Infographics On Government Spending
Comparing spending on alcohol prevention etc vs. teacher salary demands, via Facebook
My old nemesis Sanjaya Senanayake has done some interesting infographics on the SL budget. Namely, why we don’t spend on teachers and yet spend millions on protecting cows, preventing alcohol, etc. Please note that I haven’t check the numbers, but they look about right. The one above is a bit off in that it compares Mathata Thitha spending for a year vs. salary demands per month. Actually, that’s very disingenuous in that cutting the program really couldn’t pay for increments. It’s still a very interesting way of getting a point across about government spending using Facebook and funny visuals.
As a note on the issues at hand, teachers are demanding higher salaries. In a sense this is reasonable but the entire university system is also messed up. But that’s not really the point. The point is that the government is spending on big ticket items without giving that much back to ordinary working people.
Teacher salaries vs. Ports and Defence spending, via Facebook
Anyways, interesting info, interesting presentation.
Great post and insightful information!
“In a sense this is reasonable but the entire university system is also messed up…” the FUTA has come up with a reasonable set of requests (the salary increment being just a component of it). This is an encouraging development. The fact that FUTA was able to put out a set of comprehensive requests and stand together firmly with regard to their principles and values is a triumph of rational thought over thuggery. Yes the salaries need to be increased this should be the first in a set of reforms IMO. I just hope that FUTA won’t get bogged down in petty politics (the JVP and other hangers on want to ride this wave of dissent and thats a shame)
‘Lies, damn lies and statistics’?
I’ve no doubt that govt spending is far from ethical, efficient or prudent, but the comparisons above are perhaps unhelpful. I presume that the port and airport expenditure are pretty much one-off capital expenditure (with the hope of producing significant revenues down the line?
Does the increment to academics’ salaries include only the increment, or the total spending? This will of course be annual expenditure, subject to further increments in the future, so it is interesting, but perhaps not all that relevant as against big ticket capital projects (the justification for which of course may be suspect).
Is there any resource where one can find:
(i) Total govt revenue (taxes) and breakdown of top 10 sources of revenue
(ii) Total govt spending
(iii) Breakdown of spending by govt department
(iv) Breakdown of spending by Ministerial responsibility
(v) Total govt debt
(vi) Govt debt repayment amounts (past 5/next 5 years)
(vii) Govt revenue surplus/deficit
(viii) Trade surplus/deficit
(ix) Loans and interest rates charged to govt (and breakdown of major institutions/countries to whom loans are owed)
(x) Total overseas aid money provided to SL (and breakdown of largest sponsors)
Sanjaya captioned the images with links,
UGC Website – Distribution of Teaching Staff
http://www.ugc.ac.lk/en/statistics/teaching-staff.html
FUTA Demands Document
http://futa-sl.blogspot.com/2011/05/futa-struggle-for-dignified-salaries.html
Ministry of Finance – 2011 Budget Estimate
http://www.treasury.gov.lk/BOM/nbd/budgetestimates2011.htm
these have some of the info you mention
i
The Central Bank website has the annual report, which has all the details, but it is a bit long.
http://www.lbo.lk has some good analysis where some summaried info is available, check the items under Economy.
i love misleading graphics. oh well, at least this guys isn’t lying outright.
Facebook is going to get banned in SL.
Hey the FB link is not working???
Is there another link where we can see the full presentation?
i dont think so, you seem to need to be linked to Sanjaya on FB
Can you explain what you mean by the university system is messed up? It is one of the few institutes in SL I have respect for. The graduates are able to compete anywhere in the world; I have seen it first-hand. But it makes sense; the selection pool for university is limited from the beginning, so the quality is high. Once you allow more people in, the overall standard will plummet.
Why do we have so many unemployed graduates? Why is it that, judging from what others have said many times, they seem to lack even basic skills ? Certain campuses like Moratuwa produce good engineers and some faculties are better than others, but the overall picture seems dismal.
