In our Conclusion last year, we predicted that despite that Budget being the biggest ever, the Minister would be coming back to the National Assembly with requests for supplementary appropriations. We also said that the we considered the Budget as ambitious, having regard to the limited capacity in the public sector. The major feature of this Budget is the dramatic increase in capital expenditure in the Budget.
Despite the grand plans, the Government seems satisfied with a low wage economy, having ignored the since 2019 for the minimum wage to have been increased to $60,000 per month. The irony of Government’s boasting of the world’s highest growth rate in 2022 sits poorly with its refusal to mandate an increase in private sector minimum wage to raise the living standards of the working poor.
A lot is riding on oil. While that is inevitable, no mechanisms seem to be in place to deal with the negative effects of the Dutch Disease and risks to the environment. The separate budget of the Environmental Protection Agency actually shows a significant decrease in income in 2022 as a result of a dramatic decline in revenue from operations. The other danger of course is what can happen to the exchange and inflation rates in the absence of adequate protection. It is unlikely that the Government will allow the G$ to appreciate as it should, meaning the correction will take the form of increased prices. Once that cycle begins, it will be very, very difficult to control it. The many of the gains from oil could be lost to a much higher cost of living. That would be particularly damaging to people on fixed incomes.
The Estimates show a $2.2 billion increase in Contributions to GECOM, presumably for the holding of the delayed Local Government Elections. If so, the Speech was silent on this as well as on constitutional reform, two pillars of democracy.
The number of tax measures, including the increase in the income tax threshold, were modest. Disposable income will rise only marginally while the purchasing power of that income is being eroded by inflation. After reviewing several of the line items and some of the vague programmes outlined under both the capital and the current budgets, we are concerned about the number of opportunities for leakages, including misuse of substantial financial allocations. Such concerns can be mitigated by the enlargement of the Office of the Auditor General, the presence of strong and effective internal audit functions and the operation of a well-resourced Public Accounts Committee.
The debate in the National Assembly begins on Monday January 31 with the unprecedented situation of no Opposition Leader following the resignation of the last incumbent Mr. Joseph Harmon.
