Guyana’s fiscal framework needs tighter procurement rules, anticorruption legislation –IDB

Oct 13, 2018 News

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By Kiana Wilburg
Designing an appropriate fiscal regime is essential to ensure proper management and long-term sustainability for a resource-rich country.
This is according to the Inter-American Development Bank (IDB).
According to the Bank, strong fiscal rules, procurement rules, anti-corruption legislation and parliamentary oversight are needed to anchor the appropriate fiscal framework needed in Guyana. It stressed that this should be supported by strong institutional arrangements to ensure transparency and proper management of natural resource wealth, and the associated conversion of that wealth into citizen development.
The Bank noted that resource-rich countries with stronger economic and political institutions tend to have better macroeconomic and growth performance. In this regard, it said that Guyana does not have most of the fiscal structures in place that constitute a fiscal framework for resource-rich countries.
It also outlined some key elements of a desired framework. It noted that these include: Non-Resource Primary Fiscal Balance, Debt rules, Expenditure Growth rule, Revenue rule, and a Budget balance rule. The IDB said that these are all absent from Guyana’s current fiscal framework.
With regard to Debt rules, the Bank explained that this sets a specific numerical target for public debt as a percentage of GDP. It said that this rule is useful when monitoring and measuring economic performance. The IDB believes that debt rules are capable of directly tackling debt sustainability, can be transparent and simple, and can accommodate large shocks if debt is well below a defined ceiling.
With respect to the Expenditure Growth Rule, the IDB said that this sets a limit on the growth of government spending. It said that this is useful to limit the pro-cyclicality of fiscal spending, especially in cases of absorptive capacity constraints and where the volatility of resource windfalls requires precautionary savings.
In explaining the Revenue Rule, it noted that this imposes limits on revenues with a view to containing the size of the public sector/tax burden and allocating exante revenue windfalls (e.g., due to surprisingly high growth). It opined that this rule is useful as it can reduce pro-cyclicality in good times.
As for the Budget Balance Rule, the IDB said that this focuses on an overall budget balance, structural or cyclically adjusted balances, or an average balance over the cycle of the economy. It said that this rule helps reduce the budget deficit and supports the convergence of the debtto-GDP ratio to a desired level.
In addition to this, the Inter-American Development Bank said that a fiscal framework needs to be supported by the appropriate fiscal institutions to manage natural resource revenues. The Bank said that of importance is the ability of fiscal policy to mitigate the volatility of commodity prices. Furthermore, the Bank said that a fiscal framework that sets fiscal rules to manage price volatility and establish medium- and long-term fiscal targets is essential for smoothing revenues and expenditures. It said, too, that implementing fiscal balance targets, primary balance targets, and structural primary balance targets is useful for adjusting for volatility.
STATUS UPDATE
Perceptions of corruption and favouritism have for years, sullied the image of Guyana’s public procurement system.
However, the APNU+AFC Government and top officials at the National Procurement and Tender Administration Board (NPTAB) are very satisfied with the progress they have made in arming the system with effective anti-corruption mechanisms.
This was recently revealed by NPTAB Head, Berkley Wickham.
Wickham also took the opportunity to inform this newspaper on some of the key initiatives and interventions made since he assumed office as Chairman of the NPTAB.
Wickham said that every initiative or intervention undertaken this past year was aimed at changing the long held perception of a tainted public procurement process.
He said that the difficulty of this task was never underestimated but its success is rooted in the need to achieve transparency, accountability, fairness, integrity and efficiency.
The NPTAB head said, “We are not there yet but significant advances have been made. Some of these are; increases in the Threshold limits for Regional, Ministerial/Agency Tender Boards; work in progress in developing debarment procedures; the Bid Protest Committee has been established and is functional; The Public Procurement Commission has been established; and we have been an active participant in the Task Force for the development of the Caricom Public Procurement Regime”
Wickham said that NPTAB has also been working with the Ministry of Business to facilitate the participation of small businesses and women owned businesses in the Public Procurement process.
Pursuant to Section 17 of the Procurement Act 2003, Wickham said that the National Procurement and Tender Administration Board has been organizing training in public procurement.
This year, he said that the Board addressed its responsibility through the delivery of training to enhance expertise in Public Procurement across the country to ensure knowledge of procurement policies and procedures are continually upgraded in line with best practices.
In this regard, he said that recently, 30 participants were drawn from all 10 regions to participate in a Certificate Procurement Training Programme- Level 2 CIPS (Chartered Institute of Procurement and Supply). He explained that CIPS is the premier global organization serving the procurement and supply profession and is dedicated to promoting best practices.
This programme is financed under the Inter-American Development Bank(IDB) Public Procurement Modernization Programme and the Financial Management Technical Assistance Programme for Guyana, through the Ministry of Finance.
The training was delivered by the United Nations Development Programme (UNDP) Procurement Specialist Mr. Rodofo Sanjurjo. It was held at the Regency Suites Hotel in Georgetown.
Wickham said that two similar programmes involving 60 trainees from the Public Sector will be undertaken in January of 2017.
The NPTAB Head said that this Programme is one component of the entity’s overall Capacity Building Programme. He commented that capacity building is a key element for improving efficiency and transparency of the procurement process and training is identified as key for promoting efficiency.
Wickham also revealed that there were two female Procurement Officers who recently successfully completed a certification online programme in Sustainable Procurement which was provided by the Organization of American States (OAS). He noted that there was even a pilot programme in procurement planning which was just completed in three of Government’s large Ministries.
Wickham reiterated that while the Public Procurement Modernization Programme is financed by the IDB, CIPS is a crucial part of that programme. He said that it will serve to improve efficiency, value for money in Public Procurement through strategic planning and e-Government Procurement (e-GP).
He noted that the initiative will impact a number of areas including; bringing the current procurement regulations in line with best practices as of January 2017; Strengthen the data base system to improve reporting requirements by far flung areas of the country and facilitate analytical reporting on procurement which is a requirement under the Procurement Act of 2003; and give a more focused training for evaluators which will be on going.

Wickham said that it is important to note that the procurement planning within Agencies is a weak area. As such, he vowed that the Procurement planning intervention model will be rolled out country wide.
The NPTAB head said that website improvement will satisfy the statutory requirement of timely posting of advertisements of procurement opportunities as well as awards. This he said will also prepare a strategy for the introduction of e-procurement in Guyana.
Wickham said, too that the initiative will provide CIPS Level 2 training to at least 90 operatives in the procurement system.
On another note, Wickham said that the existing legislation does not provide for e-procurement. He said that an upcoming legislation review will provide for this.
He promised too that a debarment procedure will be fashioned for implementation.
The NPTAB Head said, “There will be further training in contract compliance and management. As you can see we have been very busy this past year. In my opinion, we are poised to take procurement out of a long period of stagnation.”
Wickham said that moves are being taken to ensure that the Procurement system is elevated onto a pathway where electronic government procurement is the major tool to build a world class procurement process in Guyana.

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