…driven by increase in spending despite being in caretaker status
It has been revealed that the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government racked up a deficit of almost $30 billion for last year due to its spending habits, despite being in a caretaker status.
Public Works Minister Juan Edghill
This was revealed by Public Works Minister Juan Edghill, during his recent reading of the new Government’s $330 billion Emergency Budget. While Central Government’s current revenue increased last year, it was not enough to cover the deficit.
“At the end of 2019, Central Government recorded a deficit of $29.9 billion, widening by 11.5 per cent when compared with the deficit recorded in 2018, largely driven by an increase in total expenditure,” Edghill announced.
“Central Government current revenue for 2019 totalled $240.6 billion, $23.6 billion above that of 2018. Tax collections accounted for 93.9 per cent of the 2019 current revenue, amounting to almost $226 billion, $27.5 billion above the 2018 tax collection,” he also informed the House.
Former Finance Minister Winston Jordan
The Minister explained that this growth in tax revenue was due to growth in tax collection, something the former Government was criticised for – an overreliance on taxing the people of Guyana, in the absence of substantial growth in the non-oil economy.
Edghill revealed that Value Added Tax (VAT) collection increased by $4.6 billion, while internal revenue increased by $15.9 billion, customs and trade $2.9 billion and excise tax collection by $4.1 billion.
Further, he noted growth in internal revenue was driven largely by withholding taxes, personal income tax and corporation tax from the Private Sector, which grew by $9.5 billion, $3.4 billion and $2 billion, respectively.
“Higher VAT collections was largely the result of growth in revenue from domestically supplied goods, which grew by 14.4 per cent, or $3.3 billion. Growth in collections of excise tax is attributed mainly to higher collections on imports of petroleum products and motor vehicles. These grew by 10.5 per cent, or $2.8 billion, and 17.7 per cent, or $1.2 billion, respectively,” he also informed.
During APNU/AFC’s time in Government, the Government’s fiscal deficit had steadily grown. The net deficit was $20.3 billion in 2016, growing to $24.2 billion at the end of 2017 and $27.4 billion in 2018. in December of that year, the former Government fell to a No-Confidence Motion
They were supposed to call elections within three months and during that time as a caretaker Government, they were not supposed to be engaged in political appointments or the signing of new contracts. The former Government disregarded all these conventions.
During his budget speech, Edghill also revealed that the former Government raided the Consolidated and Contingency Funds, making withdrawals that did not meet the legal requirements.
Article 217 of the Constitution of Guyana stipulates that money cannot be withdrawn from the Consolidated Fund except: “(a) to meet expenditure that is charged upon the Fund by this Constitution or by any Act of Parliament; or (b) where the issue of those (sums of) money has been authorised by an Appropriation Act; or (c) where the issue of those (sums of) money has been authorised under Article 219.”
Article 220 (2) stipulates that “Where any advance is made from the Contingencies Fund, a supplementary estimate shall, as soon as practicable, be laid before the National Assembly by the Prime Minister or any other Minister designated by the President for the purpose of authorising the replacement of the amount so advanced.”
But according to Edghill, under APNU/AFC “There were regular withdrawals from the Consolidated Fund and 20 months of uninterrupted, unauthorised invasion of the public purse and also withdrawals from the Contingency Fund which did not meet the legal requirements, throwing the entire financial architecture of the country off its legal and constitutional tracks.”
He also pointed to the sharp increase in employment in the public sector, including political appointments, which drove up operational costs. Despite the increase in employment, Edghill said that there was no increase in work output. (G3)
