Prudence requires political will
Thursday, March 16, 2017 - 11:00
Sometimes when good planning is elusive, instinct to rise to the only occasion could be the best platform to reduce wastage, rather than yearning for fairy tale solutions to economic hardship and industry survival.
Finance Minister Calle Schlettwein did a good job when he delivered a prudent and pro-growth budget in Parliament last week. The concern, however, is the implementation of the austerity measures in the wake of the absence of robust monitoring and evaluation mechanisms, as well as loopholes in policies that have been abused for the last two decades. This is something beyond the finance minister’s control in a political sense.
Prudence during an economic upheaval is not a magic wand to diagnose a remedy for a country with near empty pockets and a stagnant economy as it is not based on cost recovery, but an act of desperation to avoid the worst-case scenario. The budget is spot-on with increased investments in education, health, security and poverty eradication, and it has not increased company and individual taxes, but certainly it can’t stop inflation going wayward.
While many welcome actions taken by the State to eliminate financial wastage in the civil service, the strategy could backfire because of political backlash, unless new guidelines will find a way around it.
Financial prudence should either be part of all planning or it will lead to ill-thought through decisions that will destroy the little peaceful economic climate the country is left with.
It’s not clear whether cutting wastage in a difficult situation is a solution to increase unemployment or empower people to become job creators. Either way, political over-indulgence has now caught up with the Land of the Brave. Today it is hard to believe that the lucrative State jobs will ever be cut or whether keeping foreign trips and reduce S&Ts as well as delaying mega infrastructure development will be followed through to keep expenditure in check.
Since more than 40% of the population of 2,4 million people does not depend on government’s social welfare programs for a living, dwindling investments in development and economic growth could impede financial prudence in the face of a sluggish global economy.
Against all odds, preparedness against the unknown is the only insurance to rapidly react to negative growth which could inhibit prosperity. On the bright side, the entrepreneurs should instinctively exploit the pro-growth budget to take on opportunities presenting themselves around the country to create wealth and ensure prosperity during economic hardship.