Posts Tagged ‘Minister of Finance’

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The challenge to Minister Singh and the Stats Bureau was for a rational explanation of the dramatic turnaround in the fourth quarter of 2009

Sunday, July 11th, 2010

I refer to my letter of July 4, 2010 in which I addressed the issues raised by Mr. Rajendra Rampersaud in a letter dated June 28, 2010 on the April 2010 Country Report by the Economist Intelligence Unit (EIU). In my letter I indicated that I would subsequently address the reaction of the Minister of Finance Dr. Ashni Singh to the same EIU Report. I now do so.

Let me first disclose my own long-standing relationship with the Minister who I first came to know shortly after he had completed his outstanding education at Queen’s College. He was too young to be registered as a student with the ACCA and his relatives approached me in my capacity as ACCA International Council Representative to intercede with the ACCA on his behalf for special dispensation. My efforts succeeded. When he qualified he asked me to recommend him for membership, a formality which I readily accepted. Our firm’s boardroom still proudly displays a photograph in which he features with Partner Robert McRae when the firm was awarded a recognition with an international body.

I was the only accountant to publicly acclaim his appointment as a Minister, something not even our national accounting body did. For a long time after that, I had, at his request, shared with him, both orally and in writing, my thoughts on issues of interest to his Ministry and our country. There was one request to which I could not accede and that apparently ended what had developed into what seemed to be a very healthy relationship with Ram & McRae and with me.

But notwithstanding his increasingly personal attacks against me the details of my exchanges with him shall remain private even as he makes the unfounded accusation of me as “a self-confessed partisan politician” (GINA release June 26, 2010), and as part of a “tiny cabal” disparaging every transformative Guyana project (MoF Press statement April 20, 2010).

Now to his attack on the EIU whose recent reports on Guyana Dr. Singh claims “paint a misinformed, distorted, warped, and totally inaccurate picture of economic developments in Guyana”, and was “misled and misinformed by one or two political aspirants and spokespersons who pose as independent correspondents and commentators.”

That aside, let us look at some of the issues the EIU April 2010 report on Guyana raised:

1. That Guyana’s operating environment is “characterised by poor infrastructural facilities, high taxes, rampant crime and corruption.” The evidence on each of these is so obvious and compelling that neither Dr. Singh nor the private sector disputes any of them. Surely they are aware of, if not actually suffer from, the daily blackouts despite the unjustifiably huge sums spent on GPL, the failure to keep the promise of tax reform while imposing VAT at an incorrect, inflated rate on several products and services not previously subject to any consumption tax. Lest they say yes, but what about the items that were subject to consumption tax at higher than 16%, I ask how then did the revenue neutral VAT and Excise Taxes produce excess revenues of 48%, much of it wasted in corruption and nepotism on a scale unprecedented in Guyana? As to the EIU’s statement about “rampant crime and corruption” nothing further needs to be said, as the minister well knows.

2. That “following severe contractions in production in the first three quarters of the year, to attain real GDP growth in 2009 would have required an incredibly strong growth rate in the October-December quarter …… Moreover, with import compression thought to have made a major contribution, the government’s GDP growth estimate for 2009 masks the weakness of the real economy.”

Why the ministerial vitriol and bombast in response to this? In 2008, half year growth was 3.8 per cent while in 2009 there was a decline of 1.4%, a cumulative turnaround of negative 5.2%. Full year growth in 2008 was 3.1%, representing a decline in the second half of the year, in stark contrast with 2009 when a decline over nine months was transformed into a huge positive not in six, but in three months. The Bank of Guyana data show that the poor performance continued into the third quarter, so the challenge to Dr. Singh and his independent but voiceless professionals in the Stats Bureau was for a rational explanation of the dramatic turnaround in the fourth quarter of 2009. That is all.

3. That there was “little evidence of what was driving growth during the second half.” Dr. Singh offers in response growth in rice, sugar and gold but does not tell us how sectors that account in total for 17% of GDP can account for a turnaround of 3.8% in six months over 100% of the economy.

