Setting up of two funds
Occasioned by the walkout of the opposition from the National Assembly as it considered Supplementary Appropriation (No.3 of 2009) Bill 2010, for $8,245,758,278, some of which had already been spent (Contingencies) and to be spent (Supplementary Appropriations), I began an examination of the whole business of the constitution and the Fiscal Management and Accountability Act 2003 (FMAA). Together these provide the legal framework for the receipts and payments of public expenditure, and today I propose to examine the various provisions as a basis for consideration in the next part as to whether there is compliance with the constitution and the law in how the Minister of Finance treats with the Consolidated Fund and the Contingency Fund.
The constitution
The Consolidated Fund and the Contingency Fund are dealt with under Articles 216-219 and 220 respectively.
These five articles occur in Title 8 which is intituled simply ‘Finance.’ Together they deal with the establishment, funding and withdrawal of money from the Consolidated Fund or other public funds. For reminders, the Contingency Fund is not a separate fund but only a sub-fund of the Consolidated Fund.
The title of Article 220 is ‘Contingency Fund.’ It corresponds with the four articles on the Consolidated Fund and deals with the establishment of the Contingency Fund and its funding, which may be considered as one part, and withdrawing money out of it, which may be considered as the second and separate part of its provisions. One of the differences between the Consolidated Fund and the Contingency Fund is that while the constitution establishes the Consolidated Fund, Article 220 does not establish the Contingency Fund by its own provision, but leaves it to Parliament to decide whether or not it will establish the fund. “Parliament may by law establish” says the text of the article.
Because the Consolidated Fund is the repository of revenues or other moneys raised or received by Guyana and the source from which expenditure is made, the amount in this fund changes constantly. This is not the case with the Contingency Fund which has to be a specific amount, the quantum of which is determined, and therefore, limited by Parliament by law. We now look at those provisions in some detail.
Article 216 provides that “all revenues or other moneys raised or received by Guyana (not being revenues or other moneys that are payable, by or under an Act of Parliament, into some other fund established for any specific purpose or that may, by or under such an Act, be retained by the authority that received them for the purpose of defraying the expenses of that authority) shall be paid into and form one Consolidated Fund.”
This constitutional provision is systematically abused. It is now more than a decade since Auditor General Anand Goolsarran had cited the failure by the government to pay the government’s share of 24% of the proceeds of Guyana Lotteries to the Consolidated Fund, an assertion that has been repeated in every single annual report of the Audit Office. The 2007 report simply reminds Guyanese that no action was taken to pay over the amounts due to the Consolidated Fund but that such proceeds were paid into a special bank account No. 3119 and were used to meet public expenditure without parliamentary approval.
Watchdogs?
But instead of acting decisively on this matter the Audit Office accepts the inane response from the Ministry of Finance “that a policy decision is required on this matter, ” suggesting that the government or cabinet has some discretion on whether or not to comply with the constitution. Unfortunately, it is not only the Audit Office that bears responsibility for this sad state of affairs but so do the Public Accounts Committee and the National Assembly which are supposed to be our financial watchdogs. But so too does civil society, including those religious organisations which have accepted lotto funds for the construction of religious buildings.
While the lotto funds may be the most obvious and egregious case of violation when it comes to putting government revenues and receipts into the Consolidated Fund, it is not the only or obvious one. For example, the government with the cooperation of NICIL and the Privatisation Unit have been holding and spending public monies without the approval of the parliament and with no public oversight. That too runs into hundreds if not more than a billion dollars.
The Fiscal Management and Accountability Act 2003 which gives effect to the provisions of the constitution, provides that all budget agency receipts shall be credited to the Consolidated Fund. The agencies include the ministries, commissions, regions, the Guyana Defence Force and the Georgetown Public Hospital Corporation (GHPC). My understanding is that the money from the lottery company is paid to the Ministry of Finance making the decision not to place the lotto money into the Consolidated Fund both unconstitutional and unlawful. I particularly identify the GHPC because it too is guilty of such a breach which is done with the full knowledge of both the Ministers of Finance and Health. In an environment in which the rule of law prevailed, both these Ministers would be guilty of an indictable offence and liable on conviction to a fine of two million dollars and to imprisonment for three years. But Guyana has no such environment.
