Sloth in Govt’s spending continues to hurt economy – Edghill
…says situation worrying, embarrassing on the Administration’s part
Despite the coalition Government’s continuous presentation of early budgets, the rate of Government spending remains woefully short, so much so that Finance Minister Winston Jordan has admitted that Government is more than 30 per cent behind in its Public Sector investment.
The Minister made this admission during the opening of the Finance Ministry’s Budget 2018 preparation and sensitisation training workshop on Monday. According to the Minister, at the end of June 2017, less than 30 per cent of the Public Sector Investment Programme (PSIP) had been expended.
Jordan cautioned the responsible officials against repeating the dismal performance. But according to former Minister within the Finance Ministry, Juan Edghill, the Finance Minister is ultimately responsible, while direct blame can be attributed to heads of the respective budget agencies who requested funds.
“The Minister of Finance is the first person that would have to take responsibility,” Edghill stated. “And then the head of budget agencies, because these budget agencies went to the Ministry of Finance and Director of Budget and requested specific funds based on what the programme budget is. Is it that these [Regional Executive Officers] REOs (and) Permanent Secretaries requested money that they can’t spend? Or they were just plucking things from out of the sky, they had no real programme or strategic layout for what they want to achieve and by what time? Or they’re just careless.”
Describing the worrying situation as an embarrassment on the Administration’s part, the former Minister noted that the central point of an early budget was to ensure enough time to complete spending schedules.
Months after it entered office, the coalition Government had presented its first budget in August 2015. A second budget soon followed in January 2016, for the fiscal year 2016. And a third budget was presented in November 2016, before the start of this fiscal year. And Government plans to unveil its fourth budget, for fiscal year 2018, in November of this year.
“I think it is more than serious, it is embarrassing,” Edghill said. “Let’s go back to why we have early budgets. The Minister of Finance told the nation that they had early budgets (for) a better implementation plan to roll out.”
Edghill pointed out that the previous Government, despite usually presenting budgets in periods ranging from March to June, still had a higher, faster rate of implementation when in office than the coalition Government.
“He’s having a budget that can be implemented from January 1 in the new year and at almost the end of seven months, he is only 30 per cent of his implementation, which shows that they have very serious issues.
“Is it administrative fumbling? Is it lack of understanding or clear policy direction as it relates to what needs to be done to see the PSIP in place? Or is it a case where projects are plucked out of the sky and they are not intertwined in a coherent manner to achieve a particular objective.”
He noted that the struggling rate of the PSIP implementation was symptomatic of what was occurring in the economy, based on the fact that a significant amount of Government’s capital works spending provided contractors with contracts and the unemployed with employment.
“It has an effect on employment; it has an effect on other services that are tied to construction. What happens in villages (is that) if people are not employed is that the market suffers, the stores suffer. So, it has very disastrous effects on the economy.”
No lame excuse
Indeed Jordan, in his address to heads of the budget agencies during the workshop, had stated that there could be “no lame excuse” as the 2017 Budget was presented to Parliament back in November of 2016, a signal accomplishment of the Administration. Jordan, however, seemed at a loss to pin down why budget agencies would underperform to such an extent.
“Where is the benefit from the early budget presentation when, for example, we still have budget agencies in June, figuring out specifications of items to be purchased?” the Minister queried. “We have awarded only 53 per cent of the PSIP and expended a mere 28 per cent on maintenance of infrastructure within the recurrent budget.
“What lessons can we learn from this underachieving performance? For one, it is that goals can be ambitious, but not realistic. Grand hot air balloon ideas, not based on robust evidence, will never get off the ground, neither will they get anywhere,” he had continued.
But this backlog comes against the backdrop of deficiencies in services provided by regional officials. A potent case is the countrywide drug shortages that necessitated Government moving to sole source over $600 million worth of drugs.
A continuously slow rate of Government spending, owing to poor planning from budget agencies and execution from the relevant departments, is also a contributing factor to slow overall economic growth. It is a fact that even the Finance Minister has acknowledged.