Ceylon Today Editorial

Waste not, want not

10 February 2017

A significant feature in extracts of the recent COPE report published by this newspaper yesterday covering the period from year 2014 of the Mahinda Rajapaksa era up to 2016 in the Maithripala Sirisena's – Ranil Wickremesinghe's Yahapalana Government was that a mere 15 key State institutions or State-managed institutions were responsible for the waste of Rs 110 billion in taxpayers' money.

This wastage is equivalent to 0.98% of GDP as at 2015 according to latest available annual data, in which year Sri Lanka's economy grew by 4.8%, according to Central Bank of Sri Lanka, effectively shaving off nearly 1% of the country's GDP growth, if, from a hypothetical perspective, such waste is applied to 2015. Or, to put it another way, the island suffered a budget deficit of 7.4% in 2015. Therefore, if such wastage was curbed, that would have reduced the budget deficit to 6.4% of GDP in 2015.

Further, this waste of Rs 110 billion is equivalent to 150% of the Government of Sri Lanka's (GoSL's) envisaged Samurdhi expenditure programme of Rs 44 billion for the current year as spelt out by Finance Minister Ravi Karunanayake in his 2017 Budget speech.

This waste or loss is also equivalent to 214% of the envisaged fertilizer subsidy of Rs 35 billion for the current year, 1,471% of GoSL's free school text books and uniform programme amounting to Rs seven billion, 224% of GoSL's envisaged budget of Rs 34 billion to be paid as allowances for disabled soldiers, 633% of GoSL's nutritional programme of Rs 15 billion and 175% of GoSL's free medicine programme of Rs 40 billion, also, all proposed for the current year by Karunanayake in his 2017 Budget speech.

It's mind boggling that this waste is equivalent to a minimum of 150% and a maximum of nearly 1,500% in relation to only a few of GoSL's proposed welfarist programmes for the present year, discounting the cost of other welfarist programmes borne by the Exchequer such as free education vis-à-vis classroom/lecture room teachings in State schools and universities and free accommodation in the treatment of patients in State hospitals/sanatoriums.

The 15 State institutions, namely the Employees' Trust Fund, Cooperative Wholesale Establishment, Road Development Authority (RDA), four institutions coming under the RDA, Sri Lanka Insurance Corporation (SLIC), State Engineering Corporation, Telecommunications Regulatory Commission, Sri Lanka Cricket, Sri Lanka Rupavahini Corporation, National Lotteries Board, Ceylon Electricity Board and Sustainable Energy Authority, Sri Lanka Football Federation, Sri Lanka Ayurvedic Medicine Corporation, Sri Lanka Ports Authority and Kurunegala Plantations.

Not covered in this particular report are some of the other key State-run/State-managed institutions such as the Employees Provident Fund, SriLankan, Lanka Marine Services (LMS), Lanka Hospitals (formerly Apollo Hospitals), Sri Lanka Telecom, Ceylon Petroleum Corporation, Sri Lanka Railways, Sri Lanka Transport Board, Mihin Lanka (since merged with SriLankan), Lanka Sathosa, Lanka Electricity Company (Pvt.) Ltd., Bank of Ceylon, People's Bank, University Grants Commission, Janatha Estates Development Board, Sri Lanka State Plantations Corporation, Sri Lanka Broadcasting Corporation, State Mortgage and Investment Bank, Ceylon Shipping Corporation, State Development and Construction Corporation, Milco Private Ltd., National Livestock Development Board, National Olympic Committee, Urban Development Authority and the list seemingly goes on.

Therefore, if all of that wastage is also taken into account, the wastage in State-run/State-managed institutions may run to over a trillion rupees (over Rs 1,000 billion) in the review period, probably equivalent to half of GoSL total revenue programme of Rs two trillion targeted for the current year.

Waste inflates losses, while at the same time it eats into profits. If losses coupled with waste are also taken into account, then, the final figure thrown up may well be equivalent to more than a third of the present year's total expenditure programme of Rs 2.6 trillion as envisaged by GoSL.

In the private sector, waste and losses lead to accountability which, more often than not follows that those responsible for such waste and losses being sacked and the loss making institutions closed down.

Even if there may be such a mechanism in the public sector, to bring to book the offenders for such waste and losses, implementation is lacking due to politics, which also transcends into the State turning a Nelsonian eye on corruption.

Over 20 years ago, President Chandrika Bandaranaike Kumaratunga with World Bank aid established the Public Enterprises Reforms Commission (PERC) with a mandate to privatize most of those aforesaid State institutions. But, due to a lack of political will, progress was slow. And even the few which were privatized or semi-privatized were either reinvested in the State either by an Executive Order (SriLankan) or by a Court Order (SLIC and LMS).

PERC was finally abolished by Rajapaksa in 2007. The present Yahapalana Government has given mixed signals in respect of tackling waste and losses. On the one hand it has said no to privatization, while on the other hand it has said that GoSL will divest itself from non-strategic businesses.

But, even after over two years of Yahapalana Government, the state of inertia in tackling waste and losses continues. 'Waste not, want not' is not in the phraseology of Sri Lanka's modern day politicos.