3/02/2010

Can Sri Lanka government that robs Peter to pay Paul hoodwink IMF?

Robbing Hoodwink
(March 02, Colombo - Lanka Polity)  Sri Lanka overshoot its 2009 budget deficit target set by the IMF for a $2.6 billion loan. High post-war reconstruction costs are attributed for this by central bank officials.

Sri Lankan leaders are clever or perhaps corrupt enough to handle the delegations sent by the IMF or any other international body and it will somehow manage to obtain the next tranche also although it is delayed due to economic mismanagement of the Sri Lanka government. They know the science to win hearts. The IMF officials also have some soft corners that can be touched by our clever men and women.

This is a real pragmatic game of politics. Who wants to be honest to this pirate IMF? Rajapaksa regime knows too well the science of getting their support without being prey to the conditions. They rule the country for today and tomorrow my friend is blowing in the wind. The polity needs no better future. They live for today and Mahind Chinthanaya delivers what they want.

An IMF mission was in Sri Lanka last week to assess December data before deciding on the third tranche of the loan. Sri Lanka’s IMF resident representative Koshy Mathai has said whether or not the IMF is flexible in a country is determined on a “case by case” basis.

The IMF had set budget deficit targets of 7 percent of GDP by end-2009 and 6 percent this year as conditions for a $2.6 billion loan approved last July to help Sri Lanka avert a balance of payment crisis during the global financial crisis.

On Thursday, the IMF said it was delaying payment of a third tranche of the loan until it sees the budget after the parliamentary polls scheduled on April 8.

"The budget deficit of 469,627 million rupees ($4.1 billion) turned out to be 9.7 percent of the GDP," the Ministry of Finance said in a "Pre-election budgetary position report" posted on its website www.treasury.gov.lk.

The 2010 budget deficit is estimated at 7.5 percent, well above the IMF target of 6 percent, the report showed.

"Fiscal adjustment towards containing the budget deficit below 7 percent in 2009 suffered a setback due to a less than expected recovery in trade-based activities and due to a more than envisaged impact of the global economic crisis on the Sri Lankan economy."

Revenue had declined by 0.5 percent of GDP, while interest payments and public investments have increased by 0.8 percent and 1 percent of the GDP respectively, the report said.

Though government revenue had declined only by 3.25 percent from the estimated level, expenditures were 22.2 percent higher than the full-year estimated spending, data showed.

"High spending has been also due to welfare spending on rehabilitation and humanitarian expenditure after the end of the country's 25-year war last year, increased wages for state employees due to expanded public sector," says Reuters.

However, these are the prides of the reign of the Rajapaksa regime and peeling them off will open the hollow inside.

A government that robs Peter to pay Paul can always depend on the support of Paul, said George Bernard Shaw,


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