Budget has no initiative tackling poverty

– Ram and McRae review

While the government’s proposed 2018 national budget is likely to be much less contentious than this year’s, there is nothing in it that could be considered a pro-poor initiative, according to accounting firm Ram and McRae

According to the firm’s detailed annual review of the budget, Focus on Guyana’s National Budget 2018, which was published in Wednesday’s Stabroek News, Finance Minister Winston Jordan focused more on tax administration than on tax reform in his budget speech.

Though the firm noted that the tax amnesty and the reduction of the sums to be lodged as a condition for a challenge against a tax ruling were among the recommendations of the Tax Reform Committee that was appointed by the Minister on APNU+AFC’s assumption to office in 2015, it stated that the present “Administration does not seem to regard income and wealth inequality as serious issues and accordingly there is nothing in the Budget that could be considered a pro-poor step.”

Specific mention was made of the fact that Jordan’s lengthy speech “was short on references to gender and youth issues, on the issue of unemployment across the economy, the continuing problems faced by Linden and the National Insurance Scheme, and on specific measures to restore the economy to robust growth.”

Additionally, the review noted that with a second major catastrophe at the Georgetown Prison in less than two years, the Minister sought to place the blame on the rioting of the prisoners and “their wanton act of violence and mayhem.”

“It is unfortunate that politics dictate that he could not attribute any blame and responsibility to the President and the Minister of Public Security for their failure to act on the recommendations of the Commission of Inquiry into the first catastrophe,” the review stated.

‘Unbelievable’

An area of specific concern raised by Jordan and examined by Ram and McRae is the implementation of the Public Sector Investment Programme (PSIP).

Jordan has repeatedly bemoaned the rate of implementation of the PSIP and he declared in his budget speech that the performance was far below both the expectations and economic needs in 2017.

Ram & McRae reported that it tested the constant complaint of substantial underspending on the capital budget against publicly available information.

The review explained that in 2017, actual spending exceeded budget by 2.4% while in 2016, actual spending was below budget by 10.7%. However, in both years, spending in the second half of the year accelerated dramatically, the review said, before concluding that the numbers are “unbelievable.”

The firm expressed the suspicion that “this is a clear case of a conspiracy to violate the provisions of the Fiscal Management and Accountability [FMA] Act by senior government functionaries by leaving the Cash Book open and writing cheques on the old year well into the new year.”

The law requires that unspent funds at the end of the year should be returned to the Consolidated Fund, the firm noted.

This suspicion might find support in the 2016 Auditor General’s Report, where it was repeatedly noted that a number of “stale-dated” cheques, equaling millions of dollars, were still on hand as of September 2017.

In each of these cases Auditor General Deodat Sharma noted that the Audit Office recommended that the Head of Budget Agency ensures that there is full compliance with FMA Act 2003.

Expenditure

Also noted by the accounting firm in its review is that a disproportionate and the largest percentage of expenditure under the 2018 budget is controlled by ministers and the amount continues to grow.

It labelled this development “a glaring inconsistency with the Constitutional provision that requires devolution of authority to the regions and implies that adequate resources should be allocated.”

Note was also taken of expenditure on the ballooning Ministry of the Presidency, which continues to climb, with a 62.8% increase budgeted for 2018.

However, it was acknowledged that subsidies for Culture, Youth and Sport are now shown under the Ministry of the Presidency, while the Integrity Commission has been moved from this Ministry to the Office of the Prime Minister.

Parliament Office came in for criticism, with the accounting firm challenging whether it provides value for the money invested.

According to Ram and McRae, the current Parliament has little to show for the $1.5 billion per year that it has cost taxpayers and its paltry legislative results are an absolute disgrace. “It appears that there are two constraints to its effectiveness: its inability to have meaningful sessions because of its members’ penchant for overseas travel and the apparent lack of awareness of ministers of their responsibility for the issuance of the regulations that give meaning to legislation,” the review stated.

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