So far, we have carried two articles on the above subject. The first article looks at the period 1966 to 1992 where there was a progressive deterioration in public financial management so much so that public accountability was brought to a standstill in 1981. The Hoyte Administration had made a sincere and dedicated effort to bring about some semblance of normalcy but its efforts were short-lived due to a change in Administration.
The post 1992 period saw a restoration of public accountability through the almost single-handed efforts by the Audit Office. However, the gap covering the period 1982-1991 would remain a significant blemish in our history of public financial management.
Today, we continue our third in a series of articles on public financial management in Guyana’s post-Independence period.
Integrity Commission
Guyana is a signatory to the Inter-American Convention against Corruption and the United Nations Convention against Corruption. Both conventions require it to take concrete measures to minimize the extent to which corruption is perceived to exist among politicians and senior bureaucrats. This is done through, among others, annual declarations of assets and liabilities to an independent body comprising technically and professionally competent persons. These persons scrutinize the returns and probe any inconsistencies with observable lifestyles as well as any unexplained increase in wealth. One such mechanism is the establishment of an Integrity Commission whose responsibility it is to monitor and review annual declarations of assets and liabilities of senior government officials and politicians, and to promulgate a code of ethics to which these officials and politicians are required to adhere.
The Integrity Commission Act 1997 provides for the appointment of a Chairman and not less than two or more than four other persons appointed by the President after consultation with the Leader of the Opposition. It was not until 1999 that the first commissioners were appointed exclusively from the religious community. Arguably, they would have lacked the relevant skills to properly evaluate the declarations made to the Commission and therefore it would have been necessary for the Commission to engage the services of professional persons. However, there was no evidence that this was done. In April 2006, the Chairman of the Commission resigned and had not since been replaced. Since his resignation, there was no sitting of the Commission for want of a quorum.
The U.S. Department of State Country Report on Human Rights Practices continued to highlight the lack of effectiveness of the Integrity Commission as a key anti-corruption mechanism. The 2015 report stated that although there was general implementation of the law relating to criminal penalties for corruption by officials and that the current administration has responded to isolated reports of government corruption, there remained a widespread public perception of corruption involving officials at all levels, including the police and the judiciary. The report further indicated that the then Prime Minister in 2012 had given the assurance that members of the Commission would soon be appointed. Guyana continues to be rated poorly on the Corruption Perceptions Index (CPI) in 2015 with a ranking of 119 out of 168 countries surveyed and a score of 29 out of 100.
Programme Budgeting
Prior to 1998, the Government’s budget focused mainly on accountability for inputs. This was particularly so in relation to current expenditure. Legislators were therefore approving funding for Government departments with little or no knowledge of the intended outputs, outcomes, and impacts. This practice also had the effect of restricting the Legislative Audit’s ex post facto evaluation to one of regularity and compliance, and the evaluation of performance was rendered difficult.
In 1998, an attempt was made to shift the focus from accountability for inputs to one of accountability for results though a system of programme-based budgeting. This involved the allocation of resources based on functions and objectives, and results and outputs. Within each entity, a number of programmes were identified and these were to be supported by sub-programmes and activities. Initially, programme budgeting was introduced at the programme level and there was to be a gradual phasing in of sub-programmes and activities.
A review of the budget documents since the introduction of this new approach some 18 years ago, indicated that although resources were allocated on a programme basis, there were no sub-programmes and activities. In addition, although Programme Performance Statements by Ministries and Departments were presented to the Assembly at the time of the National Budget, they were only brief bullet point statements of objectives, strategies, impacts, and indicators. Given the absence of the quantification of indicators of achievement as well as a report of actual performance, it was not surprising that the Auditor General’s reports did not include any evaluation of the performance of Government departments vis-à-vis their programme budgets. As a result, legislators and the public at large have no knowledge of the extent to which these departments have achieved their stated objectives, and what were the actual outputs, outcomes, and impacts.
Guyana Revenue Authority
The World Bank’s assessment in 1992 of revenue generation was that the tax system was badly administered and collection levels were far below the potential of the system. The Government did take a number of measures to improve revenue collection, especially in relation to the Customs and Excise Department. Systems and procedures were overhauled, and revenue collections increased annually by on average 14.4 per cent during the period 1992 to 1999.
