Today is Election Day. It is the sincere hope of this column that peace will prevail in an atmosphere free of fear or intimidation, as citizens proceed to cast their votes for the political parties of their choice. Whatever, the outcome of the elections, it is incumbent on all citizens to respect the results so that the next government that is formed is allowed to proceed smoothly with management of the affairs of the State. Any lesser arrangement will be detrimental to the public good and the public interest.
This is the fifth in a series of articles on the above subject. Last week, we had posed 15 questions, the answers to which we believe can form the basis for the commencement of a process aimed at improvement. We discussed three of these relating to our cash resources, and our short-term and long-term liabilities. In our consideration of the external debt, we noted that eight loans agreements were entered into as at 31 December 2012 with the China Exim Bank and the India Exim Bank to execute a number of projects, some of which turned out to be controversial. The contractual amounts involved totalled US$294.892 million of which actual disbursements amounted to US$119.820 million. We touched on two projects, namely the Skeldon Estate Modernisation Plant; and the GPL Infrastructure Development Programme.
As regards, the E-Governance Programme, the related loan amount was US$32.8 million while there was a grant amount of US$18.4 million from the Government of China. As at 31 December 2014, these amounts would have been fully disbursed, and with Central Government financing of US$18 million, the total cost of the Programme was US$69.2 million. If one were to deduct the amount of US$36 million which would have been expended in the acquisition of laptops, the expenditure on the infrastructure works under the E-Governance Programme, inclusive of the Fibre Optic Cable Project, would amount to US$33.2 million.
On 18 March 2015, the Government entered into an agreement with a hitherto unknown private company, with a small share capital of G$14,000, to carry out rehabilitation works on the Fibre Optic Cable Project at what the Head of the Presidential Secretariat claims to be no cost to the Government. In exchange, the company has been given the right of use of the cable, repeater stations, roads and access to poles, among others, for a period of 25 years with an option to renew for an additional 15 years. Recognising that it has neither the capacity nor the capability to execute the agreement, there is provision for the company to enter into a joint arrangement to execute the agreement. The company also enjoys one of the most generous concessions throughout the period of the agreement, including tax holidays, remissions, waivers and duty-free concessions every three years.
The agreement raises serious questions as to who will be become the ultimate beneficiary of what can only be described as one of the most generous giveaway of public resources paid for/to be paid for by taxpayers’ hard-earned money. One can sense the link with the granting of two licences for television and internet services in December 2010 as well as ten radio and cable licences days prior to the 2011 elections to individuals and entities with close association to the ruling party. Let it be said, it is the duty of every government to protect and preserve public resources, and not to superintend over their dissipation or dissolution on behalf of private interests. When this happens, there is a betrayal of public trust by our elected officials. This column therefore adds its strong voice of condemnation of the agreement and calls for its immediate rescission and disciplinary action against those responsible for this violation.
The loan amount for the design and construction of the Specialty Hospital was US$19 million, and the contract was awarded to an Indian firm with no prior experience in the construction of such a facility. The Government eventually terminated the contract because of unsatisfactory performance. However, it was unable to recover the mobilization advance of US$4.3 million because the performance bond issued by the company was reportedly found to be defective. As regards the acquisition and installation of irrigation pumps, the loan amount was US$4 million, and the related contract was awarded to the same Indian firm. Up to the time of writing, the Government is yet to confirm how many pumps were received and installed and whether they met the required specifications.
In relation to the Cheddi Jagan International Airport Expansion Project and the installation of traffic lights, the related loan amounts were US$130.952 million and US$2.1 million respectively. This former is also mired with controversy while the latter, although completed several years ago, appeared not to have been satisfactorily performed, as evidenced by the fact that several of the traffic lights in the city are not working. Finally, the loan amount for the construction of the Providence Stadium was US$19 million. Knowledgeable persons have raised serious questions about the cost vis-à-vis the quality of the works and whether we obtained the best value for money.
