Thread by @ChayuDamsinghe

Quick thread on what I'm expecting from Budget 2023, and what it could mean.

#SriLankaEconomicCrisis #SriLanka #lka #EconomicCrisisLK #Budget2023

2/ As always, personal opinion, but especially here, since this is speculative just a day in advance.

3/ Main point of the budget going to be both short term (2023) and long term (next few years) plan on reducing budget deficit. Both IMF driven but regardless, something SL needs to do.

4/ We've already seen a bulk of the tax policy measures already announced one way or the other. There could be some more as well here, including a possible wealth tax (possibly in the form of property/vehicle tax?).

5/ I've argued before on why the painful tax changes are necessary, so not going to go there again

https://mobile.twitter.com/ChayuDamsinghe/status/1581195426677821440

6/ But I think there's a lot of pessimism about any further change on tax administration/collection as well as on expenditure management. Probably the comms from gov as well as the view of "protecting the corrupt" is tying into this.

7/ I think it's very unlikely that RW will push for something like the UN's StAR programme given the balance of power needed to pass the budget, outside of some token measures. unodc.org/unodc/en/corru…

8/ But because SOE reform including privatisation is a key part of the IMF programme too, as well as tax admin reform being critical for maintaining tax levels, I think there's a good chance of some progress beyond expectations on these too.

9/ To be clear, not expecting really good measures on either, but think something more than in a usual budget is probably likely. Because expectations are set somewhat low, this could be a bit of a "positive surprise".

10/ Expenditure allocations is another thing I'm looking at - because the top line numbers that often get quoted don't tell the film story.

Eg - health/edu exp is largely in Public Admin not in line ministries.

11/ Even capital expenditure might not be as simply reported, with some expenditures being in the budget but not really going to be expenditures. Interpretation will likely be needed.

12/ In any case, budget (once passed) is a critical step to recovering SL. Especially the framework it sets for the next few years will be critical to getting us out of this deficit and debt driven story of the past.

13/ Yes, it's also needed for the IMF programme, but that's mostly held up by the bilateral negotiations on arrears. If interested in more on that, can follow @TheoMaret who talks of this globally.

14/ But I'm cautiously optimistic that the budget WILL go in the direction needed to some degree. Part of it is that it's forced in a crisis, of course, but its progress nevertheless.

15/ Hopefully, this momentum continues and the new personal impetus people have also pushed further change.

That way perhaps we can get to a better future.