Public sector salary increase : Milinda Moragoda calls on Presidential candidates to bring in public service reforms

COLOMBO (News1st):- As Sri Lanka’s annual Public Service Salary and Pension bill is to exceed Rs. one trillion per annum for the first time in history this year, Milinda Moragoda calls upon Presidential candidates to present their proposals for meaningful Public Service reform. In his statement, Milinda Moragoda adds, the budgetary allocation for salaries and pensions for 2019 amounts to Rs 685 billion. With the addition of the estimated cost of the public sector salary increases of Rs 120 billion this year, the total public sector salary bill for 2019 is estimated to reach Rs 805 billion. In addition, the budget outlay for pensions in 2019 is Rs. 212 billion and is expected to be Rs 235 billion in 2020. This will take the annual public service wage and pension bill in excess of Rs. One trillion for the first time in history. Public sector salary and pension increases will result in higher inflation, and put pressure on the balance of payments, resulting in the depreciation of the Sri Lanka Rupee. These negative effects can only be contained if the salary increases are funded by cutting other recurrent expenditures, raising revenue, or a combination of these two measures. The statement notes, cutting capital expenditure is a less good option as it reduces growth impulses in the economy. He highlights that ultimately, someone has to pay the piper. The worst option is to fund the salary increases through additional borrowing as increasing public debt to fund recurrent expenditure will be highly detrimental.