-projects loss of over $100b from inefficiencies
Chartered accounting firm Ram and McRae has criticised the trillion-dollar 2024 budget as being all about spending and borrowing and not addressing the cost of living crisis that has snared thousands of people in the lower brackets.
In its annual budget review for Stabroek News which is carried as an insert in today’s edition, Ram and McRae said: “This Budget makes history, not all for the right reasons. It is the largest Budget ever – by far -much of it in capital works. It is all about spending and borrowing. The Minister has given no explanation for the levels of spending and borrowing. Even if this Government can bring inefficiencies down to 10%, we will have a loss over 100 billion dollars, before any later supplementary provisions”.
The firm said that because of a change in how the Estimates are constructed, the exact starting balance in the Consolidated Fund cannot be determined.
“In other words, the Government will be spending from a fund whose balance is unascertained. The Ministries, Departments and Regions have demonstrated no financial capacity or capability to handle the kinds of sums for which the Minister seeks parliamentary approval”, the review said.
It added that the Capital Budget is now $666.1 billion dollars or US$3.1 billion, without an independent planning authority. It said that Volume 3 of the Estimates identifies close to 400 projects many of which bear nebulous names and descriptions.
“One common factor is that many of them have not been subjected to any serious evaluation. Indeed, many bear the hallmark of slush funds”, the review said.
It cited some examples.
It said that regional economic transformation is allocated $5 billion while Community Infrastructure Improvement Project is allocated $13.4 billion. The Low Carbon Development Programme is allocated $50 billion while the Amerindian Development Fund is allocated $4.6 billion dollars, even though it is highly unlikely that such a fund in fact exists. Another $3.3 billion for Industrial Estates and Payment of Retention is assigned under the Ministry of Tourism while under Agriculture there is the Integrated Agriculture Development Programme for $6.7 billion to cover enterprise and agriculture development initiatives.
The budget review argued that the massive Gas to-Shore project is facing an uncertain funding situation, and “having so committed itself, the Government may have to rely on the Natural Resource Fund for salvation”.
The review argued that the legislative performance of this Administration is sorely lacking.
Single piece
“There can be no excuse for the fact that most of the Ministers have failed to produce even a single piece of secondary legislation, let alone primary legislation. It is hard to put this down to absorptive capacity. President (Irfaan) Ali has to recognise that this reflects on him, and he needs to demand more from his ministers. But he himself needs to lay put his policy agenda in the National Assembly and not have this communicated by some third party on a Thursday”, in what appeared to be a reference to Vice President Bharrat Jagdeo.
Addressing the cost of living in one of its focus pieces, the review said that Finance Minister Dr Ashni Singh announced inflation for the year at 2.5%, following an increase of 7.2% in 2022.
“The announcement has had mixed or no reaction. As one of the issues identified for attention as an issue of significance, this essay looks at a survey on cost of living begun by the Stabroek News in October 2022. The feature is titled How the Cost of Living is affecting People and has now been covered in fifty-eight articles, arising out of interviews conducted by Stabroek News reporters.
“Given the personal nature of the responses, verification was not possible. Focus has access to the monthly purchases by Ram & McRae made from independent sources in Region 4 and the purchase of fruits and vegetables from the markets. Our own experiences reflect those of the respondents to the survey”, the budget review said.
It said that the geographical breadth, demographic depth of the coverage by Stabroek News and range of products and services were sufficient to make some useful conclusions and recommendations. Guyanese were not only not afraid to speak but were willing to be photographed as well. That probably reflects the severity of their plight.
“Respondents shared their personal stories about the difficulties they face on a daily basis, such as being unable to afford basic school supplies for children, challenges in affording nutritious food, and the constant struggle to balance budgets. This concern appears corroborated by a recent joint report by UNICEF, WHO and the World Bank that Guyana ranks among leading Caribbean in various forms of child malnutrition.
“Significantly, respondents did not identify any single cause of the increases as predominant, with some attributing the factors as including global events such as the COVID-19 pandemic, shipping costs, wars and climate change. Vendors and business owner respondents, while not accepting any responsibility for price gouging claimed that they themselves face the challenge of in balancing rising costs with maintaining reasonable prices for customers”, the budget review said.
It noted that the key constant in the series was:
Almost all basic goods and supplies have food items keep getting more expensive.
Salaries and incomes are not keeping pace with the rate of inflation.
The high cost is having social and economic effect on ordinary people, leading to frustration and anger.
“Focus notes with considerable disappointment that the national minimum wage has not changed since 1st of July 2022. An increase in the tax threshold does nothing to someone who is paid 30% less than that threshold. A minimum wage of $60,147 per month is simply unacceptable, insensitive and uncaring.
“We need benefits that genuinely target the unemployed and the working poor. This is a task for the social and economic and finance ministries. It should come as no surprise therefore that despite all the talk about diaspora projects and helping the poor, no dent is being made on the net migration rate”, the budget review said.
