The annual drumbeat of bigger Budgets has appeared to have some inherent virtue. The size of the Budget has increased from $221 billion in the Coalition’s first year in office to $300 billion in Budget 2019, an increase of 36%. There has no doubt been many benefits from these vast sums which it must be remembered are contributed to a large extent by the people themselves.
Unfortunately, perhaps forced by the nature of a Coalition, Guyana has the largest number of Ministers per capita of any country in this Region. Large Government are usually expensive, bureaucratic and inefficient. It is a huge cost to impose on the people. By its nature too, it is virtually impossible to sanction any Minister when there is no possibility of replacement since some members of the Coalition are miniscule.
President Granger too seems to have a preference for large governments with ministries with unrecognizable names and undefined purposes, and a particular liking for the Army of which he was once in the leadership. Persons landed with important Ministries are clearly not up to the job, having had no training or experience in management. It is simply illogical that someone whose only experience is heading an office of a handful of persons heads a ministry with thousands of persons overseeing the spending of millions of dollars. Under this Administration, that is not particularly exceptional.
The preference for the political and the loyal rather than the professional and the competent can encourage bad and very expensive decisions – with the Administration’s handling of the petroleum sector being a critical example – and often leaves little room to correct them, let alone sanction misconduct. Many of the initiatives or inheritances of the Administration have been too inefficient and too costly, the CJIA being a prime example. Even as the project moves to completion, there should be a post-audit review to identify what went right and what went wrong. That should be standard practice.
This Budget sends important signals by the Government and potentially by the Opposition as well. A Budget of this size and complexity that dazzles with details requires competent and careful examination. The dangers are in the details and in the 1500 plus pages comprising the three Volumes of the Estimates and the Budget Speeches. The opportunities for graft, corruption and cronyism are multitude and beyond the capacity of the Permanent Secretaries, the Accountant General and the Audit Office. The Fiscal Management and Accounting Act requires all agencies to have Internal Audit capabilities. They need to be activated and made to work.
In this, our 29th, Budget Focus we have identified many weaknesses, some small but others very large. It just seems unbelievable that the Minister can feel confident enough not only about ignoring the law but on announcing it.
On a technical issue, Minister Jordan must be honest and open about whether VAT in any form should be embedded in exports. And whether the unambiguous commitments made in Budget Speeches 2017 and 2018 still stand. Here is what he said:
Budget Speech 2017 paragraph 6.12 item (v), “I propose to expand the list of exempt items and eliminate all zero-rated items, with the exception of those pertaining to exports and manufacturing inputs…”
Budget Speech 2018 paragraph 6.25, “… in Budget 2017, a suite of amendments were introduced to the VAT Act and Schedules…it is recognised that additional amendments would be necessary to correct errors and omissions… None of these proposed amendments will negatively affect any individual or business.”
If he wishes to make Guyana the only country covered in a recent international survey not to give credits for all VAT paid on inputs, then he should state so.
The political backdrop against which the budget will be executed however cannot be ignored. Constitutional reform, governance and leadership are pivotal to economic success and are undermined when the Opposition and the Government engage in mutual demonisation and tit-for-tat politics. The past Administration was the subject of serious allegations of corruption and the recipient of adverse comments by this Publication. Unfortunately, allegations against this Administration are increasing. This is not a good omen as Guyana approaches First Oil.
The health of the President and his ability to carry out extensive tasks and responsibilities will assume greater significance as the country moves towards general elections in less than two years. Ministers need direction, guidance and oversight,
Ram & McRae hopes that the President is well enough to lead his supersized Government in a positive direction. Leadership counts – now more than ever.
Ram & McRae,
Chartered Accountants,
Waterloo Street,
Georgetown.
30 November 2018
