Guyana’s public expenditure management characterized by irresponsible and extravagant spending –Ram

Oct 13, 2017 News

By Kiana Wilburg

Economists have often said that a budget should be a financial mirror of society’s financial and social choices. To carry out these choices, the government must do two essential things; collect resources from the economy and distribute those in a practical and transparent manner.
When it comes to the latter, Public Expenditure Management (PEM) is crucial. But upon analysis by some of the nation’s financial minds, it appears that Guyana is in the “danger zone”.
Chartered Accountant and Attorney-at-Law, Christopher Ram finds that the nation’s PEM is characterized by irresponsible and extravagant spending.
Ram, addressing the final session of the Private Sector Commission’s (PSC) Business Summit which closed yesterday at the Marriott Hotel, was very critical of the nation’s Public Sector Investment Programme (PSIP).
At the end of June, only 28 percent of all the moneys allocated for projects were used up. Since this revelation to the public, various ministers have been promising that by the time the next budget is out, Government spending would move up to as much as 60 percent or more. Ram however finds this appalling, to say the least.
“Tell me how at the end of June you only expended 28 percent of the PSIP and by December you got 90 and 95 percent spent. Is there some kind of manipulation of the numbers? Or is there irresponsible spending at the end of the year?”
He continued, “Do the people who are seemingly incapable managers suddenly become experts in the second half of the year and then when you go to the next year, they suddenly become poor managers again?”
The Chartered Accountant added, “Something is wrong with public expenditure management and that is where the private sector needs to start this discussion. We are fooling ourselves thinking that it is only about taxation…The nation’s public expenditure management is characterized by irresponsible and extravagant spending…We have had runaway public expenditure in this country…”
Ram said, “Our current administration is the largest, single, Government in post independent Guyana; it has the most ministers, highest percentage of elected Members of Parliament forming the government, least number of technocrats and the highest cost. You take those and you add to them the non-statutory bodies and you have one of the highest levels of public administration anywhere.”
“That is where this conversation has got to start. Let’s not avoid the real issues; let’s not fiddle with a tax rate here and a tax rate there…We have to look at the expenditure side of the budget.”
PSIP
The rate of implementation of projects was also highlighted in the half year report of the Ministry of Finance.
According to the Ministry, the Public Sector Investment Programme, which is financed by both local and foreign-funded sources, expended $15.8 billion during the first half of 2017, reflecting a 19.8 percent increase over the first half of 2016.
Finance Ministry officials said however that this represents only 27.9 percent of the PSIP’s budgeted allocation of $56.8 billion.
It was noted that the locally-funded projects were primarily constrained by delays in the project implementation as a result of a dearth of procurement planning, apparent lack of capacity, and delays in the tender process.
The Ministry noted that this resulted in only 26.8 percent of the budgetary allocation of $34.6 billion expended at half year. The implementation of the foreign-funded projects was also plagued by delays emanating from the late finalization of a number of financing agreements with both multilateral and bilateral development partners and the subsequent setting up of the project implementation unit.
The Finance Ministry noted that a mere 29.6 percent of the budgeted sum of $22.1 billion of the foreign-funded portfolio was expended. In the first half of 2017, the amounts expended for major projects including the Cheddi Jagan International Airport (CJIA) Expansion Project, the Power Utility Upgrading Programme, and the West Coast Demerara highway Project, were $2.8 billion, $1.2 billion, $0.6 billion, respectively.
At the end of June 30, 2017, there were a number of ministries which were below the 30 percent margin regarding their rate of implementation. The Ministry of Social Protection for example had a budgetary allocation of $477M but up to June, it had only used up $81M. This represents an execution rate of 17 percent.

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