In a further attempt to strengthen revenue collections, the Guyana Revenue Authority (GRA) was established in January 2000 as a replacement to the former government departments of Customs and Excise, and Inland Revenue. This initiative saw a significant increase in the emoluments of the staff in order to attract and retain the much needed skills; the creation of the position of Commissioner-General to manage the day-to-day operations of the re-designated Customs and Trade Administration, and the Internal Revenue; and the establishment of a Governing Board to provide oversight responsibilities. Despite these measures, revenue collections increased annually by on average a mere 9.2 per cent during the period 2000 to 2005.
In January 2007, the Government introduced the Value Added Tax (VAT) at a rate of 16 per cent, resulting in a substantial increase in revenue collection. It had indicated that the implementation of VAT was a revenue neutral measure since a number of other taxes were abolished. However, several interest groups, including the then political Opposition, claimed that VAT has caused a significant increase in the cost of living and had argued for a lowering of the rate. In his budget speech to introduce the 2008 budget, the Minister acknowledged that VAT revenue exceeded projections by approximately 50 per cent. The present Administration has promised a reduction in the rate, but to date it yet to materialize.
2001 constitutional amendments
One of the main constitutional amendments undertaken in 2001 is the provision for the establishment of a Public Procurement Commission. This amendment was made in response to the persistent criticisms by the Auditor General over the years of the failure of Government departments to adhere to the requirements of the Tender Board Regulations. Contract-splitting to avoid open and transparent competition among potential bidders, and adjudication by the relevant tender boards, was a common practice. This was in addition to defective work performed; inferior quality of goods supplied due to the poor choice of contractors and suppliers; overpayments to contractors and suppliers; inflated contracts and allegations of kickbacks, among others. Knowledgeable and experienced persons have offered various estimates, ranging from 15% to 20% in value, as to the level of leakages in the procurement system as a result of the above.
There was public pressure to reform the government’s tendering procedures, since many stakeholders held the view that the arrangements in place did not provide them with an acceptable degree of confidence as to the fairness and transparency of the government’s procurement process. In particular, the various tender committees were appointed by the Minister, and the Cabinet was responsible for approving the award of contacts above a certain limit. Many contractors also believed that they were not fairly treated during the tender process and there was no mechanism in place to address their concerns.
It is against this background that during the constitutional review process in 2001 involving major stakeholders, it was decided to amend the Constitution to provide for, among others, an independent and impartial Public Procurement Commission with reporting relations not to the Executive, but to the Legislature. Under this new arrangement, the Cabinet’s involvement in public procurement would cease or be progressively phased out. The Commission is required to consist of five members who have expertise and experience in procurement, legal, financial, and administrative matters. These members are to be appointed by the President after they have been nominated by the PAC, and approved by no less than two-thirds of the elected members of the Assembly. In addition, a member cannot be removed from office except as provided for in the Constitution. An important safeguard is that none of the functions of the Commission can be removed or varied except by the votes of not less than two-thirds of the elected Members of the Assembly. However, any addition thereto requires the votes of a majority of elected Members.
Despite this important amendment to the Constitution aimed at securing public confidence in the public procurement process, 15 years later, the Public Procurement Commission is yet to become a reality. In addition, the Cabinet continues to approve contracts whose values exceed $15 million while the responsibility for the appointment of members of the National Procurement and Tender Administration Board (NPTAB) continues to be vested with the Minister who also appoints three of the five members of the tender boards of Government departments.
The continued failure to have in place a constitutionally functioning Public Procurement Commission almost inevitably leads to the perception that Government was not willing to give up its involvement in the procurement process at both the levels of the Cabinet and the Minister. It has been a year since the new Administration took up office, and despite an election promise, citizens are still awaiting the establishment of the Commission.
Included in the 2001 constitutional amendments is the requirement for the Auditor General to submit his reports to the Speaker of the Assembly rather than to the Minister. In addition, the public accounts of Guyana have been defined to include the accounts of (i) all central and local government bodies and entities; (ii) bodies and entities in which controlling interest vests with the State; and (iii) all projects funded by way of loans or grants by a foreign State or organization. The Audit Office was also given financial and operational autonomy with oversight responsibility by the Public Accounts Committee.
