Sunday, August 25, 2013

On building Pleasure Gardens and austerity measures

The kings of old built pleasure gardens for their own use and amusement. The exact purpose they served is not certain but were probably used for hunting, games and ceremonial purposes. King Wickramabahu III was apparently the first monarch associated with gardens when he built one in 1371. Later ones followed suite.

Under the evil colonials such great traditions died out but what joy filled my heart when I read that these were to be resurrected, in the very city of the colonials. What better way to teach those foreign devils a lesson? 

More soberly, a smaller story  announced new austerity measures

We live in hard times and the yawning budget deficit has necessitated a tightening of the screws (or is it thumbscrews?)

The all-round austerity measures also include further curbing public expenditure while increasing taxes and reducing subsidies or doing both. This came as debt servicing costs rose by three per cent more than state revenue, a senior government official told the Sunday Times. If the new measures were not resorted to, the Treasury would be forced to go for more borrowings to cover government expenditure which would then lead to more debt servicing, the official added.  

Purely from an economic point of view, cutting expenditure on one side, increasing it on another side; to finance the Pleasure Garden, serves little purpose.

In economic terms all that is happening is a reallocation of resources; presumably from areas of low priority to those of greater importance.

Apart from the priorities, there are other questions that come to mind. Why is the Telecommunications Regulatory Authority doing this? It has nothing to do with its function or responsibilities. Are gardners or architects in charge of the TRC?

No, the answer is that the TRC has an increasingly scarce resouce: some spare money. Instead of contributing this towards bridging the existing deficit they instead choose to spend it on a project. Why so?

Because the spending enables the building contractor to make money. Funding the deficit will bring no joy to the rulers (although it may bring some relief to the people) but new expenditure opens new possibilities for personal enrichment and gratification.

Moreover the spending need not be restricted to the funds actually available at the TRC, the TRC can also borrow. The advatage that this offers is that such debt is not recorded as Government debt.

Thus the Government can claim that the debt to GDP ratio (a measure of the sustainability of Government debt) is declining, while actually increasing its borrowings. This is something that the rating agencies have warned about, although all the implications of this may have been missed by the public-at-large. Naturally such grim warnings are viewed as being the work of spoilsports, attempting to ruin the party, so it drew a sharp rebuke from the Central Bank.

Anyway, the path to reclaiming our ancient glory is clear, all one need do is discard the colonial mindset and assume one from some long dead king. This is evident here.

While we await the Pleasure Gardens in Colombo we can visit the one built in Mirijjawila in the Hambantota district. I have not seen it yet, would someone who has visited share a few pictures?

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