Unemployment is probably due more to the fact that you need to have connections to get a good job in SL. While that’s true almost everywhere in the world, it’s even more pronounced in SL. But what I don’t get is why SL doesn’t reward its brightest minds with high-paying jobs. Even in India, another utopia for corruption, the best graduates (from so-called IIT’s) are guaranteed lucrative jobs upon graduation. In general, the incentive for attending a top university, be it Harvard/Cambridge/Oxford etc. is to land a high-paying job afterwards. Perhaps the universities are undervalued in SL, which may be due to the fact that SL is not a major player in any export market (no incentive for big firms to recruit top talent).
LOL!
My mother is a very senior teacher in a public school. Couple of years ago she was in the panel selected by the Education Ministry to mark the IQ exam held by the ministry to select jobless graduates from SL universities as teachers. She came home on the first day and told me one of the graduates got zero for the IQ paper and most others fell below the cut-off mark of 40. It is very rarely that anyone scored more than 40 in the papers that she got to correct.
My uncle is a Director of a blue chip conglomerate in Colombo. Few years ago the government forced the private sector to recruit a large number of jobless graduates as trainees. He told me that they took in 40 graduates and 2 months into their training, 39 of them had left and only 1 guy remained. The other 39 were back in the streets agitating agains the government to provide them with state sector jobs which were very much easier to do.
Chandana,
have your heard of a University of the Visual and Performing Arts? I have heard of professors there who have full time television shows in the evenings (on state television) and who pass students willy-nilly as to their preferences and have little if nothing to teach all day.
They were on strike one day but apparently no one knew why.
They even have a Professor of Tabla, apparently.
That is why I keep saying over and over again that a majority of the Sinhala Buddhists have only 3 brain cells in their heads. That is why they say “Sinhalaya modaya, kavun kanna sooraya…”
Tamils are, of course, superior to everyone else:
http://www.youtube.com/watch?v=abXf_RamTCc
Where to begin. I don’t blame the Uni students. I think the system fails them.
University is a loose social contract. You work hard and study, you get in. You take time in Uni, you can get a better job. In SL all parts of that social contract are broken.
The Uni system cannot fit all qualified graduates. This is broken.
People with an education also have a higher employment rate than non graduates (2006 blog post, recent Sunday Times). Really broken.
I don’t blame the students. They’re doing what they’re supposed to and they get out and they’re fucked. When I worked in the private sector, after a while you just start putting Uni graduates in another pile (when hiring). They don’t have English, they don’t have especially useful skills and they’re a lot older than other applicants. It’s actually heartbreaking how we waste our youth.
Thanks for the links, Indi and Jack Point
Had a quick browse – is the GoSL really running a LKR 230Bn deficit for 2010 out of total revenues of only LKR 720Bn? Even with growth of around 8%, how can that be sustainable? The 2010 predictions were a bit off (i.e. worse than GoSL expected), but even so the 2011 predictions maintain the same deficit on much higher spending and assumed revenue.
Sri Lanka’s national debt seems to be ~13 highest in the world as a proportion of GDP. I guess Sri Lanka’s in a better position than, say Greece (higher growth minimises the hit of interest payments), but worse than rich countries like France who can service their debt comfortably.
(http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt)
The funding of the ministries relative to one another is also quite revealing, as is the continued increase in total defence spending (near 30% of total Govt revenue devoted to defence alone), despite the end of the war.
didn’t realize our debt was that high. And we’re also getting crappier loans that developed countries
True. Also we are turning away from donor funding (which is cheaper) towards commercial funding (no pesky questions to answer or reports to file.)
Carasek,
“Had a quick browse – is the GoSL really running a LKR 230Bn deficit for 2010 out of total revenues of only LKR 720Bn? Even with growth of around 8%, how can that be sustainable?”
