Sri Lanka ruling party champions fiscal prudence, as opposition scrapes bottom

Nov 06, 2008 (LBO) – Sri Lanka’s ruling party, whose fiscal profligacy caused high inflation and high interest rates while endangering the entire economy with foreign commercial borrowings, has slammed a sunshine ‘budget’ of the opposition. The main opposition United National Party which gained a name for long term budgeting that brought the country out of an economic crisis in 2002 and 2003, presented a pro-forma ‘budget’ ahead of the official budget Thursday, promising handouts to all and sundry.

“For a party that has presented most of the budgets in the history of this country, this is an infantile budget,” deputy finance minister Ranjith Siyambalapitiya told reporters Wednesday.

Chicken and Egg

The UNP ‘budget’ promised large subsidies for families on income support, massive salary increments to state workers, fertilizer subsidies and other largess.

The UNP expected to ‘finance’ the ‘proposals’ out of a flat consumption tax, concessional foreign borrowings and interest rate savings.

But to bring interest rates down, inflation has to be brought down first through prudent budgets which allows the central bank to stop printing money.

A UNP led administration did both in 2002 and 2003 but from 2004, th