Business Page – November 07, 2004

The Infrastructure Development Fund Act

Conclusion

Challenging reason:

One of the reasons the Government has given for the establishment of the Infrastructure Development Fund is the need to accelerate the infrastructural development of the country. That is indeed a noble and desirable objective but is it the fig leaf that conceals some other less honourable motive? Is the Government suggesting that the absence of such a fund has hindered infrastructural development? If so where is the evidence? Anyone who follows the annual budget speeches by the Minister of Finance would be only too familiar with the annual boast of how successful the Government is in terms of achieving the Public Sector Investment Programme (PSIP). Let us quote from the 2004 Budget Speech by Minister Kowlessar:

"Mr Speaker, the Government was able to implement 95 per cent of the public sector investment programme (PSIP), which was budgeted at $16.8 billion. This extremely creditable performance was due to improved programme and project planning, aggressive project monitoring, and the cooperation and logistical support of all stakeholders." But to show that 2003 was not some anomaly or an idle boast, let us look at the achievement of the PSIP for the past ten years as taken from the budget speeches:

Year % achieved

2003 95

2002 99

2001 99

2000 91

1999 Not stated

1998 88

1997 99

1996 99

1995 78

1994 75.3

Accountability:

In those years where were shortfalls, it was not because of spending or execution capacity, but rather because some loan funds had not materialised as planned. This makes the performance all the more impressive and does not in the least suggest the presence of any hindrances to spending. Indeed the Government has often and with good cause been accused of just the opposite: that it rushes to spend taxpayers' money without enough attention or concern for proper financial management, parliamentary approval, accountability, corrupt practices or adequate planning and supervision.

For this administration, the ability to spend is a measure of success and competence even if among the projects would be included the bridge at Mandela Avenue, the stone scam, the Charity Wharf, the East Coast Embankment Road and the numerous schools on which billions have been spent on shoddy work causing double spending in so many cases.

Just as a footnote it should be added that for the same reason it ought not to be said as I have heard it said that there is some dissatisfaction with the performance of Minister Xavier. After all if he is not performing - and the numbers do not support this - then having someone do the job for which he will continue to be paid is hardly the answer.

And how does the establishment of a separate fund help to accelerate development? It cannot be that more funds will be available, since it is merely money from the Consolidated Fund that is now being siphoned off. Is it then that the approval process will be circumvented and that the financial rules governing the receipt and expenditure of public funds will not apply? Accountability has taken a knocking from the misuse of the Lottery Funds and the President's Youth Award whereby the President and Mr Lumumba seem able to walk around the country handing out public funds.

This new scheme seems designed to legalise such misuse and either suggests that we have learnt nothing from the experience or that the Government has found it useful, expedient and politically beneficial.

The IDB and accountability :

Under the heading 'Strict Fiscal Discipline,' the Minister in the 2004 budget speech reported as follows:

"The Government is currently negotiating with the IDB a loan of US$32.8 million for a project to support the rational and transparent management of its fiscal and financial affairs. Implementation of the project will start later in the year. The Government will apply strict cost control measures and these will be enhanced by a tight fiscal stance and strict fiscal discipline. Programme budgeting will be strengthened to make budgets increasingly reflective of the Government's priorities... The system will make available timely financial and programme information and, more important, increase the capacity to support effective decision-making in managing budgets and resources."

In Ram & McRae's review of the 2004 Budget and at a public symposium on the budget hosted by the PNCR, the justification for the expenditure of $6.5B on such a nebulously defined project was questioned, and there was a call to the political parties and civil society to challenge the IDB's apparent irresponsible lending policies which impose additional burdens on taxpayers. The public is unaware whether the PNCR acted on that call and it cannot escape responsibility for not taking the matter more seriously much earlier. It is truly troubling that the IDB to all appearances cannot be held responsible for its actions in Guyana, but this new legislation must surely force it to take a more cautious approach in its lending policies to a government that deals in such a cavalier manner with financial matters.

Fiscal Management and Accountability Act:

Business Page considers the new legislation not only unconstitutional but also inconsistent with the very specific provisions and requirements of the Fiscal Management and Accountability Act (FMAA) passed less than one year ago. Section 39 of the FMAA allowed for the creation of an Extra-Budgetary Fund by an act which must set out -

(a) the officials who will undertake the financial management of the Extra-Budgetary Fund, including the responsibilities and accountabilities of the officials charged with managing the Extra-Budgetary Fund;

(b) the banking arrangements that pertain to the Extra-Budgetary Fund;

(c) the accounting rules and auditing requirements applicable to the Extra-Budgetary Fund;

(e) the financial reporting requirements applicable to the Extra-Budgetary Fund, including the reporting of financial performance both during and at the end of each fiscal year.

Of interest as well is section 40 of that act which provides that "subject to any other law resources allocated from any Extra-Budgetary Fund for the purpose of financing Government social or economic development projects shall be included in the relevant investment plan and programmes contained in the annual budget and such resources shall be processed through the Consolidated Fund." Are the funds really extra-budgetary and does the FMAA require that the expenditure which the government is hoping to account for separately be passed through the Consolidated Fund?

Conclusion:

Apart from all these issues, it is on the wider grounds of democracy and accountability that this legislation is most dangerous. The rights and duties of elected officials are being usurped by nine persons appointed by the Minister of Finance who can give directions to them and to whom only they are accountable. Is this what constitutional reform was all about? As a concession for taking away their rights to question public expenditure through the Public Accounts Committee of the National Assembly on which the entire parliamentary opposition is represented, the PNCR now has one of nine!

There has been no public reporting of the position of GAP-WPA on this legislation which sets a most dangerous precedent, but it must be to the PNCR, the largest opposition party, that serious responsibility points. As a party with all its top positions held by lawyers, it is well placed to take what must surely be the only recourse at this stage - to challenge the legislation in the courts.

Patrick Denny

It is with shock and sadness that I learnt of the death of Mr Patrick Denny, a gentleman and competent journalist with whom it was always a pleasure to exchange views. To his family and his colleagues at the Stabroek News and Sunday Stabroek, Business Page extends sincere condolences.

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