The supplemental application is chronic
Kaieteur News – The right of the PPP / C to the National Assembly for approval of the G $ 18B supplementary provision represents a serious indictment against the PPP / C Emergency Budget. It is now clear that there is a huge underestimation of actual financial needs the country during the last quarter of this year.
The PPP / C had boasted that it had completed the Crisis Budget in record time. Well, in a hurry to do that he seems to have lost a number of things and this has meant that, despite passing the Emergency Budget, he has to return to the National Assembly for more money.
It is good that the Opposition has chosen to question the proposed application for Supplementary Funds. That is the role of any Opposition, to strongly oversee government spending and policies.
However, the APNU + AFC is also to blame for the current situation. It also spent excessive amounts without parliamentary approval and justified this expenditure on the basis that it represented crises. But that was a five-month crisis and the whole world knows what triggered this so-called crisis.
Media photographs showed images of Bharrat Jagdeo, Guyana’s Vice President, participating in the Budget preparation process. It is now clear that his numbers are demanding and he, more than any other person, should be explaining how his numbers are so off the rails, to the tune of G $ 18B.
Budgeting is not an exact science. No government can be expected to accurately predict how much spending it will need during any financial year. Nor can it fully cover in its Budget the wide range of needs for which expenditure may subsequently arise. That is why the country’s laws provide for approaches to the National Assembly for approving supplementary spending.
PPP / C and APNU + AFC governments have had to go to the National Assembly for Supplementary guarantees. In 2014, the PPP / C introduced a Supplementary Bill for G $ 4.5B. In 2016, the APNU had requested an additional G $ 2B in supplemental funds.
How did the PPP / C and its financial expert, Jagdeo, miss a mark with such a large sum? It is embarrassing that, without any emergency, the government has been so far off target.
The government is requesting more than G $ 2.5B or more than 50 percent of the original amount for the COVID-19 grant. He explains that he used the 2012 numbers from the census but the original amount was based on these numbers.
However, that cannot explain why the Ministry of Human Services and Social Security is asking for an additional G $ 2.5B. This would bring the total allocation for the COVID grant to G $ 7B. This would mean that, in Phase 1, the government provides for about 280,000 households. It is impossible given the population of Guyana and the average household size that there will be 280,000 households in Guyana. Something is enough here and the Opposition fell asleep when considering this amount. He seemed more concerned with “pink slips” than real households.
Guyana Sugar Corporation is expected to receive an additional G $ 4B. The government is trying to revive the sugar industry and it will take many more billions to get the industry going.
The APNU + AFC did not consider the social costs of closing the estates, which is fundamental to economics. In Economics 101, students learn that sometimes it is better to run a loss-making operation rather than close it because depreciation of the assets would outweigh the losses started. There are also social costs, which society as a whole has to pay, and when these costs are carefully scrutinized, it makes practical sense to have kept the industry going instead nor close four estates as the APNU + AFC did.
The Minister for Agriculture explained that the additional amounts were needed to recapitalize the operating estates while the original amounts, passed in the Budget, were to recapitalize the closed estates. Why is the PPP / C spending more to re-capitalize existing estates, when there is unlikely to be any significant increase in productivity as a result of this recapitalization?
Again the Opposition fell asleep here. He should have questioned whether any of the money was spent on operating costs.
All Guyanese should be concerned about the extent of this Supplemental provision. Regardless of whether the money can be found and is necessary, serious questions remain about the Budget preparation process and whether an assessment of the preparation of the 2020 Emergency Budget should be undertaken.
(The views expressed in this article are those of the author and do not necessarily reflect the views of this newspaper.)