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Message: <blockquote data-quote="ibnanv" data-source="post: 18651904" data-attributes="member: 218596">ECONOMYNEXT - Sri Lanka should stop auctioning non-existent resources  for elections, which will result in hardships for the poor later, a  think tank has said, as higher spending on state worker salaries is  beginning to pressure the credit system. Pathfinder Foundation, a Colombo-based think tank said a budget in later  2014 which was again revised in January 2015 had seriously undermined  state finances. It could be further worsened by self-seeking, anti-people promises made in manifestos in upcoming budgets. "In this connection, Sri Lanka needs to follow good practice which is  being pursued by an increasing number of countries around the world,"  Pathfinder said in a report Charting the Way Forward: Prosperity for All.  "All handouts, subsidies and other welfare measures, included in the  manifestos, should be costed and specific measures should be identified  for financing the incremental costs involved. T  "This will enable the voters to assess the financial viability of the  promises included in the manifestos of political parties. "  "It should also assist in making a clean break from the ‘auction of  non-existent resources’ which have characterized party manifestos in the  past."  In 2014 the budget deficit as 6 percent of GDP exceeding a target of 5.2 percent.   "There is likely to be further deterioration in the fiscal position  without urgent remedial action on both the revenue and expenditure  fronts," the report said.    "It is crucial, therefore, that the manifestos of political parties  exercise far greater fiscal responsibility in the preparations for the  Parliamentary Elections.  "The people of this country should not be misled by ‘giveaways’ which  will eventually have to be either eroded through higher inflation or  reversed through taxes/administered price increases."  Most Sri Lankans do not understand that they have to pay high rates of  interest for housing loans due to political entrepreneurs living beyond  its means and borrowing heavily to sustain subsidies, themselves and a  bloated state worker cadre.  They also do not understand that the rupee falls and inflation goes up,  destroying their salaries and lifetime savings, when money is printed to  finance the very subsidies that they are deceived by.  A government has only three sources of money. Taxes which only takes  specific amounts of money from the people and borrowings which burdens  them and their children with future interest and repayment.  The third measure is printing money or central bank credit, which Sri  Lanka has resorted to since 1951 when a central bank was created by then  Finance Minister J R Jayewardene, which causes the rupee to fall and  inflation to rise. The corrective measures involve higher than-usual-interest rates and a sharp economic downturn. Sri Lanka's rupee is already under pressure from rising domestic credit  some of which has been financed by the Central Bank which has released  liquidity. http://www.economynext.com/news_details-3-2335.html</blockquote>

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