He adds that “the [official] numbers are sourced from the sectors themselves and can be verified directly with those sectors,” and that it “is nothing short of absurd and dishonest to call into question these numbers.” It is Dr. Singh who is being absurd and dishonest by conflating production numbers into GDP figures. GDP is a value not a quantity and a 3% increase in production does not automatically translate into a 3% increase in value. Prices will simply be another variable in the GDP equation.

4. Dr. Singh’s anger becomes uncontrollable when the EIU report quotes from a 2009 Business Outlook Survey by Ram & McRae in which 60% of the respondents reported no confidence in the economy. The survey is described as “politically motivated, highly flawed, and designed to distort the facts and present a negative picture of Guyana under the current administration”, and the principal of the firm, (i.e. me) as “a self-confessed partisan politician”.

Dr. Singh has never, as far as I am aware, sought from any of the partners of the firm the methodology or software it uses in the Survey and did not have a problem with the Surveys in 2006 and 2007 when reported confidence in the economy was high. Those findings were then welcome and widely publicized in the state media. Nor was I “a self-confessed partisan politician” when I was asked by him and the President for assistance on certain matters; when his party asked for tax ideas on their 2006 Manifesto; or when I was visited at home by a high priced Presidential Advisor for consultations on a range of issues.

5. Further, Dr. Singh should be careful in impugning anyone’s integrity, professional or otherwise. His own situation where the wife of the Minister of Finance is the de facto head of the Audit Office is unique, a violation of all the tenets of professional independence, and an embarrassment to this country; he was complicit in the untruth perpetrated in the National Assembly over the $4 billion paid to GUYSUCO in 2009, participating in, and contributing to the devaluation of that august body; and complicit too about the error in the VAT rate that instead of consumers paying $12.1 billion in VAT in 2007, they actually paid $21.3 billion, that is more than 75% more! He was, we recall, also centrally involved in the unlawful concessions given to the Ramroop group. These occurrences and circumstances all speak for themselves, and require no elaboration from me.

But I will show faith in Dr. Singh and look forward to a higher standard of integrity and competence from him in, among other things: ensuring that public moneys are paid into the Consolidated Fund and not the Office of the President or special accounts; ensuring a strong, independent Audit Office; publishing of the mid-year report within the statutory deadline set in the Fiscal Management and Accountability Act; tabling in the National Assembly annual reports of state entities required by the Public Corporations Act; ensuring that NICIL, the Board of which he is Chairman, begins to operate within the law and its own constituent documents, including having its accounts audited and filed as the law requires; granting concessions under the Income Tax (In Aid of Industry) Act on an objective basis rather than on political grounds; and taking a stand on the high level of corruption that has engulfed public finance in the country.

I know he possesses the integrity to rise to the occasion. I am less confident about his courage. But hopefully he will reflect on the oath which he took on being appointed, and will recognise that more than at any time, Guyana needs from its Finance Minister this level of integrity and courage. While he struggles with these challenges, I also suggest the temperance and language befitting his position.

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These two ministers misled Parliament on the $4B request and should be taken to the Privileges Committee

Sunday, March 21st, 2010

I refer to the article titled, (Manning admits error on UNC land gift – SN March 16) that described a parliamentary incident in neighbouring Trinidad. I do this to draw attention to an example of the egregious misconduct practiced in the parliament of this very country. The Guyanese example reeks of misrepresentation and deception; of what has become the norm and that which should be found most intolerable.

In the SN article, which relied on original coverage in the Trinidad Express, it was reported that the T&T Prime Minister Manning expressed his regret in the Parliament for an earlier statement which, after subsequent enquiry, he found to be false. The report stated that if one gives false information to the Parliament, “it is the proper parliamentary thing to do, to return to the Parliament as soon as possible and correct the inaccuracy.” It goes without saying that this incident was characterised by standards and conduct of a truly higher calibre.

