The supplementary request is chronic

Dec 29, 2020 Features / Columnists, Peeping Tom

Kaieteur News – The recourse by the PPP/C to the National Assembly for approval of a G$18B supplementary provision represents a serious indictment against the PPP/C Emergency Budget. It is now obvious that there was a massive underestimation of the actual financial needs of the country during the last quarter of this year.
The PPP/C had boasted that it had completed the Emergency Budget in record time. Well, in its haste to do so it seems to have missed a number of things and this has meant that despite passing the Emergency Budget, it now has to return to the National Assembly for more funds.
It is good that the Opposition has opted to interrogate the proposed request for Supplementary Funds. That is the role of any Opposition, to exercise strong oversight over government spending and policies.
However, the APNU+AFC is also to blame for the present state of affairs. It too was expending excessive sums without parliamentary approval and it justified this spending on the basis that it represented emergencies. But that was a five-month emergency and the whole world knows what triggered this so-called emergency.
Photographs in the media had shown images of Bharrat Jagdeo, the Vice President of Guyana, being involved in the Budget-preparation process. It is now obvious that his numbers were askew and it is he, more than any other person, who should be explaining how it is that his numbers were so much off-track, to the tune of G$18B.
Budgeting is not an exact science. No government can be expected to predict with exact precision the amount of expenditure that it will be required during any fiscal year. Nor can it totally cover in its Budget the vast array of needs for which expenditure may subsequently arise. That is why the country’s laws make provision for approaches to the National Assembly for the approval of supplementary spending.
Both PPP/C and APNU+AFC governments have had to go to the National Assembly for Supplementary warrants. In 2014, the PPP/C tabled a Supplementary Bill for G$4.5B. In 2016, the APNU had requested an additional G$2B in supplementary funds.
How did the PPP/C and its financial expert, Jagdeo, miss the mark by such a large sum? It is an embarrassment that without any interceding Emergency, the government was so far off mark.
The government is requesting more than G$2.5B or more than 50 percent of the original sum for the COVID-19 grant. Its explanation is that it had used the 2012 numbers from the census but the original sum was based on these numbers.
That, however, cannot explain why the Ministry of Human Services and Social Security is requesting an additional G$2.5B. This would bring the total allocation for the COVID grant to G$7B. This would mean that in Phase 1, the government is catering for some 280,000 households. It is impossible given Guyana’s population and the average household size for there to be 280,000 households in Guyana. Something is amiss here and the Opposition fell asleep during the consideration of this amount. It seemed more concerned about “pink slips” than actual households.
The Guyana Sugar Corporation is expected to receive an additional G$4B. The government is seeking to revive the sugar industry and it will take many more billions to get the industry going.
The APNU+AFC did not consider the social costs of closing the estates, something that is basic to economics. In Economics 101, students learn that sometimes it is better to run an operation at a loss rather than close it since the devaluing of the assets would surpass the losses invoked. There are also social costs, which have to be borne by the entire society, and when these costs are examined closely, it makes practical sense to have kept the industry going rather than close four estates as the APNU+AFC did.
The Minister of Agriculture explained that the additional sums were needed to recapitalize the operating estates while the original sums, passed in the Budget, were to recapitalize the closed estates. Why is the PPP/C spending more to recapitalize the existing estates, when there is not likely to be any major increase in production resulting from this recapitalization?
The Opposition once again fell asleep here. It should have queried whether any of the monies were being spent on operating expenses.
All Guyanese should be concerned about the size of this Supplementary provision. Regardless of whether the monies could be found and are necessary, there remains serious questions about the Budget-preparation process and whether there should not be an assessment of the preparation of the 2020 Emergency Budget.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)