Now for expenditure
Article 217 restricts the withdrawal of moneys from the Consolidated Fund to one of three cases:
(a) to meet expenditure that is charged upon the fund by this constitution or by any Act of Parliament;
(b) where the issue of those moneys has been authorised by an Appropriation Act;
(c) where the issue of those moneys has been authorised under article 219.
Paragraph (3) of this article requires an Act of Parliament before any money can be withdrawn from any public fund other than the Consolidated Fund while paragraph (4) empowers Parliament to prescribe the manner in which withdrawals may be made from the Consolidated Fund or any other public fund.
Article 218 deals with the Appropriation Act to give effect to the National Budget as well as any supplementary estimates.
Article 219 which deals with the authorisation of expenditure before the annual Appropriation Act is passed, empowers parliament to make provision for the Finance Minister to authorise withdrawal from the Consolidated Fund of moneys to meet expenditure necessary to carry on the services of the Government of Guyana up to April 30 of the year, or until the Appropriation Act for that year.
The provisions governing such expenditure are contained in the Fiscal Management and Accountability Act 2003 to which for the moment I now turn.
Fiscal Management and Accountability Act 2003
If anyone has any problems with interpreting the relevant constitutional provisions, section 16 of the FMAA should remove any doubts. It provides very simply that there shall be no expenditure of public moneys except in accordance with Article 217 of the constitution. It does not stop there but goes on to set out detailed provisions in sections 17 (the statutory framework for the annual appropriation to authorise the expenditure set out in the budget); 18 (proscribing any expenditure of any budget agency receipt except by way of an appropriation); 22 (authority to vary annual appropriations); 23 (Appropriation Amendment Acts) and 24 (Supplementary Appropriation Acts).
We the ordinary citizens need not feel badly if this sounds a tad too complicated. Not only do we not bear the statutory responsibility for ensuring the act is complied with, but from all the evidence it seems that all the persons with responsibility for doing so are equally confused or simply do not care.
The Appropriation Bill presented under section 17 is required to conform to international standards, but what these are and whether they are applied in Guyana has never been addressed in any published document of which I am aware. With great respect to our ministers, accounting officers, staff of the National Audit Office and members of the Public Accounts Committee, I am not sure that they too are aware of what such standards are, let alone best practice.
Varying expenditure
Subject to laid down conditions, section 22 gives the minister the power to reallocate authorised spending among annual appropriations. The main conditions are that these be within the same budget agencies, that no capital allocation can be used for recurrent expenditure, a ten per cent limit and that no new appropriations can be created. Such changes are themselves subject to what is called an Appropriation Amendment Bill to be presented to the National Assembly no later than the end of the eleventh month of the current fiscal year.
Any variation other than the reallocation referred to in section 22 must be authorised by a Supplementary Appropriation Act prior to the incurring of any expenditure thereunder. As we noted last week, on the introduction of a Supplementary Appropriation Bill, the minister must present to the National Assembly the reasons for the proposed variations and provide a supplementary document describing the impact that the variations, if approved, will have on the financial plan outlined in the annual budget.
Neither the current Minister of Finance nor his predecessor has ever complied with the requirement to publish such a document. Again, one has to ask where is the National Assembly in all of this and whether the clerk and/or the speaker, the parliamentary opposition and the Public Accounts Committee ought not to do something about this persistent abuse. Dr. Ashni Singh gives the appearance of not being influenced by any law, professional or public opinion in terms of how, what and when he does anything. It is one of the failings of these types of legislation that they provide no automatic sanction for patent and systematic breaches. Nor do they lend themselves, without the availability of substantial private resources, to being responsive to legal sanctions.
Next week we will look at the Contingency Fund and close by examining the extent to which the cause of the walkout that sparked this series has any merit.