and the Minister of Finance
According to the
Minister of Finance, "the Government [has] enacted the most comprehensive
piece of legislation [Fiscal Management and Accountability Act 2003] on
budgeting ever formulated in this country." He goes on to say in his 2004
budget speech that the act which he loosely referred to as the new "budget
law" provides for a modern legislative framework for managing public
finances, and includes a number of provisions of this legislation aimed at
widening the scope of fiscal reporting to the National Assembly, thereby
fostering transparency, efficiency and effectiveness of public financial and
economic management. If only reality could be half as good as the Minister's
flowery language, then yes, Guyana would be on the way to achieving the
potential my grandmother's father told his wife about in persuading her to
come to Guyana.
But we need to look
deeper into the speech for some reality. "The Government is currently
negotiating with the IDB, a loan of US$32.8M for a project to support the
rational and transparent management of its fiscal and financial affairs.
Implementation of the project will start later this year." After twelve
years in government and billions of a combination of taxpayers' money and
loans - which in the long run are one and thesame - the Minister now
promises to impose another $6.4B debt burden on taxpayers to bring
accountability to this impoverished nation. But that is not all. He informed
the nation that the government had secured a grant of US$1M from the IDB to
"support the design of the institutional and operational model for proper
project cycle management system" - a term that despite the extravagant
language begs the question about the model we currently use to meet this
Praise for the budget shortfall
The President in
his address last Friday evening praised the Finance Minister and his 2004
Budget team for "coming up" with "a well-put together" National Budget for
this year, describing it as one which sets the tone for a massive capital
programme that entails billions of dollars to be spent on improving the
social sectors in the country. While this column has previously commented
favourably on the team at the Ministry of Finance, surely spending billions
of dollars in an environment where there is no "institutional and
operational model for proper project cycle management system" is a
regrettable indictment of those who committed the expenditure. Before
rushing to extend praise, the President should have asked for explanations
regarding the consistent failure to achieve capital expenditure targets
which have been growing and which in 2003 reflected an under-achievement of
the budgeted capital expenditure of $22,247.2B, or 22 per cent, similar to
the shortfall in 2002.
The crux of our
financial problem is a policy of tax, beg, borrow and spend. After all, the
press has now joined our politicians in (mis)leading the nation into
believing that bigger is better - a not uncommon fallacy. When it comes to
public finances this is not only wrong, but is downright dangerous.
We are all aware
that lean and clean has been corrupted by greed rather than need, but is the
concept dead as well? Must we now accept as normal and proper the creation
of new ministries for the less than successful (Messrs Reepu Daman Persaud,
Rohee and Sash Sawh), positions for those who served the PPP/C government
well (Laurie Lewis, Robert Persaud, Manniram Prashad and Feroze Mohammed),
and super salaries for the chosen few? And is it just an oversight that the
word 'accountability' was not used by the Minister to speak of the
But there is
another fallacy which appears to dominate the mindset of the politicians and
that is, that all one has to do to address a problem is to pass legislation.
Hoyte enacted the Offshore Banking Act in 1986 but how many off-shore banks
did we attract?
And last year we
had the Kidnapping Act but have the police or the DPP applied this in any
way and has it been of any effect? And how have we fared since the
introduction of the Domestic Violence Act? People and their managers solve
problems, not money and legislation.
appears that even the President now equates value with huge chunks of money,
while the international donor community indulges in a mad spree of
disbursing moneys to countries to enable it to extend its loan portfolio and
report on its contribution to good governance and accountability in the
The return of the Auditor General's report
The return of the
Auditor General's report on the national finances was not brought about
either by new law or the PPP/C but by a courageous and determined Anand
Goolsarran who was appointed Auditor General by President Desmond Hoyte, and
who was willing to challenge the powers in the Ministry of Finance including
Minister Carl Greenidge who were unhappy with the intrusive and professional
approach signalled by Mr Goolsarran.