Just a few weeks ago, our own National Assembly was apparently deliberately misled by the Ministers of Finance and Housing concerning the specific matter of a payment of $4 billion to the state-owned GuySuCo. The occasion was the presentation of Bill No. 1 of 2010 on January 11, 2010, in which the Minister of Finance sought approval to pay [in the future] that sum of money into the Corporation, while the Minister of Housing, Mr. Irfan Ali, added to the deception of the timing of the payment when, in answer to a question by AFC MP Sheila Holder as to how soon he could spend the $4 billion, he replied, “we are ready.” Notwithstanding the title of the bill, Supplementary Appropriation (No. 3 of 2009) Bill 2010, the two ministers, through both submissions, pretended-and led the parliament to believe-that this payment to GuySuCo had not been effected, and that such payment was an event in the future.

I am now in possession of irrefutable evidence that when the Bill was presented by Dr. Singh for approval, and the supporting/corroborating statement was made by Mr. Ali, the money had already been paid to GuySuCo. Repeat: it had already been paid. Given the amount involved, the forum, the appropriation bill procedure, and the collusive ministerial effort, it appears that a crass subterfuge of the lowest order was perpetrated. It was where a known occurrence in the past was being capriciously parlayed as a future event; one requiring the attention and action of members of the highest body in the land; and one then unknowingly and inaccurately inscribed in the records.

There seems no doubt that the two ministers have committed a grave transgression for which they should be taken before the Privileges Committee of the National Assembly. In view of the evidence, there can be no reprieve or safe harbours of procedure, timing, semantics, misunderstanding, communication gap, or ignorance. The ministers knew what they knew, and very deliberately foisted what rises to the level of a blatant falsehood on the parliament.

To the detriment of this country, deception in public life has become unexceptional, and casual everyday, among our politicians; it is time that we start to root this out. In the circumstances, the acceptable options open are limited, unambiguous, and mandatory. The two ministers must: first, apologise to the parliament and the nation; and, second, immediately tender their resignations. Such mitigating actions would be decent and honourable. It is timely to recall that Dr. Singh is the person who persisted-and succeeded-in bringing his parliamentary colleague Ms. Deborah Backer before the Privileges Committee, for a statement she made about torture by members of the Guyana Defence Force.

In the interests of fairness and consistency, the two ministers should be subject to the same process.

I stand ready to participate in any truth finding procedure or inquiry.

And while I am committed to protecting the confidentiality of my source, I am prepared to present this evidence to the Speaker of the National Assembly, under the condition of credible commitments to information and source security. Still, the actions along the lines contemplated should not be left solely to a private citizen. It would be a most heartening development for parliament to activate forthwith available mechanisms to have this issue investigated as a matter of urgent, national importance.

Anything less would be a travesty; would pave the way for future misconduct; and could expose this deliberative body to further ridicule, and total irrelevancy.

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Estimates do not disclose total cost of overseas visits for Office of the President

Friday, February 12th, 2010

In responding to concerns about the cost of presidential travel, Finance Minister Dr Ashni Singh is quoted as saying that “over the past three years, the average annual expenditure for the entire government on travel has been $200M.”

The 2010 Estimates which Dr Singh presented just three days ago has a head ‘Transport, Travel and Postage’ under which is a line item ‘Overseas Conferences and Official Visits.’ The Estimates disclose nil costs for the Office of the President, the Ministry of Foreign Affairs and indeed all the ministries, departments and regions, barring the Finance Ministry and the Guyana Defence Force. It is under these two budget agencies from which Dr Singh would have derived his $200 million figures. But it would have been helpful and reassuring if Dr Singh had indicated, at least for the Office of the President, the total cost of overseas visits for the period, the subject of concern and speculation.

Dr Singh should have explained whether that line item includes per diem allowances and other costs associated with overseas visits, and indicate if payment for any such trips is reflected under any other line item, or channelled through any other government agency or controlled entity. The entourage to witness the President receiving an honorary doctorate in Russia included Mr Winston Brassington, head of NICIL. Details that would indicate the propriety of the financial arrangements for that trip (which had some private elements to it), would help to dispel many of the public concerns and neutralise speculation.

