Recent Trends of Public Sector and Financial Management in Sri Lanka

Abstract

AttachedIt is difficult to im agine a situation w here there is no governm ent. As the leader in an economy as well as the authority in charge of the State, governm ent can contribute m uch tow ards economic developm ent. If the governm ent is not moving along a proper path of developm ent, the results may be different. The gradually expanding public sector is an exam ple of such an occasion. Derailed governm ent can som etim es be corrected if citizens are familiar w ith the critical limit of the governm ent in economic activity. The size of the governm ent is increasing in som e developed and developing countries. This underm ines the role of the State in economic developm ent. In the late 1970s Sri Lanka opened its economy and privatised m any public ventures. This paper reviews the trends of the financial aspect and the size of the public sector in Sri Lanka. The paper com pares governm ent related variables such as expenditure, tax revenue, public debt and the num ber of public sector em ployees in Sri Lanka over time and w ith that of other countries in a given period of time. The paper concludes that in Sri Lanka, in spite of massive privatisation, the public sector is expanding. The critical variables, budget deficit and foreign debt are also increasing. However, the dow nw ard turning point has just originated. The citizens in a country ought to be m ade fam iliar w ith the fact that governm ent is to provide goods w ith indivisible benefits and that governm ent and the m arket are com plem entary and not substitutes. They should not alw ays ask the governm ent for more jobs. By introducing new taxes the governm ent may increase income to narrow dow n the budget deficit.