This seemed insane to me. Until I had a look at the US federal budget: approx. USD3500 billion expenditure vs. approx. USD2200 billion revenue.
http://en.wikipedia.org/wiki/United_States_federal_budget
Proportionally, that’s worse than Sri Lanka. Also, as a percentage of GDP, the US budget deficit is expected to breach 10% this year. Again that’s worse than ours (if the Central Bank figure is anything to go by). And this is not accounting for all the red ink at the state level.
http://www.usgovernmentspending.com/downchart_gs.php?year=&chart=G0-fed&units=p
I know the US enjoys a much lower cost of borrowing than SL, but this is eye-opening stuff nevertheless.
Carasek, the deficit is actually worse than that.
If you see the following story:
http://www.lbo.lk/fullstory.php?nid=1781145810
The gross deficit is income (818.2 billion) less expenditure (1,280.2 billion ) is 462bn.
The deficit is financed by borrowing, if you look at the CBSL report below there is a table that shows how.
http://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2010/English/10_Chapter_06.pdf
See also link below; explains things bit more, the simplified table at the bottom may be easier to understand:
http://www.lbo.lk/fullstory.php?nid=1879859464
You are quite right about the level of debt, we can end up like Greece or Ireland if the debt level goes up too high. The defence expenditure is extremely high, some people think we are still paying for weapons and munitions bought on credit.
Thanks, Jack Point
The links play down the significance of the deficit by reference to the previous year’s excesses, but the interest payments still seem huge to me. There’s always room for creative accounting, though. For example, in the UK under Labour the PPI funding of schools and hospitals was kept ‘off the books’, thus hiding the real cost of these schemes. No doubt there are myriad hidden areas of expenditure that play out over time (like the defence credits you mention).
True, there was some controversy over the way in which the CEB showed a profit last year:
http://www.lbo.lk/fullstory.php?newsID=885528531&no_view=1&SEARCH_TERM=1
Hi on my iPhone I see some additional posts that I don’t see here, including a good post from rajivmw on the US deficit.
However, I think there are some very clear differences. The US is able to service its huge deficit (and national debt interest) because it generates so much money and its debtors have absolutely no interest in forcing any defaults or weakening the currency. So much sovereign wealth is US dollar-based that there are significant players who will shore them up for a long time to come. They don’t face a problem in the short-medium term of finding pretty cheap debt partly for this reason. Add to this the fact that it doesn’t take much growth for them to radically improve their total revenue compared to almost any other country and their economy is capable of tremendous turnarounds.
Of course, they cannot go on like this and need to grasp the politically toxic reality that they spend way too much on areas like defence (notice any similarity?). The thing that I find tricky to fathom is that, unlike most European countries which have high social spending (health, education, welfare etc), the US really doesn’t have a lot of room to manoeuvre on these areas. They must look elsewhere. Their spending on military procurement and maintenance alone is more than much of the rest of the world’s defence spending in total, but with most politicians terrified of appearing weak on security and the overblown pride in their military, I don’t see many options for useful reform.
Sri Lanka has a tiny economy by comparison to most countries and so its vulnerability is more pronounced. Add to that the B or B+ credit rating (which would be a disaster for most Western countries) and the price of the debt is almost more important than the amount of debt (hence the horrendous interest payments domestically seen as benign for some reason).
Where I think Sri Lanka has a saving grace is that it is starting from a low base, has significant potential in the services industries, manufacturing and tourism and can benefit from debt-interest-defying growth. There’s a high literacy rate and nothing like the disparity of wealth found in neighbouring, richer countries. Where I see it struggling is in vision (Sri Lanka is a long way from even the Malaysian planned model let alone the oft-touted Singapore) and execution. I also think the love-in with China won’t last, just like it’s coming apart in Africa right now. As the new colonisers, they are no less ruthless than their forebears.
Almost forgot, my experience of Sri Lankan manufacturing standards (other than clothing) is not good. I drive a Sri Lankan-assembled Micro ‘MX’ car and, while it’s fine to drive if out of date, the build quality is an absolute joke. Bits of trim fall off all the time, nothing is screwed together properly, important bits of plastic break, the key broke in the lock, the windscreen wipers sometimes fail to function at all. I could go on. This from a nearly new car, regularly serviced with only about 12,000km on the clock. The technology sectors need support and clear strategies to succeed, but there’s a very clear example of why foreign companies will be loath to step in to fill the gap.
