Fiscal Management and Accountability Act

February 14, 2015February 14, 2015

Justice Chang’s decision on disapprovals

Introduction
Chief Justice acting Mr. Ian Chang last Friday gave his decision on the case brought by Mr. David Granger, Leader of the Opposition in the matter concerning the spending of money on programmes contained in the 2014 Budget expressly disapproved by the National Assembly. Two men not unknown to take their professional image very seriously, Attorney General Mr. Anil Nandlall and the shadow Attorney General have been on television both claiming victory! Yet, notwithstanding the highly technical discussion on questions about declaratory orders as opposed to conservatory orders, some things are very clear:

1. That the Minister of Finance acted in violation of the Constitution and the Fiscal Management and Accountability in spending the sum of $4,553 million for purposes specifically disapproved by the National Assembly. Note that this spending was up to June 16, 2014

2. That the Court has no jurisdiction to restrict any authority granted on the executive by the Constitution or an Act of Parliament since “to do so would be to violate the doctrine of the separation of powers which indubitably inheres in the Constitution of Guyana.”

3. That the Minister cannot use one article of the Constitution to engage in spending that is disapproved under any other article.

4. That support of expenditure in 2012 and 2013 in similar circumstances did not mean that no court challenge could be brought in respect of 2014.

5. That the breach of constitutional authority regarding expenditure in 2014 is not a proper basis to fear that the government would exceed the limits of their authority in respect of any other period.

6. That the Court is more concerned about form rather than substance. There can be no other explanation for the decision by the court to deny on procedural grounds an application in respect of expenditure on disapproved programmes for 2014 that the court considers to be in violation of article 219 (3) of the Constitution and the Fiscal Management and Accountability Act 2003.

7. That having found that the Minister of Finance violated the Constitution and the law the court passed the buck regarding any cure or sanction by ruling that those are matters for the internal affairs of the National Assembly!
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August 18, 2012August 18, 2012

Finance Minister ignored the requirement of the law in relation to a supplementary appropriation bill

In a letter published on May 17, 2012 (‘In accordance with the law?’ SN)I drew attention to an exchange in the National Assembly between the Speaker and the Minister of Finance following a question raised by Mr Khemraj Ramjattan during the debate on what soon entered into the public psyche simply as Paper 7. That paper was part of Supplementary Appropriation (No 3 of 2011) Bill 2011.

The exchange centred around a requirement of section 24 of the Fiscal Management and Accountability Act (FMAA) that on the presentation of a supplementary appropriation Bill, the Minister, in addition to providing the reasons for the proposed variations must also provide “a supplementary document describing the impact that the variations, if approved will have on the financial plan in the annual budget.”

At the time of that debate, the supplementary document had not been provided. For ease of reference here again is that exchange as recorded in the official parliamentary record:

Speaker: Hon Minister of Finance, will you be in a position to give an undertaking that you will accord and abide by the conditions of the Act?

Dr Singh: Mr Speaker, as has always been the case, the relevant submission will be made in accordance with the law.

I pointed out then that Dr Singh had misled the National Assembly, not ever having presented in close to fifteen supplementary appropriations bills introduced by him since 2006, any supplementary document required by section 24 of the FMAA.

Dr Singh again came to the National Assembly on August 9, 2012 with Supplementary Appropriation (No 1 of 2012) Bill for $13,739,733,521. Without having met the obligation and undertaking given by him in respect of Paper 7, Dr Singh again ignored the requirement of the law.

Disappointingly, neither the parliamentary opposition nor the Speaker sought to remind Dr Singh about the requirement of the Fiscal Management and Accountability Act. They granted him authority to spend a further $11.9 billion without any information or understanding of the impact of their vote on the country’s 2012 finances, leaving everyone with the question whether they might have voted differently had they known the consequences of their decision. In the process the Assembly reinforced Dr Singh’s demonstrated disdain for the national body, the country’s laws and indeed all Guyanese.

I am copying this letter to the Speaker of the National Assembly with the hope that future supplementary provisions are dealt with strictly in accordance with all statutory requirements. The country deserves better.

May 17, 2012May 17, 2012

In accordance with the law?

Page 414 of the March 15 parliamentary debate on Paper 7 for replenishment of the Contingencies Fund, Mr Khemraj Ramjattan, the AFC MP drew the attention of the National Assembly to section 24 of the Fiscal Management and Accountability Act (FMAA) which requires the Finance Minister, “when introducing a supplementary appropriation Bill, [to] 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 in the annual budget.”

The Speaker, either because he did not appreciate that such supplementary document ought already to have been presented or because he wanted to take his ‘brother’ off the hook, intervened as follows:

“Speaker: Hon Minister of Finance, will you be in a position to give an undertaking that you will accord and abide by the conditions of the Act?”

Most persons would have to think for a moment or two to come up with a convenient excuse. Others will simply lie. Without a blink, instead of being gracious and honest in accepting such a generous hand from the Speaker, Dr Singh chose to respond as follows:

“Dr Singh: Mr Speaker, as has always been the case [emphasis added], the relevant submission will be made in accordance with the law.”