The in-country costs of presidential visits are invariably met by the host country. Dr Singh should disclose whether Dr Jagdeo has been receiving per diem for such visits, and the amounts paid to him for the past three years.

Finally can Dr Singh please say whether he agrees with a response to an Audit Office 2003 query on overseas travel, that the “concerned official” (suspected to be the President) is exempted from clearing his travel advances. If the President is not exempted, can Dr Singh tell us the number and value of advances the President has outstanding.

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Budget 2010: Looking back

Sunday, February 7th, 2010

Introduction
The Minister of Finance has announced that he would be presenting the country’s National Budget tomorrow February 8, 2010. This can be considered early, given that the law allows him to present the budget by March 31 of each year, while providing him with the money to run the business of government until the budget is passed. The relative timeliness of the 2010 National Budget is commendable. It is, however, in obvious contrast with his annually late presentation of the mid-year report which goes way, way, beyond the two month deadline, even though as this column has consistently pointed out, the report is routinely misdated. Hopefully, the Minister will tell Parliament how his ministry finds it possible to present the full year accounts five weeks after the end of the year but needs about twenty weeks to present the half-year report.

It is a matter of speculation whether the timing of the budget presentation has anything to do with the education the government would have received about the constitution and the law on the public finances of the country during a recent debate on supplementary funds and the Contingencies Fund, or to pre-empt the publication of another damning audit report on the use and abuse of public funds.

Constitutional deprivation
The Minister has shown that, certainly in relation to the National Budget, he has no time for Article 13 of the constitution which requires that citizens and their organisations be provided with opportunities to participate in the management and decision-making processes of the state and, more specifically, “on those areas of decision-making that directly affect their well-being.” Let us see whether any organisation, trade union, the ubiquitous and loquacious Private Sector Commission, the Guyana Manufacturers’ Association, the multiplicity of Chambers of Commerce, the Consumers’ Association and other private sector bodies will make even a murmur on this constitutional deprivation. If the budget, the principal policy instrument affecting every citizen not incidentally or singly, but in almost every aspect of her/his life is not considered appropriate for, not only consultation on, but meaningful participation in, then Article 13 should be repealed by any constitutional means necessary. If it is so considered, then it is time that this disdain be ended and the constitutional rights of citizens, and the corresponding duty of the government and its ministers, be respected and observed.

Today’s Business Page, barring a few minor comments, will not attempt a preview of the 2010 budget, but instead look back at some of the main issues Ram & McRae had raised in their Focus on the 2009 Budget, and offer a preview of some of the issues which the firm will be raising in its review of the 2010 one. Having examined three budgets and speeches from this once promising Minister, witnessed his utter lack of imagination and his passion for long and expensive spending lists, and been overcome by the tedium of increasingly partisan political rhetoric, I no longer expect much from Dr Singh’s budget speeches. That prevents any disappointment and allows for pleasant surprises.

The state of statistics
One thing I will certainly hope for and that is that the Minister will put to rest the confusion he and the Bank of Guyana caused when, in their respective half-year reports, one was reporting growth in the economy while the other reported a decline – both using the same source, the Bureau of Statistics. It will be fascinating to see what the Minister announces as the 2009 growth (decline) and inflation rates to be, which no doubt will be attributed to the same Bureau of Statistics. In this regard, the Minister will be ahead of the bureau, which up to three days ago had posted on its website inflation data only to September 30. It would be unfortunate if, soon after the Minister announces his number, the information on the website is updated. If it were, that would do little for the integrity, independence and professionalism of the bureau. If we cannot rely on the quality and integrity of the official statistics or the competence of the Audit Office, it is near impossible to engage in any meaningful analysis of or discussion on the country’s economy or finances.

