We need to bring back greater accountability in the budget system

Feb 21, 2010 Letters

---

Dear Editor,
As the Budget debate unfolds and the opportunity for the small man evaporates, we must seriously contemplate what we want as a future for the Guyanese people.
Why in a year with such a significant upswing in tax collection, the working class could not benefit from an increase in their tax threshold?
Tax collection was $89 billion in 2009 vs. $86 billion in 2008 and when we compare it to the Cheddi Jagan years ($29 billion was collected in taxes in 1996), worker got a 15% increase in their salaries in that year.
Something is fundamentally wrong in the way in which we are planning for the working class in Guyana today.
This approach is nothing short of callous and disrespectful to the people who sweat and toil for Guyana.
As Joseph Stiglitz and 22 other world famous economists said in their letter to the FT – “the wealth of a nation lies in what its citizens can produce”.
Who produces for Guyana? The sugar workers, the rice farmers, the pork-knocker, the mine workers, the agriculture workers, the factory workers, the construction workers and yet these classes of workers are the target of economic marginalisation as a result of the 2010 Budget.
I know of a case of a single mother at the Ministry of Foreign Affairs, who has two children and occupies a clerical position. Her life’s ambition is just to have a simple house of her own, and her children to get a good education.
Nothing else! She does not want riches, she does want a private swimming pool, and she does not want to travel the world. She just wants a small house and to provide for her children.
Her salary is below $40,000. Do the maths! You will immediately recognise that unless Aunty Bess in Brooklyn does not get on board this project, her life’s ambition is unachievable. A budget must in a scaled manner take cognizance of this fact.
We need to bring back trust in the budget system, we need to bring back greater accountability in the budget system (all Guyanese should be extremely concerned about the misuse of the supplementary budget process – $8 billion done post dated in January 2010 is just one example of many previous abuses), we need to consult a greater cross section of citizen groups to better design the budget, and we need to produce a document to be able to draw inspiration from; a document of hope.
The truth is the 2010 budget was a hopeless and unclear document that certainly was not designed for the working class. This therefore begs the question whom was the 2010 budget designed for?
I have seen some letter writers and columnist attacking the Minister of Finance, but I think they are misguided in doing so, since he is just the messenger and any attack should be focused at the source of the message, not the messenger. He is in a very difficult position and he has to follow order from higher up.
This budget clearly demonstrates that no one party can be trusted to plan for the people’s future at this juncture in our history.
Thus the people must force the parties to work together come what may. Solution – a hung parliament after the next elections.
All fair-minded Guyanese are duty bound to throw their weight behind the AFC to secure enough votes to create that hung parliament.
The Guyanese electorate must be clear that the PPP will get the Presidency and the largest chunk of votes regardless of this abysmal performance of the Jagdeo regime. Why? The PPP has the best oiled political machinery to bring out the voters and they have done commendable political work in the Amerindian communities and this must never be discounted. I was reliably informed that the work has already started in the run up to the next elections to terrify the Guyanese voters that a hung parliament will cause violence and will cause the government to ground to a halt.
This is a fallacy and furthest from the truth.
If anyone is to do a due diligence of the broad numbers in the national budget, they will realise that Guyana still needs rescuing after ten years of Jagdeo.
They would realise that Guyana could have consolidate its gains much faster if not for the financial leakage from the system with all the wanton waste and investment in projects that do not realise tangible returns (cases in point just under $1billion spent on the international travel, accommodation, per diem by the Jagdeo regime).
The UK has taught us that during their gravest crisis, Winston Churchill governed with a coalition? Guyana has to remember Burnham’s irresponsible financial attitudes were kept in check by Peter D’guiar stewardship at the Ministry of Finance. Thus can we really imagine what intangible value a Winston Murray at the Ministry of Finance or a Trotman at the Ministry of Foreign Affairs or a Ramjattan at the Ministry of Home Affairs will have on a Donald Ramotar Presidency? Ahh, I know I got you thinking now.
The history of Guyana has enough evidence to demonstrate that single-party despotism has poorly governed our country (save and except for era of the Jagans and the post-1988 Hoyte era) and if we are really to analyse the evidence, we would welcome a coalition or, at worst, a minority government.
