Fiscal policymaker follows people’s voice in the news

by Sanath Nanayakkare

As the government is returning to a course of fiscal consolidation by indefinitely extending the ban on many imports and hiking the price of fuel and wooing foreign investments into the Colombo Port City to make the difficult balancing act of macro fiscal challenges, vociferous demands made by the general public via national newspapers and prime time news bulletins have begun to weigh on the minds of policymakers at the Ministry of Finance.

Dr. Kapila Senanayake, Director at Department of Fiscal Policy, Ministry of Finance said yesterday that the general public make various requests via print media, radio and television that they need jobs, increased prices for their produce, Samurdhi allowance, a social safety net and so on, but the other side of the coin is that there is an imbalance between state revenue and public expenditure, and it boils down to fiscal policy, or how you can manage these requests as well as other externalities such as the recent pollution surrounding the MV XPress Pearl ship.

“We need rationalisation between government revenue and government expenditure. Not only monetary policy, the fiscal policy would also have an effect on inflation, therefore, coordination between the fiscal policy and monetary policy is important as well as reforms on the fiscal side to achieve its objectives It encouraging to see that today there is more coordination between the two policy regimes for a more sustainable framework,” he said.

Dr. Senanayake made these remarks while speaking as a panelist at a virtual forum organised by the Centre for Banking Studies (CBS), the training and human resource development arm of the Central Bank of Sri Lanka (CBSL).

The two-day programme was held to educate journalists on interpreting economic data with a better grasp.