Dear Editor,
THE Leader of the Opposition (LO) and at least one other critical commentator of the Government, expressed concerns about the government’s request for supplementary funding through the National Assembly.

Mainly, the LO contends that in 2023 for instance, “the government came to the National Assembly five times for extra money totally $116 billion, nearly 15 per cent more than its initial budgeted sum. The LO surmised that “the more the PPP/C Government spends, the more money is lost through poor planning, mismanagement, and corruption.”

This article seeks to address this issue in terms of the legitimacy of “supplementary appropriation”, in contrast to the former, APNU+AFC Government’s approach to supplementary spending.

In the case, the former government, during their tenure in 2015-2020, departed from the legal provisions pursuant to the country’s principal financial law—that is, the Fiscal Management and Accountability Act (2003) (hereinafter the “FMAA”), as demonstrated hereunder.

First and foremost, considering that the national budget is presented at the beginning of the fiscal year, the need for supplementary funding throughout the fiscal year, as the programmes in the budget are implemented, is not an unusual practice whether it is in public finance, corporate finance, or personal finance.

There will always be plausible variances in budgeted costs versus actual costs, especially in relation to capital budgeting. These variances would arise due to a number of unavoidable factors, such as inflation, supply chain disruptions, exogenous and endogenous factors, unforeseen events etc.

Thus, it does not necessarily mean that there is poor planning on the part of the government. It is with this basic principle in mind that the drafters of the FMAA had ensured that a number of provisions were embedded within the FMAA, thereby adequately providing for these eventualities. It therefore follows that the most important concern from the tax-payers vantage point, is whether the supplementary appropriation (s) being sought is/are in conformity with the FMAA.

To this end, Section 22 (1) of the FMAA establishes the “Authority to vary annual appropriations”, where Section 22 (1) (c) establishes that “the amount of an appropriation for any programme may not be varied under this section by more than ten percent of the total amount appropriated for that programme in the applicable appropriation Act.”
Notwithstanding Section 22 (1) (c) of the FMAA as noted above, Section 24 (1) establishes that “any variation of an appropriation, other than those variations referred to in Section 22, shall be authorised by a supplementary appropriation Act prior to the incurring of the expenditure thereunder.”

This means that if the Minister requires any variation of an appropriation exceeding the 10 per cent threshold pursuant to Section 22 (1) (c) of the FMAA, then such approval ought to be sought prior to the expenditure thereunder, in accordance with Section 24 (1) of the FMAA.

Further to note, Section 24 (5) of the FMAA states that “the Minister shall not, in any fiscal year, introduce more than five supplementary appropriation Bills under this section, except in circumstances of grave national emergency, where the Minister may introduce a Bill, intituled an emergency appropriation Bill, to meet the situation.”

Additionally, Section 23 (1) of the FMAA establishes that “the Minister shall present to the National Assembly any appropriation amendment Bill referred to in subsection 22 (2) no later than the end of the eleventh month of the current fiscal year.

The sum in question being sought through Financial Papers Numbers 1 and 2 in the National Assembly by the Senior Minister with responsibility for Finance, amounts to just over $40 billion, representing 3.5 per cent of the $1.146 trillion budget 2024 that was approved earlier in the year.

Conversely, the same cannot be attributed to the incumbent’s predecessors as illustrated in the table. During the period 2015-2019 period, the former Minister of Finance presented a total of eight supplementary appropriation Bills, all of which were approved by the house.

On the face of it, this gives the impression that the former government did a great job in terms of managing the national budget in a way that minimises the need for too many supplementary funding. Be that as it may, an in-depth analysis into this matter has overwhelmingly disproven this notion.

In existence, there is compelling and otherwise, indisputable evidence suggesting that the former Minister of Finance deliberately violated the FMAA, by circumventing the legally established procedures for the approval of supplementary spending through the National Assembly.
In doing so, the former Finance Minister effectively engineered a false perception that he was practicing tight budgetary controls. Unfortunately, this was not the case by any measure of one’s imagination.

Towards that end, during the period 2015-2020, the former government unlawfully withdrew from the government’s deposit accounts held at the Bank of Guyana, a cumulative sum totally $149.4 billion in contravention of the FMAA.

In this respect, Section 60 (1) of the FMA Act states that…” the Minister may approve the use of advances in the form of an overdraft on an official bank account to meet cash shortfalls during the execution of the annual budget”.

In other words, the FMAA provides for the deposit accounts to be overdrawn. However, Section (2) of the FMAA Act states that…” the minister shall repay in full all advances in the form of an overdraft on an official bank account on or before the end of the fiscal year during which that overdraft was drawn.”

Yet, the overdraft balances referenced herein, were never cleared for the entire five years period (2015-2020) by the former Minister of Finance; not until the incumbent Government, in May 2021, made the necessary provisions to regularise those overdrafts in conformance with the FMAA.

It is worthwhile to note that under the incumbent Administration, the government’s deposit accounts held at the Bank of Guyana have since reverted to their historically surplus balances, as opposed to the illegally racked up overdraft balances by their predecessors.

As shown in the table, the deposit accounts closed 2021 with a surplus balance of $46 billion, which rose to $94.4 billion (105 per cent) at the end of 2023.

Most evidently and importantly, the supplementary appropriation Bills presented to the National Assembly on July 31, 2024, by the subject Minister seeking approval of some $40 billion, are in compliance with the Fiscal Management and Accountability Act (2003). It should be noted, too, that the lawful procedures thereof have also been properly adhered to in consonance with the FMAA.

This is in stark contrast to the incumbent’s predecessors who, during the period 2015-2020, deliberately violated the FMAA in respect of supplementary expenditures totaling a whopping $149 billion that were not subjected to parliamentary approval and scrutiny.

Yours respectfully,
Joel Bhagwandin