Flood and drought
Last year, the Minister of Agriculture Robert Persaud, responding to public disquiet over the delay in addressing the flood problem, announced that the government was treating the construction of a $3B Hope Relief Channel as “a priority,” a decision that met with dismay from a number of professionals who raised several questions, including the source of the technical study and advice on which the multibillion dollar investment was being made. Even though the country is now experiencing a drought, the debate on the budget should at least answer those questions. For if the critics are right, then not only will we have wasted three billion dollars, but we will have lost valuable time and done little to remove the danger of a recurrence.

Focus 2009 constructed what the firm referred to as the expectation gap – the difference between the growth rate set out in the Economic Recovery Programme – 4% – and the actual growth rate. The Guyana economy performed better than many of the more open economies which are only now recovering from some steep declines. The Minister would of course, be reluctant and disappointed to announce that for the first time under his stewardship, the economy recorded a decline, particularly after projecting growth in real GDP of 4.7%. The graph will be updated in Focus 2010.

Oversized government
Last year Focus examined the explosion of the size of government, including the huge increases in the number of ministries, corresponding with a large growth in the number of statutory bodies. Space constraints do not allow for the table presented last year showing how from eleven ministries in 1992, the number has increased by 50% in 2009, with many of the ministries now having two ministers, dozens of ex-ministers, scores of advisors, and hundreds of contract employees. Budget Focus will tabulate some of the more shocking cases of contract employees, noting that the concern is not about the concept, as much as about the numbers and who some of those advisors are.

We recalled last year that the 2003 budget speech had reported that an IDB-financed Public Service Modernisation Programme was expected to be concluded and the consultant’s final report would be used as input into the design of a major modernisation project. We recommended that the IDB financed report be tabled and considered in the National Assembly and its recommendations critically reviewed with a view to implementation. That recommendation was clearly ignored by the government which seems more concerned to provide jobs for members of the ruling party, and increasingly their children.

Meanwhile the obviously over-financed IDB, the EU and others, continue to make further billions available for the government to spend, sometimes in the most wasteful manner, even as large segments of the population live in poverty.

The regulatory environment
In regulatory matters, last year belonged to Clico – the insurance company that represented perhaps the worst case of regulatory failure this country has ever witnessed. Focus 2009 identified and discussed the level of effectiveness of the multiple regulatory bodies, with most of them not equipped with adequate in-house, full-time analytical skills or legal expertise, and each operating well below what can be considered a moderate level of effectiveness. It recommended the establishment of a Financial Services Commission (FSC) under which is brought the supervisory functions of the Bank of Guyana, Securities Council and the Office of the Commissioner of Insurance. It further recommended that the Financial Intelligence Unit be placed within the Bank of Guyana or under the FSC.

Despite the colossal failure of the Office of the Commissioner of Insurance, the only action taken by the government in 2009 was to bring that office under the Bank of Guyana, which itself was at fault in Clico’s collapse. One particular statement by that unit, responding to a press statement about Clico, signalled an unacceptably harsh tone from an otherwise moderate institution.

Meanwhile the policy-holders and depositors of Clico find themselves in legal limbo even as the Bank of Guyana holds more than three billion dollars in funds available to pay them.

Other issues
Some of the other issues addressed in Focus 2009 were sugar, about which we continued to hear much almost throughout the year, debt management which has continued its inexorable rise during 2009 and for which Ram & McRae has recommended a statutory borrowing cap. Focus 2009 touched too on tax reform which has assumed the status of an annual, obligatory promise. The GRA recently announced that it had substantially exceeded its 2009 collections budget, even as the hugely expensive and much touted TRIPS was cheated to the tune of more than $300 million. I doubt whether the Minister would even bother to mention this, the largest single cash fraud ever to have been perpetrated on a state institution in Guyana.

2010
Focus 2010 will revisit, as appropriate, some of these matters but will look at others as well. It will examine in some detail the serial violations of the constitutional and legal provisions governing receipts and expenditure, supplementary appropriations, and the Contingencies Fund. We will look as well at the abuse of the contracts to undermine the self-undermined Public Service Commission, the abuse of the Public Corporations Act to divert proceeds of privatisation from the Consolidated Fund to the politically controlled NICIL, whose executive head is Mr Winston Brassington himself at the centre of the QAII deal, and who secured funds from NIS and NBS for the Berbice Bridge Company.