The fate of Sri Lankan Airlines should be considered a national disgrace. The GoSL’s decision to revoke the former CEO’s work permit because the carrier refused to oblige el Presidente’s demand for seats to be freed up for his entourage is an absolute joke and deserves scorn. Certainly it will have made Sri Lanka look like a risky place to do serious business for foreign investors. Not only that, but since the GoSL’s demands for greater management input (because clearly they are better placed to run an airline…) and the Sri Lankan taxpayers’ money being used to buy out Emirates’ stake, the finances of the airline have been in free-fall. This is not the way for a country to operate if it is to be taken seriously.
ps Sorry for the long post!
Aiyo these are old stories. This country had a budget deficit problem the IMF threatened to cut loans and now things are getting better. Pointless looking at debt alone, the more important indicator is where debt is heading and it seems to be heading down. And the credit rating has been improving overtime. I think we’re BB- or B+ right now that there are people in the country looking to see if it should be hiked.
carasek, we haven’t been making cars for long. I think it will take sometime before micro becomes a respectable piece or engineering.
How does debt go downwards if the government keeps borrowing and borrowing? All that happens is that the interest accrues. Let me a wager a guess and say that if the IMF hadn’t come to the rescue, the Sri Lankan economy would have been on a quick road to collapse; e.g. assuming inflation was high (as always), money to pay civil servants was drying up, etc.
The Government debt has been rising steadily. You can check the figures here:
CBSL
It has fallen slightly as a % of GDP but in absolute terms it has grown. This would be interpreted as positive provided we are certain that the GDP figure is correct.
Questions have been raised about the inflation number (as measured by the GDP deflator).
The GDP number is a ‘real’ number – ie net of inflation. This is calculated by taking the nominal; increase in output ( 15.3%) and reducing inflation ( 7.3%) to arrive at the the growth 8%. If inflation is is understated then the growth is overstated along with the GDP. Thus we could have a higher level of debt to GDP than reported.
What is of concern is the huge and increasing cost of servicing debt, interest alone is expected to be 353.9bn in 2011 compared to 309bn in 2009. When revenue expected is only 963bn that is a third of all income. Add to that the basic running cost of the government, the recurring expenses, salaries 344bn, goods and services 455bn what do you have ? Total current expenditure is 1,017bn (there is a small difference if you add up the previous set of figures due to the way in which things are classified).
Thus we are in effect borrowing to pay the interest on the existing debt.
Make no mistake, we are heading for a debt trap, unless Government expenditure is reduced drastically or taxes increase? Who wants higher food and fuel prices?
Jack, inflation & growth figurers are audited by people like the IMF. I don’t know exactly how this calculus takes place but i doubt the IMF will pull a enron-anderson type thing. Sri lanka is running a budget deficit. that doesn’t mean there will be a ‘debt crisis’. the IMF comes here and reviews our situation all the time and they are claiming that the debt situation is satisfactory. the budget deficit was 9.9% of gdp 2009, 7.9% 2010, the 2011 target was supposedly 6.5%. I’m not sure if that is possible, we might have to take a little bit more debt this year because of the flood though. I don’t know who much that will aggravate the situation.
there will be another IMF report coming at the end of this months that should give us an update of what is actually happening.
Haha, what a dumb piece of shit. The IMF doesn’t calculate GDP – that’s the job of the Central Bank. As for the IMF, I’m guessing it’s ultimate goal is to keep Sorry Lanka in perpetual debt.
Dodo, the IMF don’t audit these figures.
They may specify broad targets or goals to be achieved but they use the basic figures calculated by the government.
