The $18.3B which was cut from the LCDS needed to be covered by a conditional appropriation

I prefer to impute no motives to Government spokespersons or self-appointed, self-interested critics of the Budget “cuts”, including Drs. Ashni Singh, Roger Luncheon and Leslie Ramsammy, Mr. Juan Edghill and Carvil Duncan, Martin Goolsarran and Fuzzy Sattaur and Ms. Gita Raghubir and Alexei Ramotar for misrepresenting the “cuts”, including the removal of the LCDS money from the Appropriation Bill for the 2012 Budget. Shepherded by Mr. Martin Goolsarran into NCN to cry “heartless and unpatriotic”, none of them it seems, including Ms. Raghubir, an attorney-at-law, bothered to check the Budget “law”, the Fiscal Management and Accountability Act.

They would have learnt that the appropriation of expenditure of $18,394,650,000 had to be brought by way of a Conditional Appropriation Bill under section 21 of the FMAA, and not by way of an Appropriation Bill. But before I refer directly to section 21, I draw attention to both the Explanatory Memorandum to the Bill as well as the statement made by then Finance Minister Mr. Saisnarine Kowlessar in the parliamentary debate on the Bill on December 15, 2003.

The Explanatory Memorandum states that the bill “establishes the concept of conditional appropriation, whereby an agency may be appropriated sums that are conditional on the said agency achieving specified levels of revenue in accordance with an agreement entered into with the Minister.” In other words, the National Assembly authorises the expenditure but only if (or conditional upon) the money comes in.

For his part, Mr. Kowlessar in introducing the Bill said “… In addition, the Bill describes the concept of a conditional appropriation, as well as details the terms and conditions under which such appropriation may be made and accounted for.”

It is nonsensical for Dr. Singh to compare the expected LCDS sums with VAT and say that since VAT has not yet come in, maybe a Conditional Appropriation Bill will be required for VAT as well! Does he believe that in relation to him Guyanese are that stupid and cannot understand the difference between a tax (VAT) and moneys that come under an MOU with preconditions attached? Someone should have pointed out to Dr. Singh there and then that it was his Government that passed the Fiscal Management and Accountability Act because US$30 million of donor money depended on its passage. Details then did not matter. And if the PPP/C can ignore the Constitution, ignoring a mere law is no big deal.

The logic of linking the expenditure to income by way of a conditional appropriation is evident from the following example. For the year 2012, expenditure of $18.394 billion represents more than 12% of the non-LCDS budgeted Current and Capital Revenues. If that sum is spent but the money does not come in, the government’s expenditure will have exceeded its income not only by the $30.524 billion shown in the Budget but by an additional $18.394 billion, bringing the 2012 budget deficit to $48.918 billion, or close to quarter billion United States Dollars. No amount of juggling of figures or playing with the 2000 Series Bank Accounts can mask that reality.

To see how inconsistent Dr. Singh has been in relation to budget preparation for future revenue flows, one needs to look no further than the 2011 budget treatment of the Chinese vessels in which only the local expenditure of $366 million was included at the time of the budget presentation. It was not until one year later, when the resources had actually arrived in the country that Dr. Singh went to the National Assembly for supplementary appropriation of $2.588 billion. At the time, former Finance Minister Carl Greenidge drew Dr. Singh’s attention to section 21 of the Act, pointing out how it should have been treated in the first place. But so convinced was Dr. Singh that he could never be wrong, that he ignored Mr. Greenidge.

Much was made of the fact that the $18.394 billion that was removed from Budget 2012 included an unspecified amount for land titling for Amerindians. In fact, the issue of land titling for Amerindians (so far as necessary) fits neatly into the provision of the Act by allowing a “conditional appropriation” to consist of both a) an authority to spend a specified amount of money; and b) an additional authority to spend a specified amount of money, conditional (emphasis mine) upon budget agency receipts earned by that budget agency and being credited to the Consolidated Fund.

I say ‘so far as necessary’ because land titling is a constitutional requirement which since 1993 has been funded each year out of annual appropriations and need not be tied in with LCDS money. It would be a sad day indeed if our first people have to wait on foreign moneys to right the historical wrongs inflicted upon them centuries ago. But I suspect that the Singh/Luncheon formulation of including it was as bait to the international community with its soft spot for indigenous peoples across the world.

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