Advocata welcomes full time Minister of Finance for Sri Lanka’s Public Finances

Originally appeared in the Daily FT and Daily Mirror

An independent Minister of Finance can lead the way for better management of Public Finances.

COLOMBO, Sri Lanka— For 23 of the last 30 years, the Head of Government in Sri Lanka has simultaneously held the title of Minister of Finance.  Experience shows that combining the two roles is usually a big mistake as the job of the Head of Government is already very demanding. It is almost impossible for any one person to combine that with being an effective Minister of Finance. The tasks associated with being the Head of Government almost always gain priority.  Secondly, an effective Minister of Finance needs to maintain fiscal discipline by resisting pressures from the political office. The head of government who is also the head of a party or coalition cannot simultaneously meet this requirement due to such conflicting priorities. 

 Analysis of Sri Lanka’s public finances further provides convincing evidence that the absence of a dedicated Minister of Finance has undermined revenue collection. From post independence to around 1990, Sri Lanka’s tax revenue averaged over 20 per cent. At present Sri Lanka has one of the lowest income tax rates compared to peer countries as well as a tax threshold which is several times its GDP (Gross Domestic Product) per capita.

The Advocata Institute, therefore, welcomes the government decision to appoint a dedicated Minister of Finance.

Key Points:

• A dedicated Minister of Finance is beneficial to effective public Finance management.

• The Advocata Institute welcomes the appointment of a full-time Minister of Finance.

• Poor public finance management and poor revenue collection are partly a result of a lack of a dedicated Minister of Finance.

• Understanding the seriousness of the present crisis and utilising pragmatic public policies is the way forward.

[1] The Political Economy of Long-Term Revenue Decline in Sri Lanka, Mick Moore, ICTD Working Paper 65, February 2017

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"The most important thing we need to realize about public policy is that it deals with peoples issues and the issues that impact their livelihood. And then we analyze those issues. As a policy-maker or policy analyst what we do is try and propose solutions that are equitable, in line with the development and with other factors. The problem in Sri Lanka is that we haven't prioritized this process."

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"The fundamental problem that Sri Lanka is facing, which it has been for decades, is our twin deficit problem. We have both a fiscal and external deficit. Basically, we have been living beyond our means and consuming more than we produce. We must address this problem."

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Aneetha Warusavitarana on Newsline in conversation with Sharlan Benedict 14/06/2021

Aneetha Warusavitarana (Research Manager at the Advocata Institute) speaks about the fuel pricing mechanisms & economy. SHe addresses this on Newsline with Sharlan Benedict. June 14, 2021.

'Ideally the solution that would work best here is a fuel pricing formula. A crucial factor is that this formula is transparent. The way in which it is calculated should be made available to the public, it should be vetted by the relevant authorities and we should be able to understand how this formula works and how it is linked to international changes in fuel prices.'

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Dhananath Fernando on Newsline with Faraz Shauketaly. April 19, 2021

Dhananath Fernando, Chief Operating Officer of the Advocata Institute speaks how Special Economic Zones are needed because doing business in SriLanka is difficult and how the Port City is not going to solve all our problems. He addresses this on Newsline with Faraz Shauketaly. April 19, 2021.

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New Policy Interventions by Central Bank Could Negatively Impact Exporters

Aneetha Warusivitarana, Research Manager at Advocata Institute was featured on News 1st : Prime Time English News on 20-02-2021. She comments on how the new policy interventions by the Central Bank of Sri Lanka Central Bank of Sri Lanka could negatively impact exporters.

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Murtaza Jafferjee Chairman and Dhananath Fernando, Chief Operating Officer of the Advocata Institute participated in an exclusive News 1st discussion on the topic “IS THE ECONOMY IN PERIL?” with Chandra Jayaratne Former Chairman of the Ceylon Chamber of Commerce and Dr. W. A. Wijewardhena Former Deputy Governor of the Central Bank of Sri Lanka.

To access the opening presentation by Dhananath Fernando

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