Recent Trends of Public Sector and Financial Management in Sri Lanka

Abstract

It is difficult to imagine a situation where there is no government. As the leader in an economy as well as the authority in charge of the State, government can contribute much towards economic development. If the government is not moving along a proper path of development, the results may be different. The gradually expanding public sector is an example of such an occasion. Derailed government can sometimes be corrected if citizens are familiar with the critical limit of the government in economic activity. The size of the government is increasing in some developed and developing countries. This undermines the role of the State in economic development. In the late 1970s Sri Lanka opened its economy and privatised many public ventures. This paper reviews the trends of the financial aspect and the size of the public sector in Sri Lanka. The paper compares government related variables such as expenditure, tax revenue, public debt and the number of public sector employees in Sri Lanka over time and with 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 downward turning point has just originated. The citizens in a country ought to be made familiar with the fact that government is to provide goods with indivisible benefits and that government and the market are complementary and not substitutes. They should not always ask the government for more jobs. By introducing new taxes the government may increase income to narrow down the budget deficit.

The Nexus Between Foreign Direct Investment, Informal and Formal Sectors in Sri Lanka

“…According to the report of the World Bank Group (2020), Sri Lanka accounts for the contribution of informal sector employment to the total employment is about 60.8%, and further disclosed that 86.8 percent of agricultural employment comprises informal sector employment whereas agriculture formal sector employment accounts for only 13.2%. This status reveals that the informal sector dominates domestic (traditional) agriculture and related activities in Sri Lanka (Arunatilake & Jayawardena, 2010; Herath, 2013). As far as its working-age population of Sri Lanka is concerned, it has a substantial informal sector employing over 4.5 million Sri Lankans, which is more than the number employed by the formal private sector, the government sector, and state-owned enterprises combined.…”

Does Trust Matter? An Inquiry on Citizens’ Trust in Public Institutions of Sri Lanka

“…The number of government employees has been growing rapidly in the country. In 2012, the proportion of the public sector was 15.4 per cent and for every 16 citizens, there was a public servant (Herath, 2015, p. 19). In the Appropriation Bill (the Government Budget) presented to the Parliament in 2015, the government has allocated US$1,116,218 for the salaries of the employees in the Public Service and the total emoluments with overtime, and allowances etc., it is US$2,852,196 (see ).…”