Following an unprecedented economic crisis, and declared bankruptcy, Sri Lanka has over the last year enacted many austerity measures which, as bitter as they may be, was largely necessary to effect meaningful change and improve the stability of the troubled nation. 

One of the key issues which was part of the economic downfall of Sri Lanka was its weak fiscal discipline. With the introduction of the International Monetary Fund's $ 2.9 billion bail out package, the Government moved to introduce several restrictions on state expenditure, with the aim of improving fiscal discipline. Many capital expenditures that were planned were halted. 

However, the Government also has introduced taxes which have disproportionately affected the lower tiers of the population, given the high cost-of-living. The plight of the poor in Sri Lanka today is insufferable. Those who fall below the poverty line due to the Covid-19 pandemic and the economic crisis have significantly grown over the last three years. However, many in the poverty bracket continue to get by, while there is no relief in sight. They continue to pay the taxes and see their children go without, as they have no choice in the matter. 

If better fiscal discipline and improved state revenue raising is a national objective, Sri Lanka as a whole must commit to that end. It has to be a national effort, not one shouldered by many, and ignored by some. Earlier this month, the Government celebrated the islands independence anniversary with much pomp and pageantry. Sri Lanka has also not moved to effectively reduce wasteful state expenditure. Many State-owned Enterprises (SOEs) continue to remain bloated, with excess staff who draw a myriad of ‘benefits’ be it loans partly paid by the State. 

While the broader Sri Lankan population grapples with taxes, some of which are necessary, the State's inaction to recover unpaid dues from key industries, often led by politically connected business remains, dead in the water. Closing regulatory and legislative loopholes which have long bening abused by businesses and tycoons to line their pockets, without paying necessary dues, move at snail's pace. 

The fact that Sri Lanka hasn't moved to recover unpaid loans, given to ‘political friends’, which have put pressure on state banks and the financial system, even after the banking sector is said to have stabilised, begs the question as to how sincere is the Government in effecting the fiscal discipline which it need to establish. 

There is also the optics of the matter, the State must seem to be fair in its dealings. When the State asks a broad segment of the population to ‘tighten their belts more’, the State must lead by example. This is clearly not being done properly. 

Yesterday, the Opposition raised the issue of the Central Bank of Sri Lanka (CBSL), proceeding to give itself a significant pay raise, with no parliamentary oversight. 

The Chief Opposition Whip claimed that the decision taken by the CBSL administration to increase the salaries of their workers in an unprecedented manner does not comply with the existing rules and regulations, and that therefore Parliament has the authority to suspend the particular decision since the House is entitled to control the public finances under the Constitution.“This proposal must come to Parliament. It has violated the regular procedures. Therefore, the decision is completely illegal. I urged the Ministry of Finance, Economic Stabilisation and National Policies to consult the Attorney General regarding the matter and to take necessary actions. Otherwise, we (a future government by his party) will collect this money from these officials in the future,” he added. The Opposition MP alleged that the salaries of the CBSL officials have been increased by 70%, and that accordingly, the salary of a Deputy Governor has been increased by Rs. 712,000. Meanwhile, he also claimed that the salary of an office assistant has been increased by Rs. 75,000. “This is the conduct of those who advise us to cut down our expenditures. This is how they have been behaving for the last few years. They remained silent when the entire economy was going into bankruptcy.”

Irrespective of how and why the CBSL decided, independently or otherwise, to raise their own pay, the timing of the move is extremely insensitive to the masses who struggle to get by. This move does not tell the public that the burden they are lifting is fair, nor does it show that the Government is serious about doing what it says it must do.