Recent Trends of Public Sector and Financial Management in Sri Lanka

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.

Sri Lanka Journal of Development Administration, Vol. 5, pp. 14-26, 2015