The target that has been set is for the reduction of the deficit which is good. What is bad is the government’s approach to reducing teh deficit, which is increasing taxation rather than reducing expenditure. I posed this question to Koshi Mathai at a seminar a few months ago and he agreed that the only sustainable way to go about it was to reduce expenditure and he was hopeful that this would happen.
I am not quite so sanguine.
There is something called national income accounts this essentially looks like an audit done by the IMF. But to be frank i have little knowledge about how this works, or how well it works. So i could be wrong about them.
But this is what is said about them:
“”Indeed, once released, NIAs can enforce their own discipline. That is, obfuscation cannot be maintained by altering or exaggerating one aspect of NIAs, say investment or growth of total income, since each such number is related to others, and consistency is a check on the accuracy of the components. Because the data cannot easily be faked, autocrats are loathe to publish their countries’ NIAs and either proscribe or delay their release.”"
http://www.econlib.org/library/Enc/NationalIncomeAccounts.html
It not fair to say government has increased taxation, and that how it has reduced expenditure. The corporate tax & income tax has been cut down quite a bit. The tax on finacnical institutions & electronic & electrical items has also been cut down.
and the government hasn’t increased the price of gasoline to reflect the increase in the brent.
the same holds true to other commodities like wheat which the government is discounting. in june 2010 the price of wheat was 149USD/tn as of april it’s 336. The price of bread has gone up but it has in now way gone up to reflect the 130% increase in the price of wheat. the government is right now offering a massive subsidy on wheat.
You are right, they are called the national accounts and they are compiled by a series of returns that the Central Bank sends out to a sample of the bigger business entities and other records gathered by various surveys and reports (from the BOI, stock exchange, Tea Board, paddy marketing board) etc.
It is a vast exercise and unlike in the case of a company’s accounts. Remember that what we are trying to do is collect the entire output of every business, farm and all other activity in the economy. The final result is a very rough indication of output (no country’s national accounts are an exact figure although some may be better than others) which is useful for the purpose of policy making.
Therefore it is impossible to audit unless someone is willing to put in a huge amount of time, so the time and it is not really productive to do so.
What the IMF does in its surveillance process is described here:
http://www.imf.org/external/about/econsurv.htm
If we look at taxation, follow the link below and look at page 133, table 6.2
http://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2010/English/10_Chapter_06.pdf
The figures for 2009, 2010 (estimated-which is what was budgeted at the beginning of the year and provisional, the rough actual figure) and 2011 estimates are available.
The total tax rises from 699.6bn in 2009, to 818.2bn in 2010 to 963.32bn in 2011.
The breakup of the main taxes (income tax, VAT etc is shown above the total). Overall taxes have risen. However we do know that certain tax rates were reduced. How does that square with the above?
It is a case of either :
a) the government collecting more revenue because of volume increases (eg cars – after the duties were raised revenue dropped from about 17bn to about 4bn, with the cut in duties more cars will be imported and overall tax collection will go up).
b) Taxes on other items have been increased. Eg Telecoms have been taxed more heavily, tobacco, alcohol, fuel, bread, electricity.
Overall people are paying more tax, but some may be enjoying a saving while others may be paying more.
However if government expenditure can be brought down then overall taxes can be brought down and EVERYBODY can be better off sinec this allows overall taxes to be reduced.
How can expenditure be reduced:
1. Borrow more cheaply. We boast about the loans from China, they are easy to get but cost a lot. They have a BIG advantage – no questions are asked, so it is easy for part of that money to go into the pockets of people who do the deal. Who pays for this? The public. Low cost development funds are available for use instead.
2. Close down loss making ventures. What does Mihin Air, Lakaputhra Bank, State Plantations Corporation, JEDB and a whole host of other things contribute to the ordinary public?
3. The waste – from pirated electricity to setting the clock forward to all the unnecessary tamashas that take place.
On the waste, have a look at this:
http://www.dailymirror.lk/news/11591-rs101bn-for-state-losers.html
I too doubt it will reduce expenditure. That would require massive cuts in defense expenditure as well as cutting down the size of the civil service. The government agenda seems to be otherwise.
