This week brought the exceptionally good news that Guyana has arrived at the completion point of the enhanced Heavily Indebted Poor Countries Initiative (eHIPC) and is therefore eligible for debt relief to the tune of US$334M over the next twenty years of so. Having now attained this level of relief which the international community had determined for poor countries with the most crushing debt load, Guyana will now have to look for innovative ways for reducing the remainder of the debt burden as President Jagdeo has pointed out.
The government should be congratulated for steering the country towards this point albeit in the backdrop of the worldwide acceptance that the debt burdens of countries like Guyana negated the medicines prescribed by international financial institutions and the tireless efforts of pro-Third World campaigners such as the indefatigable, former UK Secretary for International Development, Clare Short.
While the President has been at pains to point out that the debt relief won't be available to augment public sector salaries but would be applied to social sector spending as stipulated by the lending agencies and to meet the Millennium Development Goals, his administration must establish a transparent and consultative framework for expending these sums. Indeed, it would be in keeping with the tenor of the hurriedly passed Fiscal Management and Accountability (FM&A) Bill which was assented to last week in record time and was one of the conditions precedent to eHIPC completion.
It would be an instructive lesson in prudence and accountability were the government, for instance, to define each year how much money had been saved in debt payments and to channel this amount into a fund - perhaps one of the extra-budgetary ones now catered for in the FM&A - and to permit public discussion in and out of Parliament on the best possible uses of these funds within strictly defined social sector parameters. Not only is it a way to give effect to participatory democracy but it also allows the public a bird's eye view on how the financial side of governance operates and to see directly how the savings to the nation are being spent.
The corollary to this is that it lessens the potential for this substantial annual savings to be used arbitrarily and in ways not conceived by the donors. Each future budget over the savings period should indicate in the estimates where the eHIPC relief is being allocated. While the government must be the administrator of this relief, it must not be the sole arbiter in determining how these funds are used. This subject is ripe for discussion at the talks between President Jagdeo and the Opposition Leader. The social partner groups also have a natural role to play in these deliberations.
The FM&A act which contains many positive provisions could also have been the subject of such deliberations. Unfortunately the fullest debate on it was not possible because Formula One-like the government sped it through Parliament. Surely no one would object to it simply because it was one of the conditions set by the international institutions for tapping this enhanced debt relief. But this is happening too often.
The government, the ministers and their draughtsmen have to be more efficient and nimble in putting together legislation so that it meets the deadlines set by the international institutions while not robbing the National Assembly of the required period to pick out gaps and point out potentially hazardous implications. These rushed legislative jobs destroy the concept of vigorous parliamentary debate and inevitably lead to botched and unimplemented laws.
That aside, the Act introduces sweeping changes in fiscal management and accountability which are to be welcomed. In particular, the sections dealing with preparations for the budget and accountability for fiscal management and performance.
Clause 12 requires the Minister, not later than 180 days prior to the start of each fiscal year to set a time-table for the preparation of the annual budget proposal. This entails a budget circular to all the relevant agencies setting out the economic situation and the fiscal policy, targets for a budget surplus, a pro forma of the annual estimates and budget costing parameters. A budget submission then has to be prepared by each budget agency to be approved by the relevant minister before being forwarded to the Finance Minister.
The annual budget proposal itself will have to contain a financial plan for the upcoming year, a review of the execution of the annual budget for the current fiscal year, a statement of usage of a planned budget surplus or the sources of financing a budget deficit (deficit has been the norm) and details of the fiscal relationship between the government and the regions.
Following the presentation of the budget, the minister has to table in the National Assembly within sixty days after the end of the first half of each fiscal year, a report on the year-to-date execution of the annual budget and prospects for the remainder of the year. This will have to encompass a comparison of the current and capital expenditures and revenues with the estimates originally approved and explanations for any significant variances. A list of major fiscal risks for the rest of the year also has to be supplied together with the likely policy responses. This then has to be followed up by an end of year budget outcome statement.
These are all essential elements in the budgetary process which have been lacking and which will now allow for continuity between budgets and the relating of numbers to specific commitments. Hopefully, the best practice of a budgetary presentation before the end of the year could be attained.
There is a host of other useful provisions including the auditing by the Auditor General of the key financial statements which must be presented for scrutiny by the minister within a certain period so that a report could be submitted to Parliament.
Provision is also made for the appointment of a Finance Secretary who will be a permanent secretary with the authority to issue finance circulars and to ensure that the provisions of the Act are complied with.
Other sections mandate that expenditure can only be committed or incurred via authorised drawing rights and deal with the classification of public funds and payments from the Consolidated Fund. Implementation of the Act - which can be phased in over a year - will be a tall order and require dedication. It is left to be seen how serious the government is about these provisions especially in light of the continuing violations of good accounting practices which the Auditor General's report continues to pick up each year including accounting for the lotto funds expended on the President's Youth Choice Initiative projects.