Part 1

Introduction

So often we hear time-worn sayings like ‘Chickens coming home to roost,’ ‘History repeating itself’ and ‘Forgetting the lessons of history,’ and we think they are just platitudes of no consequence. Yet the brouhaha in the National Assembly last Monday showed how some such things are not only more than idle talk, but rather powerful enough to have an after life.

The occasion for the war of words in the National Assembly was consideration of Supplementary Appropria-tion (No.3 of 2009) Bill 2010, for $8,245,758,278 as further and additional funding for various purposes, some of which had already been spent (Contingencies) and to be spent (Supplementary Appropria-tions).

On one side there were Prime Minister Sam Hinds, Housing Minister Irfan Ali and Health Minister Dr Leslie Ramsammy, three persons whose ministerial portfolios were significant would-be beneficiaries of the bulk of the supplementary funds. Over the other side were two attorneys-at-law, Opposition Members of Parliament Winston Murray (PNCR) and Khemraj Ramjattan (AFC), both of whom eventually left the arena in anger and frustration, threatening to take the fight elsewhere.
Déjà vu
To understand the exchanges one needs to delve a little bit into history, going back to the National Development Strategy which was adopted by the National Assembly a couple of years ago. Chapter 13 of that strategy dealing with Fiscal Policy and The Public Sector had this to say about the Contingency Fund which is so often confused – either by design or otherwise – with Supplementary Appropria-tions.
“Deficiencies in the Budget Process: Largely due to deficiencies in the budgetary process, the Contingencies Fund has been used to meet all kinds of expenditures, such as shortfalls in ministries’ provisions arising from basic miscalculations in estimates and unrealistic budget assumptions about exchange rate changes, inflation and spending patterns, and the introduction during the course of the year of new projects or programmes deemed ‘necessary’ or ‘relevant’ by a political or high-ranking technical functionary. Instead of being used for emergencies, such as a major breach in the sea defence system – the use intended by the National Assembly – the Contingency Fund now serves as a source of financing for unauthorised (by Parliament) and additional expenditures.”

More and more we have to admire, and owe a debt of gratitude to, the scores of persons who contributed to that document. Had we taken the NDS seriously we would long have been on an environmentally-conscious development trajectory rather than travelling to dictatorships like Iran to beg for money to sustain our economy.
The first walkout
The French have a wonderful way of expressing the English equivalent of “the more things change the more they remain the same.” And that introduces the second bit of history, this time in December 2003 when the Fiscal Management and Accountability Act 2003 came up for consideration in the National Assembly. The Stabroek News of December 16 of that year reported the PPP/C refusing a request from the Opposition PNCR to send the 87-clause bill to a select committee for detailed consideration. The Minister of Finance then was Mr Saisnarine Kowlessar and the reason he advanced for the government’s refusal of the request was that urgent passage was necessary to pave the way for debt relief of US$30 million from the World Bank and the IMF for the next twenty years. That explanation appears as strange as the request was sensible but then the National Assembly has never been the forum for the most sensible decisions or debate in Guyana.

Given no more than forty-eight hours to study and debate the bill, Mr Winston Murray, the PNC Shadow Finance Minister walked out in protest, allowing the overwhelming passage of the bill that may soon be at the centre of a legal action by the Alliance For Change. Ironically, the PPP/C may itself be a loser for not having read and understood what is clearly a complex and possibly badly worded piece of legislation. Indeed a statement given by Mr Robert Corbin, the PNCR leader on the recent exchange suggests that, at the very least, the act lends itself to continued misunderstanding in how billions of taxpayers’ funds are spent and accounted for. Over the next couple of weeks Business Page will examine some of the main provisions of the act, the principal objective of which is better transparency and accountability for the receipts and payments of the state in the Consolidated Fund which has as a sub-fund a Contingency Fund.

The Supplementary Appropriation

Section 24 of the FMAA requires that the variation of an appropriation other than reallocation of approved appropriations must be authorised by a supplementary appropriation act prior to the incurring of any expenditure. And that is where the experienced Prime Minister, the adventurous Health Minister and the green Housing Minister appear to have run into problems, confusing the supplementary funding with the kind of expenditure for which the Contingency Fund was specifically set up.

It seems too that the Finance Minister Dr Ashni Singh is also not sufficiently familiar with the act’s provisions on supplementary appropriations since he consistently fails to comply with the requirement that on the introduction of a supplementary appropriation bill, he is required to present to the National Assembly the reasons for the proposed variations and “a supplementary document describing the impact that the variations, if approved, will have on the financial plan outlined in the national budget.”

And before we go on perhaps it would be useful to note that Ram & McRae in Budget Focus 2008 had identified the absence of meaningful debate and real accounting for such additional funds.

Did it not strike our parliamentarians as odd that they should pass legislation that requires a request for $100 million in the budget to be subject to extensive scrutiny and debate but for an $8 billion supplementary request to be supported by only very limited information and subject only to questions and not a debate?

Cocking a snook at Parliament

Because of the supremacy of the constitution which empowers and regulates the raising of revenues and the incurring of expenditure by the government, we will also be looking at how the FMAA gives effect to and is circumscribed by the constitution. In researching for this column I found an interesting article by Indian Professor P.K. Tripathi and titled Lawless withdrawals from public funds: Cocking a snook at Parliament. It is apparent from that article that the application of responsible public accounting begins with the appreciation of a fundamental point about democracy and the rule of law.

As Tripathi points out, in a democracy the government must function both in respect of determination of its policies and the administration of those policies strictly under the control of the representatives of the people. The democratic process requires that no public monies can be spent without a grant made by the Parliament following a request by the government in the form of an Appropriation Bill or a Supplementary Appropriation Bill presented to the National Assembly specifying the purposes for which it plans to spend and the amounts of money it plans to spend on each of those purposes.

One exception for the prior approval of the National Assembly is in respect of monies out of the Contingencies Fund. I will look at the governing constitutional and statutory procedures next week, but for now it is not at all clear that those on the government side of the House, including the Prime Minister and Leader of the House Samuel Hinds and the Finance Minister Dr Ashni Singh, Dr Leslie Ramsammy and Mr Irfan Ali are familiar with those provisions. The two financial papers which were embodied in Supple-mentary Appropriation Bill #3 were in respect of both advances from the Contingency Fund and Supplementary Provisions for the year 2009. If we accept the position in the law that supplementary provision must be approved prior to expenditure it would seem beyond logic that one can be asking for supplementary provision for 2009 in 2010!

The New GPC again
Included in Financial Paper No. 5/2009 for $1.449 billion were amounts totalling $473 million for purchases of drugs mainly from the New Guyana Pharmaceutical Corporation towards which this government had earlier found itself acting illegally. Is history now repeating itself with breaches of the Contingency Fund being involved in payments made to the company between December 28 and 31 to procure drugs to last up to April 2010? What neither Dr Ramsammy nor Dr Ashni Singh told the National Assembly is when the drawing rights for these were requested, and issued in accordance with section 41 of the FMAA.

It may well turn out to be entirely ironic that one of the few amendments proposed by Mr Winston Murray and accepted by the government when the FMAA Bill was debated in 2003 may come back to haunt the government. And that is in relation to penalties for breaches.

The act makes it an indictable offence punishable on conviction to a fine of two million dollars and to imprisonment for three years for any official to knowingly permit any other person to contravene any provision of the act.

Maybe the Prime Minister sensed the rising temperature and not so implicit threats during the exchange in the National Assembly, taking refuge in the need to consult legally.

Those who have honed their political skills and owe their allegiance to the architects of the more permissive recent financial arrangements do not appear so compelled.

To be continued