruled in his favour.

He had little or no support from his own party members, but says the President of the country, and younger party members are with him on this issue. Apart from making Sri Lanka a safe space, it would encourage foreign nationals identifying as LGBTQIA+ to visit without fear, and thus boost tourism he opines.

As Joshi states society has come a long way from when LGBTQIA+ were made fun of and were subject to violence to the positive portrayal in movies. Such movies are also well-received by society. Transgender identity has a distinct recognition in South Asian religious beliefs. Hijra, Khwaja Sara or Kinnar are some names given to transgender folk and they have, since ancient times been an accepted group in society. On the one hand, there’s Afghanistan and the Maldives which make no allowances for the LGBTQIA+ community, while Nepal became the first South Asian nation in 2023, to register a same-sex marriage, Joshi states. In most South Asian nations, the courts have ruled in favour of relaxing the rules against this community, and, like in Europe, it is the governments that drag their feet.

For governments to change their stance, society must take the lead in fighting for the unconditional dignity of the individual, freedom of movement, and safeguarding the tenets of democracy, he says adding that it must also run parallel with the LGBTQIA+ community looking beyond themselves at issues that impact democratic values, and the societal restrictions non-LGBTIQIA+ groups face, such as opposition to inter-caste marriage and the right to adopt outside their caste systems and equal access to many other privileges.

While the panellists advocated working together across the global divide as a step towards achieving equal rights for all, Dolawatte also called for caution; too much pressure on such issues from Europe he said may not be welcome, and must be handled with care.

With right-wing and populist governments getting elected across the globe, Kauch claims the forthcoming EU elections will prove crucial in deciding how future and current governments ensure tolerance and diversity amongst their citizenry.

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Sri Lanka making new economic laws to embed structural reforms

ECONOMYNEXT – Sri Lanka is making new laws and also revising old legislation following a comprehensive review of past experience and lessons learned, Treasury Secretary Mahinda Siriwardana has said.

Most of these new laws focus on structural changes of the existing executive and administrative structures, Siriwardana was quoted as saying in a speech to ministry officials on April 08.

The laws related to public finance, procurement, public private partnerships, state enterprises and also a law on the offshore economy.

The following new laws are being made:

a. Public Financial Management Bill
b. Public Debt Management Bill
c. Economic Transformation Bill
d. Management of State Owned Enterprises Law
e. Public Private Partnership (PPP) Law
f. Investment Law
g. Public Procurement Bill
h. Unified Labor Law Bill
i. Food Security Bill
j. Public Asset Management Bill
k. Microfinance and Credit Regulatory Authority Bill
l. Secured Transaction Bill
m.Offshore Economic Management Bill
n. New law for facilitating proposed agricultural land lease programme
Public Service Employment Bill
o. Sri Lanka Accounting and Standard Monitoring Act

Changes are planned to the following laws

a. Amendments to Agrarian Development Act
b. Amendments to Excise Ordinance
c. Amendments to Customs Ordinance
d. Amendments to Finance Act
e. Amendments to Foreign Exchange Act. Colombo/Apr15/2024)

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After PM’s Chinese visit, US NSA talks to Sri Lanka President’s advisor on peace, security

ECONOMYNEXT – The United States National Security Advisor (NSA) Jake Sullivan held talks with Sri Lanka President’s Senior Advisor on National Security Sagala Ratnayaka focusing on regional security issues this week.

The conversation between the two comes days after Sri Lanka Prime Minister Dinesh Gunawardena ended an official visit to China in which he met President Xi Jinping and his counterpart Li Qiang in Beijing amid discussions over further investments in Sri Lanka and concerns over banning Chinese research ships.

The United States along with India is highly concerned over increasing Chinese influence in Sri Lanka, which is located in a strategic location in the Asia.

China already owns a port and a proclaimed land next to the main Colombo port in Sri Lanka and analysts say the Beijing’s ownership of assets has raised doubts if China is planning to use Sri Lanka as a military base. China has denied this and said its relationship with Sri Lanka is only based on commercial aspects.

The discussion between Sullivan and Ratnayaka focused on a range of crucial topics aimed at bolstering bilateral relations between the two nations, the President’s Media Division (PMD) said.

“Central to their discussion was the unwavering U.S. commitment to supporting Sri Lanka’s security and sovereignty,” the PMD said in a statement.

“Acknowledging Sri Lanka’s ongoing endeavours, Sullivan emphasized the importance of completing the fiscal, monetary, and governance aspects of the IMF program.”

The US along with India has raised possible threats of increasing Chinese influence in Sri Lanka, government officials have said. Both  countries see China as a security threat to the Indian Ocean region, they say.

“The conversation also delved into future prospects for collaboration between the two countries, exploring avenues for enhanced cooperation in various spheres,” the PMD said.

“Sullivan conveyed his keen interest in fostering continued engagement with Sri Lanka, underscoring the mutual objective of advancing peace and security in the region.”

“This dialogue marks a pivotal moment in U.S.-Sri Lanka relations, demonstrating a shared commitment to promoting stability and prosperity in the Indo-Pacific region.” (Colombo/April 13/2024)

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