Sri Lanka’s current economic crisis is more of a crisis of governance than a crisis of economic management. This was among the key take-aways from the public seminar on ‘Public Finance and Public Service’ held at the Sri Lanka Foundation Institute. This seminar was held on February 11, 2022, organized by One-Text Initiative (OTI). It aimed at unpacking the root causes of the current economic crisis in Sri Lanka, and how these could be addressed through constitutional reforms. The keynote speech was delivered by prominent economist Dr. Anura Ekanayake, former Chair, Ceylon Chamber of Commerce. This was followed by a panel discussion by retired administrator Jinasiri Dadallage, former Secretary of the Ministry of Public Administration, former Provincial Councillor and Attorney-at-Law Shiral Lakthilaka, and Senior Management Consultant, Nishantha Kamaladasa, moderated by Harindra B. Dassanayake on behalf of OTI.

The dialogue broadly located the current national economic crisis within a crisis of governance. Among the issues highlighted were an oversized and inefficient public service, and the prevalence of a culture of corruption and political patronage within it. There is also a lack of mechanisms that holds public finance management-related decision making accountable. Poor public finance management was also identified with regard to the pursuit of unsustainable development projects and the absence of long-term, strategic development planning. 

In his keynote address, Dr. Ekanayake showed three roots of the present crisis of Sri Lanka. First, Sri Lanka has not been able to unify all communities under the banner of a collective national identity. Second, the politicization of society including public administration has alienated the people from the governance and state. Third, the economic policy choices of the thus-established political class have managed solely to serve themselves through entrenched patronage structures and rent-seeking behavior. In terms of a broad policy response to the crisis, the solutions he recommends are: meaningful power-sharing and trust building among all communities, empowering people to be involved in policy making through plebiscite, post-enactment judicial review and decentralized governance, and also introduction of robust accountability and fiscal-responsibility laws, policies and mechanisms with proper monitoring and evaluation.  

The panelists discussed how the present economic crisis is disproportionately borne by the urban and rural poor, and marginalized communities. The state bears the responsibility in ensuring equitable livelihoods for all of its citizens. Towards addressing the shortcomings identified with regard to public finance and public service, the following proposals were discussed.

The current discourse on constitutional reforms must necessarily advocate for a fundamental intervention towards the consolidation of fiscal sovereignty. To this end, the judicial system should be used to ensure that public accounting and utilization of state resources and the role of the executive and legislature in Sri Lanka when entering into international development-related agreements are fair, equitable, transparent, accountable, competitive, and cost-effective.

Present regulations and Acts overseeing public finance management were argued to be largely outdated and subject to change depending on the balance of political forces in power. Therefore, the basic provisions regulating this area should be introduced into the Constitution of the country. As examples to follow, the constitutions of South Africa and Nepal were mentioned, which entail such provisions.

The legislative process was identified as needing to be expanded to enable more inclusive, participatory, and result-oriented development. As part of a deliberative democracy, parliament committees must play a more active and central role in public finance management.

State institutions too were identified as requiring a revolutionary overhaul, needing to be empowered and made politically neutral, even as reforms that downsized them and make them more efficient were proposed. These included among others, the need to change current constitutional provisions whereby powers to appoint, transfer and dismiss public officials (including Permanent Secretaries) be vested in the Cabinet or in an Independent Commission under a clear procedure.

The constitutional reforms discussed during the seminar are a need of the hour in ensuring that the state is constitutionally able and beholden to meet the evolving needs of the citizens through a democratic and economically-efficient governance framework.

Rajni Gamage

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