We will touch too, the debate on the LCDS that was probably the biggest issue in 2009, the limitations, conflicts and performance of the Audit Office, the allocation and distribution of the national sports budget, and take another look at the Companies Act 1991, and the Deeds Registry.

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Supplementary or contingency: same abuse – Part 3

Sunday, January 31st, 2010

Introduction
To begin today’s column I conclude with two of the provisions relating to supplementary appropriations in the Fiscal Management and Accountability Act 2003 (FMAA). The first is that except in circumstances of grave national emergency, there can be no more than five supplementary appropriation bills in any one year. Second, every appropriation of public moneys authorised by Parliament for a fiscal year lapses and ceases to have effect as at the end of that fiscal year. And just in case any official, minister, or the Audit Office needs reminding, section 38 of the FMAA repeats what is stated in section 21, ie, that all public moneys raised or received by the government must be credited fully and promptly to the Consolidated Fund. “Public moneys” is defined to mean all moneys belonging to the state, including tax and non-tax revenue collections authorised by law; grants to the government; budget agency receipts; moneys borrowed by the state or received through the issuance and sale of securities; and moneys received or collected for and on behalf of the state.

The Contingencies Fund
I now turn to the constitutional provision governing the Contingencies Fund. The position is that if Parliament decides to establish a Contingencies Fund, Article 220 permits it to do so by paying into it a specific amount, the quantum of which is determined and, therefore, limited by law in respect of any year. The article goes on to authorise the minister responsible for finance to make advances from that fund, if he is satisfied that there is an urgent need for expenditure for which no other provision exists.

Advances from the Contingencies Fund must be cleared by a supplementary estimate laid before the National Assembly as soon as practicable (see 4) below), thus replacing the amount so advanced. Section 41 of the FMAA gives effect to Article 220 by providing that:

1) The Contingencies Fund is limited to two per cent of the estimated annual expenditure of the previous financial year or such greater sum as the National Assembly may approve. It is fixed for each year, either by way of the formula or an act and the minister cannot increase it without parliamentary authority.

2) Only the Minister of Finance can authorise the release of moneys from the Contingencies Fund and must do so personally. Legally, not even the President can instruct the Minister of Finance when it comes to this fund.

3) By way of a drawing right, the minister may make an advance from the Contingencies Fund. The circumstances under which he can do so are severely limited – the overriding test is threefold: urgent, unavoidable and unforeseen. Further, he can use this fund only where no or inadequate sums had previously been appropriated, or where reallocation under the FMAA is not possible, or finally, where delay would cause injury to the public interest. He cannot use the fund to meet a promise by the President to do something or the other, or because he failed to budget properly, or because some budget agency was careless.

4) The Minister must report at the next sitting of the National Assembly all advances made out of the Contingencies Fund, specifying (a) the amounts advanced; (b) to whom the amounts were paid; and (c) the purpose of the advances.

5) On approving such advance, the National Assembly must pass a supplementary appropriation act covering the advance.

I reject what appears to be the government’s implicit assumption that Article 220 establishing the Contingency Fund somehow overrides the provisions of Articles 216-219 establishing the sanctity and unity of the Consolidated Fund, and providing an elaborate regime for expenditure of public funds. All that Article 220 does is to authorise Parliament to establish, if it wishes, a Contingencies Fund. The FMAA sets the limit on the sum of money to be paid into this fund and sets out the procedures governing the use and operation of the fund. The purpose of Article 220 is to convert the demand for money to be available for unforeseeable expenditure, which could be treated as a demand for loose or floating money, into a demand for a determinable amount of money for a specific purpose approved by law made by Parliament and by the constitution.