The truth is that Dr Singh has never once presented at any stage, in close to fifteen supplementary appropriations bills introduced by him since 2006, any supplementary document required by section 24 of the FMAA. The irony is that on this particular occasion he could simply have said that since the year had already expired, the supplementary document was really academic and he did not think it would serve any useful purpose. But, no, Dr Singh had to misrepresent on the parliamentary record an impeccable compliance record since his ego was more important than the truth.

Not that Dr Singh’s action on this occasion was surprising. He sat silent while his ministerial colleague Irfaan Ally misled the National Assembly over the earlier $4 billion transaction with GuySuCo. He played a leading role in either misleading the public about CLICO concealing the truth and so too concerning the Kingston Marriot. And most importantly and currently, he is central to the NICIL illegalities.

So consistent has Dr Singh been that I cannot be confident about what he would say if asked similar questions about the tabling of any of the following:

1. the annual report and audited financial statements of NICIL;
2. filing of annual returns of NICIL at the Deeds Registry;
3. the annual mid-year report within sixty-days of June 30 under the FMAA;
4. the annual report of the GRA;
5. the annual report of the NIS;
6. loan agreements under the External Loans Act.

But Dr Singh’s distortions go beyond these. He failed to disclose to the National Assembly that in 2010 he closed dormant accounts with balances of more than $30 billion when the budgeted Norway funds did not arrive.

It is not only uncomfortable, but also dangerous to have a Finance Minister who puts his ego ahead of the truth.

April 30, 2012April 30, 2012

The $18.3B which was cut from the LCDS needed to be covered by a conditional appropriation

I prefer to impute no motives to Government spokespersons or self-appointed, self-interested critics of the Budget “cuts”, including Drs. Ashni Singh, Roger Luncheon and Leslie Ramsammy, Mr. Juan Edghill and Carvil Duncan, Martin Goolsarran and Fuzzy Sattaur and Ms. Gita Raghubir and Alexei Ramotar for misrepresenting the “cuts”, including the removal of the LCDS money from the Appropriation Bill for the 2012 Budget. Shepherded by Mr. Martin Goolsarran into NCN to cry “heartless and unpatriotic”, none of them it seems, including Ms. Raghubir, an attorney-at-law, bothered to check the Budget “law”, the Fiscal Management and Accountability Act.

They would have learnt that the appropriation of expenditure of $18,394,650,000 had to be brought by way of a Conditional Appropriation Bill under section 21 of the FMAA, and not by way of an Appropriation Bill. But before I refer directly to section 21, I draw attention to both the Explanatory Memorandum to the Bill as well as the statement made by then Finance Minister Mr. Saisnarine Kowlessar in the parliamentary debate on the Bill on December 15, 2003.

The Explanatory Memorandum states that the bill “establishes the concept of conditional appropriation, whereby an agency may be appropriated sums that are conditional on the said agency achieving specified levels of revenue in accordance with an agreement entered into with the Minister.” In other words, the National Assembly authorises the expenditure but only if (or conditional upon) the money comes in.

For his part, Mr. Kowlessar in introducing the Bill said “… In addition, the Bill describes the concept of a conditional appropriation, as well as details the terms and conditions under which such appropriation may be made and accounted for.”

It is nonsensical for Dr. Singh to compare the expected LCDS sums with VAT and say that since VAT has not yet come in, maybe a Conditional Appropriation Bill will be required for VAT as well! Does he believe that in relation to him Guyanese are that stupid and cannot understand the difference between a tax (VAT) and moneys that come under an MOU with preconditions attached? Someone should have pointed out to Dr. Singh there and then that it was his Government that passed the Fiscal Management and Accountability Act because US$30 million of donor money depended on its passage. Details then did not matter. And if the PPP/C can ignore the Constitution, ignoring a mere law is no big deal.

The logic of linking the expenditure to income by way of a conditional appropriation is evident from the following example. For the year 2012, expenditure of $18.394 billion represents more than 12% of the non-LCDS budgeted Current and Capital Revenues. If that sum is spent but the money does not come in, the government’s expenditure will have exceeded its income not only by the $30.524 billion shown in the Budget but by an additional $18.394 billion, bringing the 2012 budget deficit to $48.918 billion, or close to quarter billion United States Dollars. No amount of juggling of figures or playing with the 2000 Series Bank Accounts can mask that reality.

To see how inconsistent Dr. Singh has been in relation to budget preparation for future revenue flows, one needs to look no further than the 2011 budget treatment of the Chinese vessels in which only the local expenditure of $366 million was included at the time of the budget presentation. It was not until one year later, when the resources had actually arrived in the country that Dr. Singh went to the National Assembly for supplementary appropriation of $2.588 billion. At the time, former Finance Minister Carl Greenidge drew Dr. Singh’s attention to section 21 of the Act, pointing out how it should have been treated in the first place. But so convinced was Dr. Singh that he could never be wrong, that he ignored Mr. Greenidge.

