"We want the economic benefits to trickle right down to the grassroots," Siyambalapitiya said.
However, no clear indication has been made of the funding mechanism for all the subsidies and handouts promised in the Mahinda Chinthana, if the populist manifesto is to be implemented through the new budget.
According to Siyambalapitiya, the government would continue with the existing programmes as it has done in the previous year.
Increasing the efficiency of the current tax structure is one way the government plans to find the necessary funds to implement its programmes.
No new taxes
"There won’t be new taxes, the present taxes would be made more efficient," Siyambalapitiya said.
The controversial Budget 2006 was presented amidst concern raised by several senior members of the government. However, the cabinet of ministers collectively decided to proceed with the previous budget presentation for 2006. Treasury Secretary, Dr. P. B. Jayasundera on the eve of the ill fated 2006 budget said that the focus would be on the overall macro-economic framework as well as follow the already set targets under the
Millennium Development Goals.
Budget 2006 focused on shifting the investing of government funds on public consumption into investing them on infrastructure and livelihood development programmes. Jettisoning the budget presented by former Finance Minister Dr. Sarath Amunugama under President Chandrika Kumaratunga, Rajapakse is hopeful of presenting a budget that would fulfil his main election pledges, but how he plans to go about it is yet to be seen.
However, during the now annulled Budget 2006 the then Prime Minister Rajapakse at the budget tea party observed that he would continue with the Budget 2006.
"It is our budget and I will continue with it," Rajapakse pledged barely a month ago.
Rajapakse who said that he was not aware of the proposals till they were presented to parliament by Finance Minister Sarath Amunugama stated that he would carry it forward even after his victory at the presidential election.
When asked if the presentation of the budget before the election would help his election campaign, Rajapakse told The Sunday Leader that it was the budget of the government and that it had to be done at some point.
However, assuming office on November 19, in his maiden address to the nation, the new President observed that he would be working with a new government, a new cabinet and a new budget to steer the country towards a new Sri Lanka. He also pointed out during the address that he would enact the necessary legislation to implement his Chinthana programme to benefit the masses.
In the Mahinda Chinthana, Rajapakse has stated that a national economic policy would be formulated by integrating the positive attributes of the free market economy with domestic aspirations in a bid to ensure a modern and balanced approach where domestic enterprises can be supported while encouraging foreign investments. He has also set a growth target of 8% per annum over the next six years through this approach.
According to the Chinthana, measures will also be taken to filter the benefits of such economic development to the general public of the country, and particularly to the lower income groups, which amounts to 50% of the country’s population.
Although the budget presented by Amunugama was a continuance of the previous budget – pro-poor growth strategy, which has some similarities to the proposals made by Rajapakse, one of the main focal points of Budget 2006 was to move away from the investing of government revenue in public consumption and redirect them for infrastructure and livelihood development programmes.
Rajapakse’s vision entails going back to investment in public consumption. E.g. Fertiliser at Rs. 350, a bag of goodies for every household, increased Samurdhi, Rs. 200 for every child from infancy till the age of five, a mid day meal for every school going child, etc.
Funding these pledges would mean the government would have to ensure a steady cash flow and in a country where government income does not commensurate the expenditure, Rajapakse and his economic advisors will have to be mindful of the proposals to be incorporated in the budget.
Otherwise, bridging the already wide budget deficit would be a pipe dream.Under the country’s present savings rate, Rajapakse would not be in a position to achieve the growth targets set by him.
The Mahinda Chinthana has stated that government ownership in the strategically important enterprises of banking, power and energy and transport and ports as well as national assets will be continued.
"Such assets or such public enterprises will not be privatised," the Chinthana states. It further states, "Legislation will be enacted clearly spelling out the responsibility of the government in acting as a custodian in the management of institutions and resources in order to protect the people’s ownership of national assets.
Management of national assets and public institutions in a more professional and independent manner without being politicised will also be ensured by this legislation."
The decision of non-privatisation, which has been done under the veil of patriotism, especially due to the pressure exerted by the Marxist JVP, which is a key player in the Rajapakse administration, has clamped down one avenue of increasing government revenue.
"The government’s stance of non privatisation of important public enterprises would continue even in the new budget," Siyambalapitiya confirmed. Funding would be necessary for accelerated growth from foreign donors. However, without reforms, none of the donors, even the bilateral donors would lend money to the government.
The money pledged at the Tokyo Donor confab is also in the balance as the peace process is still not on track and receiving the US$ 500 million pledged under the Millennium account is also doubtful.In such a situation, the government would be left with limited options.
One option would be to borrow in the local market, which would result in a drastic increase in the Treasury bill interest rates. The other would be to borrow in the international market.
Such borrowings would have to be made at high rates, as soft money would not come in. Either way leading to heavy inflation.
The choice is, up to Rajapakse and his government and the budget he plans to present on December 8 would decide the fate of the country for the year to come.