The cabinet has decided not to present a budget for 2010 said Minister of State Revenue and Finance Ranjith Siyambalapitiya speaking to the media yesterday (6th) night. The budget will be presented after the general elections due in April and permission for the spending for the first four months of 2010 will be sought from parliament through a ‘vote-on-account’ said Minister Siyambalapitiya.
As a reason for going against the tradition of presenting a budget in November the government states a new government would be formed after the elections in April and presenting a budget for the whole year before that, without leaving it to a new government, would not be ethical.
However, this argument is not sound as budgets have been presented in all the years elections had been held. Also, the government brags that it would receive a sweeping victory at the next election so that the same government would be in office next time as well. Hence, the statement that a new budget would be presented by a new government contradicts with the statement that the next government would definitely be a government by the UPFA.
There is no other serious reason to avoid the budget. The government income in 2008 is Rs.89,000 less than the estimated amount. The income expected by the 2008 budget was Rs.794,000 million. However, only Rs.663,000 million could be earned. The situation in 2009 is more critical. The income in 2009 could be less than the estimated income as well as the income in 2008. According to the report released by Ministry of Finance regarding mid year financial situation in the country, the income during the first five months of the year was 6.7% less than the same period in the previous year. The income other than from taxes has been reduced by 27.9%. Hence, the government is confronted with losing its income.
Also, the government is confronted with the issue of rising expenditure. According to the report mentioned above while the government income reduced by 10% in the first 4 months in 2009 the expenditure rose by 28% resulting in the budget deficit going up. The deficit during the first 7 months of the year was Rs.300,000 million which is 10.3% of the GNP. However, in the last budget the government expected to reduce this to 8%. According to the conditions signed with the IMF to obtain a loan the government has promised to reduce this to 5%. However, this would not be achieved now.
As a result the government is confronted with a precarious situation. Either it should present a budget with a wide deficit which would jeopardize the promised loan from the IMF or it should present a budget that would cut down on all subsidies and relief to masses. However, this would have a very unhealthy affect on the general election and the presidential election. The government earlier was prepared to present such a budget. A circular called ‘national budget circular 143’ was sent to all state institutions on 10th July, 2009. The institutions had been given the following instructions regarding preparing the budget.
1. Recurrent expenditure in 2010 should be kept to that of 2009.
2. The relief programs carried out by state institutions should be appropriately designed and should be pruned down.
3. Funds should not be included to fill any vacancies
Accordingly, the budget that was to be presented would have cut down all relief and subsidies. There will be no employment in state institutions. This would not be healthy for the government at the impending elections. Hence, the government has decided to present a ‘vote-on-account’, hold elections and then present the budget that burdens the masses. The ‘vote-on-account’ is only a gimmick to deceive people to plunder their votes. This is the truth behind various arguments put forward by the government to avoid presenting a budget this year. from lanka truth