The purpose and combined effect of the constitutional provisions and the FMAA is that all expenditure, whether from the Consolidated Fund or its sub-fund the Contingencies Fund, must be by way of an appropriation act. This allows the National Assembly to retain control of public moneys while allowing the executive branch sufficient latitude to conduct governmental business. The limitation on the number of supplementary appropriation bills would seem designed to impose a form of financial discipline and order on the Ministry of Finance and budget agencies, in contrast to haphazard, guesswork financial management.

Against this constitutional and statutory background we can now consider the six Financial Papers presented to the National Assembly for 2009 for a total sum of $15,703 million. As we see from the table below, the amounts provided to clear advances from the Contingency Fund were $3,936 million while supplementary provisions amounted to $11,767 million. These were approved by way of Supplementary Appropriations Acts passed on August 25 and December 14, 2009 and January 14, 2010.

Table of Supplementary Appropriations in respect of 2009

Source: Acts and Financial Papers

1. While nothing new can be said about the failure to deposit the lotto funds into the Consolidated Fund, equally dangerously and unconstitutionally, the lotto funds are being used by the President to make payments. I have tried to ascertain the identity of the officials complicit in this illegality by trying several sources to ascertain the signatories to “account 3119.” Everyone is afraid to speak. It is no wonder that the government would not bring Freedom of Information legislation, despite the President’s commitment announced to the international press.

2. In financial paper No. 6, $1.6 billion is included as additional inflows for the Low Income Housing Programme Revolving Fund. A revolving fund can only be established under an appropriation act which specifies the purposes and draw-down limit. There is no indication when such a fund was created or its limits. No such fund appears to have existed at the beginning of 2009 and there is some mystery about its origin and operations.

3. There is some apparent misunderstanding between inflows which should be paid into the Consolidated Fund and the related expenditure which should be the subject of the appropriation act. Any money received has first to go into the Consolidated Fund. Its expenditure is an entirely different matter.

4. The Finance Minister fails consistently to bring to the next sitting of the National Assembly advances out of the Contingency Fund. As a result we have in Financial Paper #1, Contingency Fund payments for a period of six months. During that period, the National Assembly had met on more than two dozen occasions. But this is the Minister’s artful but deceptive way to circumvent the limit on the number of supplementary appropriation bills he can introduce.

5. The annual Budget never states the amount in the Contingencies Fund. While the Audit Office annually refers to the abuse of this fund, that office seems not to understand what is meant by “advances” in the context of the fund. It is meant to be an amount paid in advance of appropriation at the next sitting, not some prepayment for future expenditure.

6. Arguably most of the Contingency Fund expenditure does not meet the strict test of “urgent, unavoidable and unforeseen” set out in section 41 of the FMAA. The case of the $400 million to the GRDB as Subsidies and Contributions to Local Organisations is instructive.

7. The Contingency Fund seems routinely used to make expenditure for subsequent financial years. The Minister of Health admitted as much in the case of purchases of drugs from the New GPC.

8. Act 3 of 2010 is interesting. It indicates that the government spends moneys contrary to law, not only in respect of the Contingencies Fund but for non-urgent expenditure. And just reflect on the first paragraph of this column: that every appropriation of public moneys authorised by Parliament for a fiscal year lapses and ceases to have effect as at the end of that fiscal year. Seems to suggest that the appropriation lapsed even before the National Assembly approved it.

9. In Financial Paper 5 there is, under the Office of the President, an amount of $353 million for the installation of fibre optic cables and termination, as a Contingency Fund provision. The explanation, or justification, by no less than the President, that this is to introduce “e-government,” ie, electronic government, is as absurd and misinformed as it is wasteful.

A criticism of this less than half-baked and non-technical description needs a separate column, but consider that the same week the announcement was made, the President was unveiling an advanced, multi-billion dollar, technically tested scheme by GT&T! Nor does the payment meet the test of “urgent, unavoidable and unforeseen,” and the Minister should be held accountable for this illegality since the law imposes on him exclusive responsibility over the Consolidated Fund.

Leading on from the issue of responsibility, next week’s concluding part will look at who is responsible and who can be penalised, and offer some of the recommendations to improve the financial management of the public finances of the country.

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