A budget that mirrors future intentions

Aug 19, 2015 Features / Columnists, Peeping Tom

The Budget Debates should be seen as an opportunity for the new coalition government to demonstrate its declared decision to have a more inclusive system of governance, including the involvement of the PPP.
The Budget essentially and predictably is not much different from what the PPP may have presented. There has been no radical departure, no strategic realignment by the new government. The Budget is again built on heavy government spending.
In fact, this year’s Budget is far larger than the 2014 one tabled by the PPP, even though the new government will only have just under five months to spend the two hundred-odd billion dollars that it is proposing.
Why did the new government, knowing that it has a shortened period to spend the money go for such a large Budget? It is impossible for the coalition government to spend that large amount of money in five months. The government simply cannot go out to all the tenders that it would need to invite in order to spend this money. The economy, also, cannot absorb such an astronomical sum in so short a period.
The coalition had to have known this. So why did they present such a large Budget. Well, for one, they are signaling through this Budget a number of things, even though the strategic focus of the Budget is not different from that of the Budgets presented by the PPP.
For one, a 221-billion-dollar budget will indicate to the private sector that the Budget is a stimulus package to an economy that has become quite sluggish, and given the government’s reticence to continue a number of large-scale projects implemented by the former government, this signal needed to be sent.
It will indicate to the market that a fiscal stimulus is planned, even though in reality the stimulus will not materialize given the short period in which to spend the billions that will be appropriated.
Another rational reason for having such a large Budget is that if the government collected billions, but only budgets for millions, there will likely be a surplus on the Budget.
Now there are implications in having a surplus of revenues over expenditures. Not only does it create the illusion that the government is flush with money, but it will also create demands for all sorts of increases in wages. The government therefore had no choice but to try to put together a Budget that would reflect a consistent deficit position, since this is what inform future Budgets and therefore will be the basis upon which it will negotiate with stakeholders.
No one should therefore expect that the government will be able to spend the amount of money that will be appropriated. Much of that spending will have to roll over to the first quarter of 2016 when hopefully the government would be in a better position to present a new strategic outlook for the country.
Notwithstanding, however, that what is being presented is a stop- gap Budget, there should be some attempt at compromise with the opposition party. After all, the government has promised to involve the PPP. The Budget debates offer an opportunity for it to do what the PPP has never done: take on Board the other side’s suggestion.
This is why it is all the more important that instead of the sniping that is taking place during these debates, there should be a stronger emphasis by the government on two things. They should instead of looking back, use the opportunity of the Budget to outline what policies they will implement.
The Budget debates are imbalanced in this respect. There has been too much criticism of the PPP administration and too little detailing of the new policies to be pursued. There needs to be criticism of past policies, but there should be more emphasis on saying what the new government will do.
The next thing is that more attention needs to be paid on finding practical solutions to problems. This can be the basis of some cooperation between the government and the opposition, and even though neither side seems to be in the mood at the moment to cuddle, they can at least lay the foundation for future cooperation and shared governance by the compromises, however small, that are achieved in these debates.

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A budget that mirrors future intentions

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