No serious person can deny that our country confronts a huge fiscal challenge with an unsustainable overall budget deficit that has grown worst since 1996. The evidence from the ERP days reveals that the PNC Government ran a deficit on average of about 28% of GDP and this was transformed after the dawn of the new era into a budget deficit as low as 2% of GDP in 1996. Since 1996, we have never again experience this fiscal prudence.
The year 1996 was the first year of a young Minister of Finance who took over from Asgar Ally and he did all the right things for the right reasons. There was no ego and personal aggrandizement, minimal waste, and most importantly a lean and clean government. In the 1996 Budget speech that young Minister of Finance talked about “development with a human face”, “creating condition under which the Government will help Guyanese to help themselves”, “further reduction of waste”, “re-allocating resources to attain higher returns”, and “commitment to the participatory approach by issuing an open invitation to the public to share their view with respect to the budget”. That Minister was happy to announce that he incorporated several of the recommendations from the public in shaping that year’s budget.
That Minister of Finance was convinced that he had to “share the benefits from growth equitably”. Thus when he announced a 15% across the board increase in salaries to the workers as a “gesture of his Government’s commitment to workers”, even the GPSU was pleased. The year 1996 was the year of the working class in Guyana, because the young Minister was not finished with the workers, he offered an increase in the income tax threshold that resulted in 20,000 workers graduating from paying income tax.
For those who know their history, they would have realised how far this Jagdeo regime has strayed from its foundation and the people must arrest this decay by voting for a hung parliament. Irresponsible politician must once again be sanctioned for irresponsible behaviours and a hung parliament is the best medicine for those irresponsible politicians.
Guyana is in a situation where over the last ten years we have had an average overall deficit running at 9% of our GDP. To break this down in layman language: if a family earns $100 every year but spend $109 per year and this has been happening for ten years, then that family would be broke since someone has to fund the gap (deficit).
If you look at the 2010 budget, we funded the budget deficit by borrowing $20 billion from overseas and this is why our external debt is targeted to surpass US$1billion in 2010.
We rebuked the PNC for their actions when they ran up a debt of US$2.1 billion and quite rightly so and we have to give credit to the PPP for eliminating that debt by way of payment, write-off, debt forgiveness etc. However, the Jagdeo regime have to take full credit for running up US$1 billion in debt over the last ten years and this will be a millstone around the neck of the Guyanese children since debt should only be incurred to fund productive assets.
We do not even have the hydro-electric station, we do not have the sugar refinery, we do not have the ethanol plant, we do not have the deep water harbour and we have an incomplete MMA.
If any family is to run their finances in this manner, they would have been bankrupt.
The only reason the Jagdeo regime can survive after such irresponsible behaviour, is that they have increased the tax burden on the people, phantom style, by way of the VAT. Please do not get me wrong, the VAT is a very good tax but it was suppose to be cash neutral, not a silent tax burden on the people.
The reality was the workers were never compensated for loss of disposable income as a result of implementing the VAT. Thus, all this platitude I am hearing about Guyana is this and Guyana is that has no grounding in the realities of the working class people. The working class was dumped from the Jagdeo train a long time ago.
This budget at minimum was anti-working class and it is time the worker of Guyana demand the respect Cheddi Jagan and his young Minister of Finance gave them in 1996.
What is needed now is fiscal consolidation in Guyana and research show that in seven out of ten cases fiscal consolidation occurred under a coalition Government.
Provided those in power are responsible and the public understands what is at stake, there is no reason why a coalition government should not deliver the restraint Guyana needs.
Yet there is, to my mind, an even bigger reason. I have long been a supporter of single party majority government. Reluctantly, I have changed my mind.
The Jagdeo regime has been the creator of a deluge of ill-conceived, media-driven initiatives such as the LCDS. Almost nothing is properly thought out.
This is the result of the domination of a handful of people over the machinery of power, unchecked by party, parliament, or the professional state officials.
Coalition government would make this change in desirable ways. So do I fear a hung parliament?
Not at all! It would force the next president to persuade some truly independent colleagues. Given the mission ahead, government by impulse and by whip is just not good enough.
Sasenarine Singh

---

---