The Government’s budget for 2019 continues a disturbing trend and vision for Guyana’s future. Despite promising “a good life” for Guyanese, the budget continues to shape a future in which the government is not accountable to taxpayers, where corruption and political nepotism are entrenched, and future oil revenues benefit only the governing political class. More troubling is that taxpayers’ money is used to pay for the government’s priorities at the expense of their own livelihood and success. Fortunately, there are common sense policies that can make the economy work for everyone and put it on a sustainable path.
Public audits can be used as a tool to identify and tackle inefficiency, mismanagement, waste, and fight corruption if lawmakers take them seriously and act on their recommendations. For the fiscal year, 2017, taxpayers lost more than $1 billion in overpayments to contractors, payments for goods without any vouchers, and payments for good that were not delivered, according to the Auditor General’s report. Public audits are meant to provide lawmakers and taxpayers with an assessment of how well public agencies delivered public services, whether they have operated within their budgets, and more importantly, whether they have executed their functions consistent with good public financial management practices.
The government should use a portion of oil revenues to fund an Earned Income Tax Credit (EITC) program to help lift families out of poverty and put them on a path to prosperity. It also incentivizes work as opposed to discouraging it resulting in greater labour market activities and improvement in social and economic well-being. The EITC is one of the most successful anti-poverty reduction policies and a better option than direct cash transfers. In addition to lifting poor and low-income families out of poverty, the EITC has been successful in growing the tax base and reign in informal activities in the formal economy.
Over the last five years, taxpayers funded more than $1.1 trillion in government spending, each year pumping more money into the government coffers than the previous year. Despite this, taxpayers received less and less in return. The government was simply unable to use taxpayers’ money to improve the economy and create opportunities for families and businesses to succeed. Moreover, its budget and policies undermined growth and began to reverse decades of positive economic momentum and social and economic progress. Government officials must start making better investment decisions to ensure taxpayers get a good return for their hard-earned dollars.
The government’s budget for the fiscal year 2018 essentially mortgaged the future of Guyanese and the economy. Despite record level spending, the budget cuts funding for the infrastructure and agriculture sectors that are critical for creating employment opportunities, mostly for low-skilled workers. Lawmakers continued to shift billions to shore up the government bureaucracy instead of better aligning spendings with social and economic needs. There are no major changes in policy direction to steer the economy away from its current downward trajectory.
Guyana: Taxpayers Lost Almost $1 Billion to Financial Waste and Abuse at the Ministry of Public Infrastructure Over Two Years
The Auditor General flagged almost $1 billion in Ministry of Public Infrastructure expenditures for financial mismanagement, waste, abuse, and non-compliance with the country’s fiscal management and accountability laws and standards during Fiscal Years 2015 and 2016. Almost $683 million represented “financial waste” and almost $243 million was “abuse,” and other forms of mismanagement. The Auditor General’s reports also identified serious concerns with widespread inefficiency and poor management of the Ministry. Lawmakers must amend or enact legislation, to end such waste, abuse, and mismanagement of public resources. These resources must deliver maximum public benefits to citizens and promote economic growth.
Regrettably, the only winner of the 2018 budget is the government, not the hard working Guyanese families struggling to make ends meet, agriculture and low-skilled workers searching for good paying jobs to support their families, or small businesses struggling to make payroll. The growing cost of government administration consumes significant amount of resources that could be better use to benefit families and businesses. Despite increasing total spending, the budget cuts funding for critical sectors and is unlikely to stimulate job creation and economic growth.
While there is no way of knowing what the government priorities are until the budget is presented, it is important to reflect on the state of the economy and more importantly the policy and budget decisions of the 2017 budget that contributed to the current economic distress. Despite record level government spending, the economy remained in peril with high-risked growth, high unemployment, severe poverty, rising crime, and low consumer confidence as funding for key sectors were diverted to a growing appetite of the government administration costs. Fortunately, there are common sense policies the government can take to boost the economy and promote widespread economic prosperity.
Government’s Budget for 2017 Focuses on the Wrong Priorities and is Unlikely to Spur Economic Growth
Despite the increase in expenditures, the budget makes it more difficult for low-income families to overcome poverty and achieve economic independence. Changes in the country’s tax laws shift more of the tax burden to households and disproportionately burden low-income families. Current expenditures alone consume all general revenues, limiting the sources of funding for major investment to grants and new debts. These findings raise key questions as to whether current allocations represent the best use of public funds and the implications of the current allocations and spending levels on future budget decisions.
Less Than 18 Percent of Government Transfers to the Regions is for Supporting Agriculture and Infrastructure – Key Economic Sectors
The failure to adequately invest in key sectors of the economy limits economic growth and is likely to further exacerbate current economic uncertainty and prime the economy for a downward spiral. The government’s budget for 2017 includes fiscal transfers to the 10 Administrative Regions totaling more than $35 billion. Of this total, less than 18 percent is allocated for supporting the agriculture sector and for building and repairing critical infrastructures necessary for creating a strong economic foundation for sustained growth.