This exercise in futility will continue in full measure from today with `debates’ which traditionally fall far short of what these are supposed to be. The one redeeming quality of these ceremonies would be the pursuit of tradition and the semblance of parliamentary normality portrayed.
Budgets in the conception of the man/woman in the street connote at an elemental level an examination of how much money is available for expenditure and how it can be used to improve the quality of day to day living while preparing for the future and insulating the household. Examined through the prism of this very basic construct the 2010 budget presented by Finance Minister Singh leaves many questions unanswered. For example, why the heavy tax burden via income tax and VAT has not been mitigated at all by a lifting of the income tax threshold from $420,000 per annum?
Having done away completely with the charade of pre-budget consultations with important stakeholders in the society, the government can now assign no blame to anyone for the continuing high level of deficit financing. In an environment of absolute need for fiscal conservatism and responsibility, this government has been massaging its ego so that its information arms can herald after each installment that this was the biggest budget ever.
The message that the government needed to convey to all sectors particularly those that are under pressure is that they should only be spending what they can reasonably anticipate accruing during the year and not rely on borrowings that veer increasingly closer to market lending rates or depend on the generosity of benevolent donors who apply many conditions and attachments to the national patrimony.
Perhaps, Minister Singh should have explained in his budget presentation the government’s growing predilection for deficit financed budgets and why this was not fiscally irresponsible. It might have been a seminal lesson for the country and government in determining priorities if the minister had attempted to present a balanced budget and eschew expenditure that either was not urgent or could not be afforded. The continuing trend towards running deficit budgets has stark implications for the apparent abandon with which the government continues to borrow.
Domestic debt has ballooned to $87B without the slightest hint from the government on how this is to be addressed and the ramifications for the average citizen. It was an issue that had been repeatedly highlighted by the former Auditor General Mr Anand Goolsarran in his reports on the public accounts. In tandem with the domestic debt, the external debt is now on a steep upswing – US$933M at the end of 2009 compared to US$718M at the end of 2007. In view of the consternation that had been repeatedly expressed by the PPP when in opposition about the PNC’s US$2.1B debt, the unlikelihood of further debt write-offs considering the multilateral initiative that extinguished large portions of debt and the diminution of access to concessional loans, the continuing unchecked borrowing is both reckless and a recognition that private inflows are far below what they should be.
Gold’s buoyancy and the likelihood that this will continue in the light of the international flight to safe havens has further underlined the jeopardy that the sugar sector has found itself in and the volatility that it and the other primary commodities like rice, bauxite and timber face in terms of their annual contributions to the GDP. Sugar remains under immense pressure to perform particularly in light of the serious teething problems with the Skeldon factor and the absence of an adequate cane supply. It is this stagnation that Finance Minister Singh was unable to extricate his presentation from. As we have said umpteen times before in these columns, the government has signally failed to progressively move the economy away from its cloying dependence on the primary commodities. Despite the declarations of economic diversification contained in the development plans that the PPP/C has engaged there is little evidence that this is taking place or about to take place. The grow-more-food campaign – with little value-added – has not taken off in the manner that was anticipated. That aside there is no evidence that the services sector is expanding. The potential advantages in the call centre industry have not been transformed into reality and will have to await the available of cheap bandwidth and reliable power supply in all parts.
It should not escape scrutiny that the lucrative returns from the gold industry have been produced on the back of private enterprise and in many cases by micro operators – evidence that entrepreneurship in an enabling milieu can yield results. It is therefore disconcerting that the government has created significant disquiet in the industry by the post-haste need to satisfy the environmental requirements in the Memorandum of Understanding with the Kingdom of Norway – several of which could have already been in place had they been phased in since 1992.
Perhaps the cruellest irony and also reflective of both the vicissitudes of the weather and the absence of an aggressive and carefully elaborated plan is the focus on the Hope drainage canal amid the aridity of El Nino. Much of this irony can be traced back to the poor management of the East Demerara Water Conservancy (EDWC) for which billions will be assigned to mitigate flooding and construct a new drainage route at Hope, East Coast to the Atlantic. The EDWC has become a dangerous double-edged sword. In periods of heavy rainfall it fills easily and is prone to disastrous leakage as in 2005. In periods of drought its holding capacity is insufficient for coastal needs because of heavy siltation and blocked channels. Had there been a sufficiency of investment in the proper maintenance of the EDWC prior to 2005 the drought/flood contradiction would not have been so severe. On this same front there has been no progress on whether phases two and three of the MMA scheme would be proceeded with or even on the dredging of the rivers which are prone to flooding.
As argued cogently in the Ram and McRae budget review “There is nothing in the budget that defines or describes the overarching vision for the country and the economy, other than as the Minister said, to maintain those same policies, which have rewarded a few at the expense of the poor and the working class”. It fails to uplift and inspire and a clear road ahead is not signposted. The minister may have a second chance this week in Parliament.
