Government’s economic policies get another beating
- Details
- Created On Wednesday, 03 July 2013 13:15
- Category: General
UNP parliamentarian and Economist, Dr. Harsha de Silva has told the Mahinda Rajapksa government’s failed economic management as the cause for the downgrading of the country’s outlook from ‘positive’ to ‘stable.’
He has said that the recent downgrading of the Moody’s rating is an indictment on the government’s current economic management and the validity of the purported development story in the coming years.
De Silva has noted that the recent sell down of foreign held government paper seem only the beginning of an emerging crisis of confidence.
“Over the last couple of years we have been pointing to the fact that the economy would lose the artificial growth momentum and that the external payment position would weaken due to economic policy being dictated to be short term political objectives,”Dr. de Silva has said.
“We have been very critical of the unsustainable external debt levels the government was getting in to and also the danger in pushing banks and other state enterprises to get in to high cost foreign borrowing. We have also been pointing out that the incentive to maintain a competitive exchange rate would also be hampered if the volumes of external debt held by these entities become significant,” he has explained.
According to Dr. De Silva, the ratings cut has indicated that however much the Central Bank is attempting to spin a make-believe positive story on the post war economic performance of the country, even going to the unprecedented extent of hiring public relations agencies at enormous costs, the rating agencies and the investor community has and will continue to see through the smoke and mirrors.
“The government has finally succumbed after dodging our continuous questions on why the Finance Ministry was hiding estimated versus actual data on revenue and expenditure in violation of the legal requirement in the Fiscal Management (Responsibility) Act for almost three years,” he has pointed out.
De Silva has noted that the recent sell down of foreign held government paper seem only the beginning of an emerging crisis of confidence.
“Over the last couple of years we have been pointing to the fact that the economy would lose the artificial growth momentum and that the external payment position would weaken due to economic policy being dictated to be short term political objectives,”Dr. de Silva has said.
“We have been very critical of the unsustainable external debt levels the government was getting in to and also the danger in pushing banks and other state enterprises to get in to high cost foreign borrowing. We have also been pointing out that the incentive to maintain a competitive exchange rate would also be hampered if the volumes of external debt held by these entities become significant,” he has explained.
According to Dr. De Silva, the ratings cut has indicated that however much the Central Bank is attempting to spin a make-believe positive story on the post war economic performance of the country, even going to the unprecedented extent of hiring public relations agencies at enormous costs, the rating agencies and the investor community has and will continue to see through the smoke and mirrors.
“The government has finally succumbed after dodging our continuous questions on why the Finance Ministry was hiding estimated versus actual data on revenue and expenditure in violation of the legal requirement in the Fiscal Management (Responsibility) Act for almost three years,” he has pointed out.
Fiscal fumble!
July 3, 2013
- Govt. misses revenue target by Rs. 51.2 b or 14% up to April; expenditure overshot by Rs. 16 b or 2.5%
- Year on Year dip in revenue is 4% expenditure up by 7%
- Total dip in revenue from import base taxes was Rs. 21 b
- Public investment expenditure up by 21.7% to Rs. 196 b
- Budget deficit at 4% up to April and annualised figure swells to 11.8%
- Treasury confident of containing fiscal deficit at 5.8% by year end as announced in 2013 Budget