Yes that is my concern. We have had six years of experience with which to judge policy and it is clear that they are are still wedded to the idea of an expansionary state.
We have seen privatisation reversed, Lanka Hospitals, Air Lanka, SLIC and a greater influence of the state in SLT. There have been a number of statements that there will be no more privatisations and it is clear that they mean it.
The number employed by the state sector has risen from around 700,000 to 1.3m. A further 30,000 are sitting the entrance exams to join the government service. The Mahinda Chinthanaya states that they wish to provide graduates with state jobs.
1.3 million in a total population of ~20 million. That’s an extraordinary figure. Good lucking cutting the deficit!
http://www.lankaindependent.com/2011/05/an-elusive-economic-dividend-and-a-pattern-of-deceit/
Some questions that have been raised on the inflation index:
http://www.ft.lk/2011/01/24/sri-lanka-opposition-says-new-inflation-index-artificial/
See this as well
http://www.lankabusinessonline.com/fullstory.php?nid=913491249
Your old nemesis … hardly. You were no match for him. You also have absolutely integrity and never will.
Sanjaya is much loved, respected and has hung onto his morals despite living in a country so bankrupt in every way.
http://www.bbc.co.uk/sinhala/news/story/2011/05/110523_colombo.shtml
Former heads of the three armed forces earned millions out of the war
The revelation of the Rs. 620 million defrauded by Defence Secretary Gotabhaya Rajapaksa is the largest fraud to have been committed during Eelam War III and according to a senior army official; it is the fourth largest corruption to have taken place in Sri Lanka’s military history.
He said the largest fraud was the conspiracy where it was claimed that a ship carrying 80mm mortar ammunition at Rs. 1,000 million from Zimbabwe to Sri Lanka was taken over by the LTTE.
An investigation carried out by the CID had found that former Army Commander Rohan Daluwatte was responsible for it. The President had now appointed Daluwatte as the chairman of the National Gem and Jewelry Authority.
The second fraud was the purchase of two C130 aircraft from Britain after receiving Cabinet approval to get financial assistance to import three aircraft. The fraud has been calculated to amount to Rs. 900 million. The former Air Force Chief who was held responsible for the fraud, Air Marshal Jayalath Weerakkody as been appointed as Sri Lanka’s High Commissioner to Pakistan by the President.
The third fraud is the fleecing of Rs. 760 million when installing 30mm guns to Sri Lanka Navy Dvoras. The Presidential Commission that inquired into the matter faulted former Navy Commander Admiral Daya Sandagiri.
The President appointed Sandagiri as the Chairman of the Phosphate Corporation a few weeks back.
The senior army official who spoke to us said that Sarath Fonseka who is making his dock statement is due to make more revelations about the Defence Secretary’s corrupt deals. He added that with those revelations, the Defence Secretary was likely to become the biggest fraudster in the country’s military history outshining the three members mentioned above.
taken from lankanewsweb.com
Daily Noise – Beijing August 37th 2008. (44pm GMT)
Mrs. Roopa Vahini of the Daily Noise spoke with Usain Boltapaksha, winner of the 100 meters and world record holder of the event.
He said that he was inspired after reading the ‘Mahinda Chinthanaya’, and keeps a copy of it under his pillow.
Usain starts his day with a glass of ‘kola kenda’ and four slices of ‘kurakan bread’ before he goes to the ‘Hum Bug Thotta Sri RajaPkistan Stadium’ where he does his training. Mr.Boltapaksha also stated that the ‘Hum Bug Thotta Sri RajaPkistan Stadium’ was the best stadium in the universe, and urged the International OlymPrick Committee to hold the next Commonwealth Games and OlymPricks in the country.
Mr.Boltapaksha said he was happy with the way the government of Sri Lanka was running the country and hoped to buy a plot of land in the Wanni and settle down in Sri Lanka when he retires from athletics.