Need for improvement in the budget processes
For three consecutive years, we have seen how the system was abused in a manner that caused significant amounts of unauthorized expenditure to be incurred.
This was because of the requirement for the Estimates of Revenue and Expenditure to be laid in the National Assembly not later than 90 days from the end of the fiscal year; and for the Minister of Finance to authorise withdrawals from the Consolidated Fund to meet the cost of essential services for the first four months of the year pending the passing of the Appropriation Act.
These requirements were laid down at a time when there were no rapid advances in information technology. There is now no reason why the budget cannot be finalized and approved before the commencement of the fiscal year, as is the practice of most private sector organisations. Indeed, it is inconceivable in this day and age for the fiscal period to commence without an approved budget in place.
The Government adopted programme budgeting since 1998 but the exercise has so far been a cosmetic affair to appease International Financial Institu-tions for the grant of debt relief. Programme budgeting is intended to provide a framework for the accountability for results, as opposed to one of accountability for inputs.
When one examines the budget documents, one cannot escape the conclusion that the exercise to institutionalize this form of budgeting has been a sloppy and neglectful one, indeed one of paying passing interest. Besides, there is no reporting back to the Legislature in terms of outputs, outcomes and impact having regard to the amounts expended on programmes and activities. The Fibre Optic Cable Project readily comes to mind.
Use of information technology
In 2004, the Government introduced the Integrated Financial Management Accounting System (IFMAS). It is an information technology-based budgeting, accounting and reporting system that manages spending, payment processing, budgeting and reporting for governments and other entities.
IFMAS incorporates essential financial management functions into one software suite. If fully and properly implemented, including ensuring requisite training for key operatives of the system, IFMAS can improve significantly an organization’s financial management practices through better management of cash resources; improved accountability for all assets (including inventories) and liabilities; more timely and accurate budget and financial reporting; enhanced decision-making; and improved overall efficiency and effectiveness of operations. These could in turn lead to significant cost savings.
IFMAS has seven modules. However, to date, perhaps two of the most important modules – the Purchasing, and Asset and Inventory modules – are yet to be activated. When one reflects on this, coupled with the failure to establish the Public Procurement Commission, one is left to conclude that the proper accountability for government’s assets and inventories has been a source of complete neglect. Only a few days ago, we learnt that a payment of $2 billion was made on the last working day before today’s elections for the procurement of drugs and medical supplies but the items are yet to be supplied.
Apart from the unprecedented action of making such a large advance payment as well as the unilateral action by the Cabinet to award the contract to a company with close association with the ruling party, can we really rely on a manual system to track all deliveries to ensure that the Government received full value for the amount expended? In addition, without an information technology-based system to monitor stock levels and the shelf lives of drugs and medical supplies, there is a serious risk of expired drugs being administered to patients, thereby endangering their lives.
Assessment and collection of State revenues
Most of our revenue is derived from various forms of taxes – income tax, corporate tax, value-added tax (VAT) and customs duties, among others. However, this column has been at pains to point out the enormous amount of unexplained wealth that certain individuals and businesses display without any assurance that they are being properly assessed for collection of taxes.
A conservative estimate is that we have the ability to increase our taxed revenue by at least 50 per cent. In this way, we can offer some relief in terms of VAT by reducing the rate from 16 per cent to about 10 percent without eroding our taxed revenue base.
In terms of non-taxed revenue, the Government over the years has embarked on the wholesale disposal of State assets to favoured individuals and businesses at significantly less than market values. To compound matters, the proceeds as well as dividends from public corporations do no find their way to the Consolidated Fund but are rather intercepted and placed into the coffers of NICIL to be used at the discretion of the Administration without the involvement of the Legislature.
A similar interception takes place in respect of the proceeds from the Guyana Lotteries, this time involving the Office of the President. These irregularities must come to an end and those responsible must be brought to account.
To be continued –
