Can Maithri Deliver His Economic Promises?

By Hema Senanayake –December 28, 2014

Hema Senanayake

“Sirisena promises 10,000/= rupees salary increase but does not show how he obtains the money to pay this.” This comment was posted by a concerned reader of Colombo Telegraph in response to an article published under the caption of “Maithri’s Manifesto Launched; It Is For Provider Government With A Vision” (December 20th, 2014). The same concern was re-echoed by Minister Susil Premajayantha and said that most of the promises mentioned in Maithri’s Manifesto cannot be delivered. He must be primarily referring to the economic promises.

Hudson Samarasinghe, the Chairman of SLBC wanted to do it in a more credible way. So he called the best official expert in the subject of economics in order to be interviewed on “Rupavahini.” The expert was Dr. P. B. Jayasundera who is the Treasury Secretary. The interview went on for two hours. The intension was to seek his professional analysis on the promises mentioned in the Manifesto of Maithri.

Accordingly, it may be useful to submit my views on this matter; the matter on economic concessions promised by the common candidate of the opposition.

In general, all the economic concessions that any candidate promises would create an impact on national budget or public debt or both because the current budget must be financed either with tax revenue or loans, if money is not printed or do not use the technique known as “quantitative easing.” Since the loans obtained at present would be paid back from the future tax revenue the loans obtained now would create an impact on future taxes. Hence promises to make economic concessions would affect to the “taxes” at present or in the future. The “taxes” could be direct taxes or indirect taxes. No economist can deny it. This is the first point we need to keep in mind.Read More