Much was made of the fact that the $18.394 billion that was removed from Budget 2012 included an unspecified amount for land titling for Amerindians. In fact, the issue of land titling for Amerindians (so far as necessary) fits neatly into the provision of the Act by allowing a “conditional appropriation” to consist of both a) an authority to spend a specified amount of money; and b) an additional authority to spend a specified amount of money, conditional (emphasis mine) upon budget agency receipts earned by that budget agency and being credited to the Consolidated Fund.

I say ‘so far as necessary’ because land titling is a constitutional requirement which since 1993 has been funded each year out of annual appropriations and need not be tied in with LCDS money. It would be a sad day indeed if our first people have to wait on foreign moneys to right the historical wrongs inflicted upon them centuries ago. But I suspect that the Singh/Luncheon formulation of including it was as bait to the international community with its soft spot for indigenous peoples across the world.

March 4, 2012March 4, 2012

Provisions of two financial Acts are vastly different

One of the attributes of someone engaged in teaching, as I have been at various times, is the constant and necessary effort to put things over in a manner that facilitates comprehension by students. While that does not apply to Mr Ralph Ramkarran, his response of March 1 to my letter of February 29 on the two financial papers currently before the National Assembly, suggests that he missed several points which I thought would be quite obvious, particularly since he presided over the parliamentary debate on the Fiscal Management and Accountability Act 2003 which is again being hotly contested in the National Assembly. Mr Ramkarran either does not understand, or is unwilling to accept, that the Financial Administration and Audit Act Cap. 73:01 is as different from the 2003 Act as chalk is from milk.

In order to make the differences between the relevant Contingencies Fund provisions of the two Acts excruciatingly clear – borrowing the words of our energetic new Attorney General – I thought it would be helpful to set those features out in tabular form. Visually, the following ought to be obvious: that the provisions are vastly different; the reasons for their being different (the sums involved, ever evolving standards of accountability and transparency); what the legislators set out to do to manage the risks associated with the huge sums involved (detailed reporting, a statement showing the impact on the annual budget); and statutory sanctions against the Minister.

Financial Administration and Audit Act Cap. 73:01 (1961)	Fiscal Management and Accountability Act 2003
1. Purpose: To meet unforeseen and urgent expenditure.	1. Purpose: To meet urgent, unavoidable and unforeseen expenditure.
2. Circumstances: Expenditure cannot be postponed without injury to the public, and no other provision exists to meet the expenditure.	2. Circumstances: Expenditure cannot be deferred without injury to the public interest and there have been no or insufficient appropriated sums for which no reallocation is possible.
3. Mechanism An advance	3. Mechanism Issuance of a drawing right
4. Maximum Spending: $500,000	4. Maximum Spending: 2% of expenditure approved by the national assembly of the preceding year. Currently equivalent to $2.5 Billion.
5. Report to National Assembly NONE	5. Report to National Assembly Report by minister specifying: I. The amounts advanced; II. To whom paid; III. Purpose of advances; and IV. A supplementary document describing the impact that the variations, if approved, will have on the financial plan outlined in the annual budget.
6. Time for taking to National Assembly As soon as possible	6. Time for taking to National Assembly Next sitting of the Assembly
7. Procedures: a) Preparation of supplementary estimates. b) Approval by National Assembly.	7. Procedures: a) The Submission of supplementary appropriation bill. b) Approval by National Assembly.
8. Sanctions against the Minister of Finance NONE	8. Sanctions against the Minister of Finance Minister personally liable for any loss which he caused or to which he contributed.

It may have escaped the attention, not only of the learned Senior Counsel Mr Ramkarran but also the entire National Assembly, that the limit remained at a modest dollar sum for thirty-seven years because the circumstances – even at the lower pre-2003 standards – so extreme that it would have been unimaginable that any person would be given discretion to spend such huge sums without parliamentary approval when the convening of the National Assembly is a telephone call away! Section 41 should be amended immediately to restore some discipline to the demonstrated tendency of Dr Ashni Singh to abuse his powers and to act recklessly. I recommend a figure of no more than $50 million, which is one hundred times the pre-2003 limit.

Finally, as demonstrated by letters in the press, Mr Ramkarran is not the only person who appears to have difficulties with the nature and implications of the 2003 vis-à-vis the 1961 Act. He shares company with Mr Philip Bynoe and pollster Vishnu Bisram, who can only see an “Indian hospital.” Not too long ago, Mr Bisram saw a landslide; it was a mirage.

To my disappointment, Mr Ramkarran, stung by my letter, allowed himself in his March 1 letter to degenerate into the public ‘cuss-down’ which up to recently he had opposed from his nemesis Mr Jagdeo. I would suggest that he moderate any intemperate response to this letter, since he himself is not without vulnerabilities.