Hear It For Choksy!
would tell you that as governments go, the UNF is about as undisciplined
as you can get. Every minister seems to have a mind of his own, and it
is only when not globe-trotting or making a bit on the side to keep the
wolf from their ever-widening door, that they make a pretence of
governance. But one minister has set himself apart by settling on a
strategy and seeing it through courageously, and at the risk of heaps of
unpopularity: viz. K.N. 'Cassie' Choksy.
Finance Minister's Mid-year Fiscal Position Report for 2003, released
last week, makes heartening reading. It represents the first dividends
the country is seeing of the belt-tightening exercise Choksy initiated
soon after taking office last year. A government new in office finds it
hard to resist the temptation to 'celebrate' by splashing on public
expenditure, usually on cheap gimmicks (remember Chandrika Kumaratunga's
Rs. 2 loaf of bread?). From day one, however, Choksy was unafraid to
stand up to the big spenders. What the economy needed was growth
capital, and it would be impossible to free sufficient cash in the money
market unless government borrowing decreased significantly. The glut of
money in the banking system that resulted from this had the effect of
driving interest rates down to about half their mid-2001 levels. Taken
together with a rupee-dollar relationship that has remained almost
unchanged for 18 months, has in turn made it more affordable for
industry to borrow from the banks. Now, rather than paying 10 percent
more interest to the banks, investors stand to make 10 percent more
profits for themselves.
is not rocket science, and thank heavens Choksy is no rocket scientist.
Economic theoreticians have been the bane of this country, and the
Finance Minister's freedom from dogma is indeed refreshing. Good old
common sense is all it has taken, as unpopular as it has been with those
who think the government should have spent more on creating jobs in its
healthy reduction (7.5 percent) there has been in the fiscal deficit and
a 13 percent increase in foreign trade are extremely promising, as is
the balance of payments surplus and growth in foreign reserves (which
now represent more than five months worth of imports), for the first
time since Chandrika Kumaratunga took over as finance minister in 1994.
Despite the PhD she claims to have studied for, and her fictitious
Sorbonne education, she was undoubtedly the greatest crisis the national
exchequer ever faced. Her multi-billion rupee luxury-vehicle purchases
did not help either.
hawks among us will shake their heads in dismay when they learn that
only 30.7 percent of the annual defence allocation had been spent in the
first half of the year. They worry that the President's claim, that
there are only 10 days worth of ammunition left, might be correct. Be
that as it may, Choksy's focus has clearly been elsewhere: on trimming
fat, fuelling the engines of growth and getting the economy (which he
describes as "vibrant") going. In this, as in the most
promising negotiation of foreign aid in the history of Sri Lanka, he has
succeeded. But this victory could be pyrrhic unless the Finance Minister
continues to bite the bullet and pushes through with yet more reforms,
ably supported by the Prime Minister and Economic Reforms Minister,
of the sad and ironic consequences of Choksy's success has been the
failure of the high street banks to cut interest rates in step with the
Central Bank. The Finance Minister needs to do more to twist the arms of
Colombo's money merchants to desist from ripping off the public and
would do well to take a page from the book of Ravi Karunanayake who,
through acts that some may term reckless, has put the shivers into Shell
Gas and Laugfs and forced prices down very significantly indeed.
Small-time businessmen are paying disproportionately higher rates of
interest than the big boys, who can wield the big stick at the banks.
Besides, banks are trying to cash in on the present low interest rates
to cover the losses they incurred in the past through poor management of
credit. Unless the fiscal benefits that Choksy has so painfully won are
passed on to the people at large, and to industry in particular, the
vibrancy he speaks of in the economy will be but an illusion.
biggest challenge of all that lies before the Finance Minister is
keeping check on the efficiency of his own Ministry. Despite a Treasury
Secretary who is as disciplined and clean as they come, the Finance
Ministry is one of the most lethargic and obstructionist institutions in
the country. While the hopelessly inefficient Public Service Commission
has crippled administration, the agencies of the Finance Ministry, in
particular the Departments of National Planning and Management Services,
are hopelessly unimaginative and lethargic. They have stifled, if not
killed, initiative in many ministries that started off with a bang in
January 2002. Worst of all, their negativism has discouraged innovation.
ourselves pointed recently to the lethargy of the Cabinet Subcommittee
on Finance, which is chaired by Choksy. Unknown to even the Minister, it
turned out that there was an official who knowingly and deliberately
delayed the passage of cabinet tenders, underlining his prevarication
with blatant lies for reasons best known to himself, while Choksy was
getting the blame for the delays. It was only following The Sunday
Leader's exposure of this fact that Choksy acted, and swiftly, too.
the massive flow of foreign aid and investment Sri Lanka is seeing,
fiscal reforms cannot stop here. The Inland Revenue (Special Provisions)
Act No. 10 of 2003, that gave a blanket tax amnesty to defaulters who
come clean, was a step in the right direction. What is needed now is a
set of incentives for people to actually pay income tax. Prime among
these must be to implement the government's stated aim of reducing
income tax to 25 percent, and one can but hope that this will happen in
the November 2003 budget.
investment, local or foreign, will not come unless we have a clean
government. On the opposite page we have revealed yet another instance
of Fisheries and Ocean Resources Minister, Mahinda Wijeysekera acting as
if he is a feudal lord, with investors having to cross his palm with
gold in order to get their projects started. We have demonstrated how
people of the ilk of Special Advisor, R. Paskaralingam and Industries
Secretary, Ranjit Fernando shiver at the prospect of having to confront
Wijeysekera. Indeed, even the Prime Minister has chosen to pass the buck
rather than confront this monstrous blot on the political landscape.
will not do. The government cannot be unaware of the grave political
damage the series of corruption scandals being exposed by The Sunday
Leader is inflicting on it. We will not falter, neither will we fail in
our duty to inform the public of the true nature of its government. Be
assured that it gives us no pleasure to do so. But it is disappointing
to see the callous indifference even the honourable few in the cabinet
show to this rape of public resources, and the jeopardy in which it
places the national interest.
is one of the few ministers who are indeed unimpeachable. But standing
idly by even as his cabinet colleagues loot the public purse makes him
just as culpable in our eyes, as the Prime Minister who has, despite his
Mr. Clean image, yet to find the courage to address the issue of
corruption in his party's ranks.
hats off to K.N. Choksy: may he go from strength to strength. But he
should not rest on his laurels; neither should he turn a blind eye to
the peril in which some of his corrupt colleagues place the government
he has so elegantly embellished. He must stand up for what is right, and
be counted. Anything less would gravely tarnish the legacy he is
building and imperil the flawless reputation he has earned for himself.