I recall an
exercise in which I participated more than two decades ago in Grenada along
with the Accountant General Angus Smith, ACCA and the Auditor General
Godfrey Bain, FCCA.
exercise had as its aim repealing and replacing the Financial and Stores
Rules and the Financial Administration and Audit Act which were considered
by the Peoples' Revolutionary Gov-ernment of Maurice Bishop as archaic and
irrelevant, and for good measure an "unacceptable legacy of the colonial
That exercise which
did not have any significant incremental cost - we all had our substantive
duties - could find nothing inherently wrong with the elements of internal
controls existing in those rules and it is embarrassing to admit that the
results were little more than cosmetic changes, such as replacing Financial
Secretary with Permanent Secretary, and Accounting Officer with Chief
The Minister has
never given any indication of his familiarity with the findings and comments
in the annual Report of the Auditor General. However, an understanding of
those reports would better inform the Minister that it is not so much that
we need more legislation - one is even tempted to call for a moratorium on
new legislation pending the implementation of that which has recently been
passed - but rather better governance and management, clearly defined and
articulated policies, integrity, competence, non- interference by the
politicos in the day-to-day administration of the government, and ministers
being held responsible for their non-compliance with laws.
Where is the debt
strategy when we beg for debt relief one day and then borrow and
inefficiently spend an almost equal amount the next? Would it not be
instructive if the Minister in reviewing all the great achievements since
1992 could tell us that we have borrowed externally some US$900M since then,
and that despite the usual song and dance of debt write-offs, the internal
debt excluding the non-interest bearing debentures has increased since 1992
from $18.9B to $61.9B or 230 per cent, while the Guyana dollar equivalent of
external debt, despite all the write-offs, has only reduced from $247.9B to
$214.6B, or 13 per cent.
The Integrity Act
has failed to arrest the corruption in political and public life due as much
to politics as to the general cynicism and widespread corruption in the
society. How many money launderers and narco-traders have been placed before
the courts let alone put behind bars for blatant infringements of recent
The review of the
Auditor General's report will also reflect some other serious cases of laws
being completely ignored by past and present ministers, including the very
Minister who is now telling us about the virtues of more legislation. Let us
look at some of those cases.
In his 1996 report
the Auditor General identified the need for the complete re-organisation of
the Central Tender Board. The 2002 report stated that the Procurement Act
2002 had received presidential assent, but because of deficiencies therein
it was "replaced" in 2003 by another Procurement Act, yet all the Minister
could report in 2004 is that "the regulations to accompany the new
Procurement Act will be drafted this year."
Next year, no
doubt, we will hear that they have been drafted and are being reviewed.
It's the people, not the system
The 1997 report
repeated the urgent need for a review of the entire financial management
system, and while noting some initial reforms in the budget process, the
report emphasised the need for a more comprehensive and all-embracing
approach to financial management reform.
This was repeated
in the 2000 and 2002 reports with the latter report indicating that the
Ministry of Finance was in the process of drafting new legislation to
improve the government financial administration.
The Minister would
find as well that there are several deficiencies reported by the Auditor
General which have to do with people simply ignoring the laws - assured of
the absence of sanctions against them.
The majority of
ministries/departments/regions violated Section 36 of the FAA Act, which
requires all unspent balances as at December 31 of every year to be
surrendered to the Consolidated Fund. In some instances, cash books are kept
open well into the new year while payments were backdated.
The proceeds of the
Guyana lotteries continue to be retained in a special bank account outside
the Consolidated Fund, which is a clear violation of the law and which has
been abused by the President and his ministers.
deficiencies are reported annually at the Ministry of Home Affairs which in
one year transferred unspent balances on three capital programmes to the
Deposits Fund bank account, instead of the Consolidated Fund, a serious
breach of the Parliamentary approval to incur expenditure; breaches in the
Tender Board Regulations at the Guyana Defence Force and the Supreme Court
of Judicature; the awarding of several contracts by the Ministry of
Agriculture which could not be properly audited because of the
unavailability of the related files, advances unaccounted for at the
Ministry of Education, large number of the ships' files at the Customs and
Excise not available to the auditors, an official of the Ministry of Public
Works and Communication being in collusion with certain contractors and
several cases of overpayments on a contract as well as several contracts
being awarded through a selective tendering process.
Next week, we will
conclude this article by highlighting the several deficiencies in the Fiscal
Management and Accountability Act 2003, and refer to the number of cases of
legislation for which the Minister has responsibility and which are
routinely being breached.
(Back to top)