Introduction
On 15 February 2012, the National Assembly considered Financial Paper No. 7 presented by the Minister of Finance for a supplementary estimate of $2.241 billion to replenish the Contingencies Fund for advances taken during the last quarter of 2011. The Assembly approved of most of the items contained in the paper, with the exception of $79.6 million because, in its view, additional explanations were needed.
The two main items rejected were: $25.5 million expended on national awards and the swearing in of the new President; and $29.1 million for site preparation for the construction of the new specialty hospital. The National Assembly agreed that the Minister could make a resubmission at a later date. The resubmitted request was considered on 14 June 2012 via Financial Paper No. 9. However, the Assembly withheld approval because there were no changes to the original submission. As a result, the Contingencies Fund is yet to be reimbursed with $79.619 million, and it is unclear how the matter will be resolved.
It should be clarified that there are two types of supplementary estimates: (a) to clear advances from the Contingencies Fund for expenditure already incurred; and (b) to meet expenditure to be incurred because the original estimate is not sufficient or a need has arisen for which no provision or inadequate provision has been made in the original budget.
What is the Contingencies Fund?
The Contingencies Fund is a sub-fund of the Consolidated Fund. It is to be used under the authority of the Minister of Finance to meet expenditure for emergency purposes, for example, a national disaster such as a severe earthquake or a devastating flood similar to the one that took place in January 2005. Recourse to the Fund is a last resort since, given the speed of events, it may not be possible to convene Parliament in time to obtain the necessary approval to incur the expenditure. This is of course on the assumption that the expenditure is unforeseen; no other provision or insufficient provision exists; and the expenditure cannot be postponed without jeopardizing the public interest.
Constitution/Legal Requirements
Article 220 of the Constitution states that Parliament may make provision for the establishment of a Contingencies Fund and for authorising the Minister to make advances from the Fund if he is satisfied that there is an urgent need for expenditure for which no other provision exists. Where any advance is made from the Contingencies Fund a supplementary estimate shall, as soon as practicable, be laid before the National Assembly for the purpose of authorising the replacement of the amount so advanced.
The Fiscal Management and Accountability (FMA) Act elaborates by stating that the Minister has the sole authority for the release of moneys from the Contingencies Fund. This authority cannot be delegated. If he is satisfied that an urgent, unavoidable and unforeseen need for expenditure has arisen:
● for which no moneys have been appropriated or for which the sum appropriated is insufficient;
● for which moneys cannot be reallocated as provided for under this Act; or
● which cannot be deferred without injury to the public interest,
the Minister may approve a Contingencies Fund advance.
The total amount permitted to be drawn from the Contingencies Fund cannot exceed two percent of the estimated annual expenditure of the last preceding fiscal year as shown in the annual budget proposal approved by the National Assembly or such greater sum as the National Assembly may approve. The Minister is also required to report at the next sitting of the National Assembly on all advances made out of the Contingencies Fund since his previous report, specifying: (a) the amounts advanced; (b) to whom the amounts were paid; and (c) the purpose of the advances.
Analysis of the Problem
Since 1992, the Auditor General has had cause to report on the apparent abuse in the use of the Contingencies Fund. In many cases, the criteria for making the advances were not met, and several advances were for routine expenditure. This practice became institutionalized since the Executive was also in control of the Legislature, and no amount of objections from the Opposition would have influenced the Executive to comply with the constitutional/legislative requirements. Although no audited accounts are available for the period 1982-1991, the evidence suggests that this practice had been going on in the pre-1992 period.
The expenditure was incurred prior to the 28 November 2011 national elections, and the government might have assumed that it would have won a majority of seats in the National Assembly. This did not happen, and the Executive was placed in a real dilemma to clear advances from the Contingencies Fund that did not meet the criteria set out, as the two cases highlighted above would suggest. The Minister, in both his original and resubmitted papers, did satisfy the other aspect of the law in that he specified the amounts advanced and to whom, as well as the purpose of the advances.
Conclusion
Given that the abuse of the Contingencies Fund has been going on unchecked for well over two decades, and that Guyana is in a state of transition in terms of the new legislative arrangements, the National Assembly may wish to reconsider its position and approve the reimbursement of the Contingencies Fund with the stated understanding that the Assembly considered that the Minister might have erred in his judgment on the criteria set out in both the Constitution and the FMA Act in terms of the recourse to the use of the Contingencies Fund.
If there is any problem with the related expenditure, the Auditor General during his examination of the receipts and payments of the Contingencies Fund for 2012 could point this out in his report in September 2013. However, given that this will take place at least 15 months from now, the Public Accounts Committee could request him to conduct a special audit of the expenditure in question and report the results as quickly as possible. Finally, the Legislature should put in place appropriate safeguards to avoid a recurrence.
