Sri Lanka government treasury chief says subsidies inefficient

July 02, 2008 (LBO) – The Sri Lankan government treasury secretary P B Jayasundera has described subsidies as an inefficient way of managing economic affairs and said the government was moving to reduce the burden of handouts with price increases in a range of commodities. “Any form of subsidy is inefficient,” Jayasundera, who is also secretary to the Finance Ministry told the Sri Lanka Economic Summit 2008, an annual conference of business leaders organised by the Ceylon Chamber of Commerce Wednesday.

“It is probably not the way to improve productivity. That’s why the government had adopted a policy of targeting subsidies to the needy.”

He was responding to a question on whether the fertiliser subsidy was an inefficient tool to raise agricultural productivity.

The fertiliser subsidy was being aimed at small holder paddy farmers and small holder plantations, Jayasundera said.

The government is now trying to relate the fertiliser subsidy to improved productivity in food production, he said.

The government was moving to reduce subsidies and had already removed the wheat flour subsidy and raised retail prices of fuel which had earlier been heavily subsidised.

The private sector has been very critical of government subsidies saying they only per