Budget faux pas

Apr 30, 2012 Editorial

It is obvious that the opposition caught a tiger by the tail in the just completed budget process. After its accusations of governmental ‘squandermania’ and waste before, during and after the debate, they could not allow it to pass unscathed. They eventually ended up slashing $20.9 billion from the overall requested expenditure of $192.8 billion. However, practically all of the cuts came from a single budgeted item: $18.3 billion earmarked for the Low Carbon Development Strategy (LCDS).
Their reason for the excision of this item is interesting, for the opposition does not appear to have problems with the substantive content with the projects: the Amaila Falls Hydroelectric project ($16.4B), installation of 11,000 solar home systems in 150 hinterland communities, the distribution of the final tranche of laptops to poor families in the OLPF project, grants and loans to micro and small businesses and vulnerable groups, the Cunha Canal rehabilitation to address flooding, support to the Amerindian Development Fund, e-Governance and the fibre optic cable, and to Amerindian demarcation and extensions.
The Opposition’s offered rationale is more procedural. Khemraj Ramjattan, Chairman of the AFC, agreed with his colleague Moses Nagamootoo’s assertion, “I have not heard anyone from this side of the House say so far that support for Amaila …would be withheld, what we are having here is this drama of a fiscal fiction being created in this House, of coming to the parliament with a revenue stated of $18B but nothing has been paid to us. If it is that this is in an account, then there is the law by which we are bound that you come by a conditional appropriation because you do not have this money in hand and you are treating it as revenue.”
David Granger of APNU and also leader of the Opposition, however, was much more pragmatic: “We are prepared to use the device of supplementary estimates to provide funds to the government as long as it provides some of the concessions we requested because we are convinced that those concessions are necessary for the economic and social development of the country.” But without getting into the merits or demerit of using budget cuts to gain ‘leverage’ in bargaining, we believe it is important to clear up the apparent ambiguity as to the nature of the funds for the LCDS.
Minister of Finance Dr. Ashni Singh, on the other hand, maintained that payment for climate services are not development aid and the money in the GRIF account at the World Bank account is “financial inflow” for climate services already provided.
He explained, “We anticipate that all of these projects will be taken through the approval stage and that the amounts identified under the respective projects will be disbursed during the course of this year.” To a lay person, since practically all governmental proposed expenditure on the budget is on funds to be ‘conditionally’ collected (taxes etc), the opposition’s position appears to be splitting hairs. This ambiguity needs to be clarified conclusively.
On the nature of the funds, the Guyana REDD Investment Fund (GRIF) was established (pending the creation of an international REDD+ mechanism)with the World Bank to disburse the moneys as payment for Guyana’s sequestration carbon by not cutting down its forests beyond agreed parameters.
The agreement with Norway, the first country to take advantage of Guyana’s offer, clearly states, “Norway will pay for Guyana’s performance on limiting greenhouse gas emissions from deforestation and forest degradation… Guyana will invest the payments it receives and any income earned on them, in its Low Carbon Development Strategy (LCDS).”
Guyana is being paid for a service it provides. The payment firstly is contingent of Guyana meeting the benchmarks established: Guyana satisfied the conditions for two years and for this reason, the payment of almost US$70 million has been deposited in GRIF by Norway. This is Guyana’s money.
For the money to be actually handed over, the projects identified must be part of the LCDS. Since the ones cut from the budget met this criterion, we wonder at the Opposition’s actions.

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Budget faux pas

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