The Opposition’s understanding of the FMAA is foggy

Jun 18, 2012 Features / Columnists, Peeping Tom

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The Fiscal Management and Accountability Act (FMAA) was passed into law in 2003. Thus, it may be something of a novelty and a mystery to some of those parliamentarians not familiar with its development.
The constitution of Guyana, Section 220, had authorized parliament to create such a Fund to meet expenditure for which no provision exists and this was done via Section 41 of the Fiscal Management and Accountability Act.
The constitution also provides that where expenditures are met through the Contingency Fund that these should be accounted for through a supplementary provision. The intention of the creation of the Contingency Fund is for there to be a mechanism to meet expenditures for which no prior authorization exists.
Since expenditures may arise that were either not budgeted for, were unforeseen- either in nature and quantum,- or are urgent and unavoidable, there obviously existed a need for a mechanism to meet such expenditure.
The Contingency Fund is not a new creation. It is not even a novel creation. It has always existed because budgeting is not an exact science and no administration can be expected to predict with precision the amount of expenditure that will be required. Nor can any administration totally cover in its Budget submission the vast array of needs for which expenditure may subsequently arise.
Some of these needs may arise in the course of negotiations with foreign governments. It is possible for example when a government team visits a foreign country, it may be able to secure an agreement for the funding of a specialty hospital. Now the government during its Budget preparations at the start of the year may not have even imagined that such an agreement would have emerged and therefore any expenditure required to be covered by the government may not have been provided for in the annual estimates.
Section 41 of the FMAA provides for the Minister of Finance to have the sole authority for the release of monies from the Consolidated Fund. It does NOT provide for the parliament to decide when and how such monies are to be released.
Section 41 (3) of the FMAA provides that where the Minister of Finance is satisfied that an urgent, unavoidable and unforeseen need for expenditure exists and where no monies have been appropriated, or where the amount appropriated is insufficient; where monies cannot be reallocated as provided for under the FMAA; and which cannot be deferred without injury to the public interest, releases can be made from the Contingency Fund.
A number of summations can be made in respect to Section 41 (3). First, the legality of the actions of the Minister of Finance is authorized by his compliance with this Section of the FMAA and not by subsequent passage of a supplementary provision covering the expenditure. If the latter were the case then parliament by withholding passage of the supplementary provision would effectively vitiate what would otherwise be deemed lawful under both the constitution and under Section 41 of the FMAA.
Secondly, the Minister is authorized to draw from the Contingency Fund to where there is an urgent, unavoidable and unforeseen need to meet expenditures not provided for. This infers that is not the purpose for which the funds are used which should be urgent, unavoidable or unforeseen but the actual need to meet the expenditure for such needs.
Thus even if for example the government ought to have foreseen that there would have been a swearing in of a new President in 2011 and  therefore should have made financial provision for this in the 2011 Budget, the fact that no such provision was made or an insufficient provision was made, does not disable the Minister from using monies from the Contingency Fund since the FMAA provides that once there  is an urgent, unavoidable and unforeseen need to meet expenditure that such expenditure can be met from the Contingency Fund.
Those who therefore interpret “urgent, unavoidable and unforeseen” to mean that the usage for which the funds were put ought to have been unpredictable are missing the script. There was in fact a great deal of misunderstanding of Section 41(3) of the FMAA when supplementary financial papers were presented in the National Assembly earlier this year.
Then the opposition misguidedly sought to negate some of the expenditure met through authorization from the Contingency Fund on the grounds that the purposes for which the funds were released were not urgent or emergencies and ought to have been predicted.
Not only was this line of reasoning false because it missed the issue of  what needed to be urgent, unavoidable and unforeseen was not the activity for which the monies were required but the need for the funding itself. This is a distinction that seems lost on the opposition.
This distinction is made clearer by Section 41 (3)( a) which provides for expenditure for which monies were allocated in the Budget but were not sufficient. It is therefore obvious from this sub section alone that when the FMAA speaks about urgent, unavoidable and unforeseen, it does not mean that the purposes for which the funds are to be utilized have to be unpredictable. Where there is an under- provision or no provision at all, the expenditure can be satisfied by resort to the Contingency Fund.
This does not amount however to a carte blanche authorization for the Minister of Finance to use the Contingency Fund to avoid parliamentary sanction of public expenditure.
The opposition had in fact made this argument sometime ago in relation to the billion dollar supplementary provisions that the government often brought to the House for approval. They had argued that this massive expenditure made from the Contingency Fund was a means of circumventing the authority of the National Assembly.
At the time they may have been caught in a time trap not realizing that the Budgets these days are multiples of what was in the past and therefore these billion dollar supplementary provisions are not, relative to the size of the National Budget, as gargantuan as they seem.
The FMAA itself protects against the risk of the Contingency Fund being used abused by limiting the amounts that can be expended with prior authorization to a 2 percent of the National Budget. In effect the Minister of Finance is limited to how much monies he can withdraw from the Contingency Fund.
The opposition clearly was either not aware of these aspects of the FMAA or they did not walk with calculators when they cut over eighteen billion dollars from the LCDS with the explanation that it could be brought back to the assembly via a supplementary provision.
Not only is this argument in contradiction to their earlier stance that only expenditure that could not have been predicted could be passed under supplementary provisions, but they also did not realize that there is a limit to the value of supplementary bills that can be brought before the House.

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