BY: DR. VISHNU BISRAM
The government is preparing the budget for Fiscal Year (September 2020-Aug 2021). Many may not know what a budget is and why it is needed. Often the nation is not given an input on how the budget is prepared — how the numbers are derived in revenue intakes and expenditures. There was hardly any national consultation during the last regime. A budget was prepared and rammed down the throats of the public. Inputs from the opposition or the public were ignored. The country should consider emulating the US model. The President presents a budget and the Congress debates and changes the budget – historically, Congress amended the budget after consultation with the public.
Anyone who studies economics would know what is a budget (plan on estimated income and expenses for a given period) and why it is necessary. Economists know the essentials of budget preparation of a country as well as the importance of wide consultation. It is a mandatory course for anyone majoring in Economics and most certainly for those doing MA or PhD in the subject; it is part of the training in becoming an economist. Even organizations, universities, schools must have a budget (revenues and expenditures) that are reviewed and approved by the full body. When I taught economics, students were required to learn the importance of how to prepare a budget. In a country or an organization, money cannot be expended without approval unless there is a proven emergency.
When I was elected to student government and held the post of Treasurer, I had to present a budget for approval (by the entire elected body) normally in September and could not even order refreshments without authorization of expenditures in a vote. The same was true when I served at City College President’s Council; even the President could not expend money without approval. There is consultation with stakeholders in the preparation of the budget for the student government and the same for the Presidency of the college before its submission for approval by the respective full voting bodies. The same should be true of a country’s budget that is the most important decision and vote in parliament that a government has to make.
In Guyana, the young government would be undertaking a needs assessment and a review of revenues at hand and projected intakes. The budget “preparers” should consult with the communities (organizations, businesses, ordinary folks, etc.) and various state entities and ministries for inputs. Government needs wide national approval not just parliamentary approval for its planned expenditures to balance demands against affordability (revenues coming in). It would also help the government on the feasibility and desirability of the budget, from a macroeconomic as well as microeconomic perspective.
Democratic countries mandate that the legislature debate and approve the budget. In the US, the President presents the budget early in the year for the coming fiscal year (Oct 1 to Sept 30) and must be approved before the year. Several times, the deadline is not met. Stopgap measures were implemented or else the government shuts down – workers, other than emergency staff, were sent home because government has no money to pay them for work performed. Once approved, items cannot be added or funds amended without approval by the legislature. The President cannot expend money without approval of Congress, but he can also reject changes made by Congress. Normally, there is compromise once the budget gets to Congress that largely accepts the President’s budget with minor changes (adding items and playing around with dollars amounts) that are self-serving to members of Congress.
Normally, for any country or organization or educational institution, the budget is a redo of the previous fiscal year with the revenue and expenditure numbers changing, a few items removed and a few items added. The same would be true of Guyana where technical experts prepare the budget guided by a Finance Minister and his team. Vice President Jagdeo is very experienced and skilled in this area. He is also very good in revenue creation that his worse critics would admit.
This year, there is an additional burden across all items and perhaps the introduction of a new item on the budget – the impact of Covid 19 that and it is likely to take up a large chunk of the expenditure side of the budget. Guyana has devastated by Covid not in terms of infected cases but its effects – closure of business, loss of jobs and incomes, and contraction of GDP. And it is compounded by the effects of bad polices and governance by the predecessor regime that sent home some 20K workers. Government must allocate money to provide assistance to so many that are now on the bread line.
An assessment through as wide a consultation as possible would help to understand the needs of the population.