First supplementary estimates stalled; AG's input being sought

First supplementary estimates stalled; AG's input being sought

Thursday, May 21, 2020

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KINGSTON, Jamaica — The Government's first supplementary estimates for 2020/21 did not receive the anticipated stamp of approval from Parliament's Public Administration and Appropriations Committee (PAAC) yesterday.

The committee members questioned whether the estimates were properly before it, given that the adjustments made necessary by the COVID-19 crisis have effectively set back the country's debt to Gross Domestic Product (GDP) target ratio of 60 per cent by 2025/26 by an estimated two years.

This fiscal target is provided for in the Financial Administration and Audit (FAA) Act of 2011.

Addressing the concern at the committee meeting, financial secretary Darlene Morrison noted that the ministry was aware of the negative deviation from the debt to GDP target, and was in the process of preparing a submission for the Auditor General. But some members insisted that the necessary legal consultations should be made before the PAAC examines the supplementary budget, given the magnitude, and consequences of the adjustments.

The budget of $852.7 billion was tabled in February and adjusted to $853.5 billion to fund the integration of the Petroleum Corporation of Jamaica into the Ministry of Science, Energy and Technology. It has now been revised downwards to $838.15 billion in the first supplementary estimates for the fiscal year, which were tabled by Minister of Finance, Dr Nigel Clarke on May 13.

East Kingston MP, Phillip Paulwell said the revised estimates equate to a new budget, which would likely have to be again examined in fulldetail, byParliament.

“The law requires that if you're going to be deviating from the assumptions of this year's budget, or any budget, then it requires an amendment of the law, to allow for that…. What we have before us now is not the usual supplementary estimates. What we haveis prettymuch a new budget, and yes it is as a result of the crisis, but it doesn'tmeanthat you can depart from the law. We can't willy nilly start to examine what really is a new budget for fiscal year 2020/21 in breach of the rules... It would be inappropriate for us to continue with thesediscussionswhen the letter hasn't even been sent yet to the Auditor General,” he stated.

Morrison advised the PAAC-- after Member of Parliament for St Catherine North Eastern, Leslie Campbell asked her if she agreed that the estimates did not require legal consultation -- thatgiven the deviation from planned programmes, then otheraspects of the FAAAct, must be taken into consideration.

“Therefore I would say that we would need to get some legal opinion on this… Earlier in the year when the minister indicated that he would need to do asupplementary [estimate], even though he had a suspicion that he may need to suspend the rules, it would not yet have been clear as to what the required level of adjustment was. Now that we have done the supplementary, and we are indicating a 1.9per centdeviation then it would suggest that a suspension is required. In terms of amendment of the law, that would not as yet be necessary because that comes when you have determined that you cannot get back on track to meet the target in the legislation,” she outlined.

Chairman, D Wykeham McNeill, who initially raised the concern about the lawfulness of the PAAC examining the estimates without input from theAuditorGeneral, pointed out that this supplementary budget was the earliest in the history of the country, and presented by far the largest alteration of a budget.

He stressed that the committee was not questioning the justification for the changes, but that due process must be followed.

The law allows for suspension of compliance with the requirements, in the event of situations such as a public emergency or financial crisis, which McNeill pointed out COVID-19 does present, but he said“entrenched in this law are rules that were put in place to ensure that we always did things the right way, and that it was checked. Something of this magnitude, which is going to put back Jamaica's target by two years, justified as it may be, must come under the scrutiny of the Auditor General, whose job it is to check those figures to ensure that the assumptions you make are right. It must be advised by the Planning Institute [of Jamaica] as well. These things were placed not just in a document, but the law of the land. We need some advice”.

McNeill said the supplementary budget was not a surprise, but that this is the first time since Jamaica was put on a fiscal trajectory of 60 per cent of GDP by 2026, that there will be a deviation from those fiscal provisions, which are rooted in law. He stressed that part of the reason the PAAC was entrenched in the fiscal accountability framework was to ensure that every administration follows the rules of transparency.

In the meantime, the financial secretary said that while the finance minister has indicated that there is the likelihood that the debt to GDP target cannot be met, given the adjustment that is necessary for this fiscal year, it has not yet been determined that other future adjustments cannot be made to meet the legislated targets for 2025/26.

Alphea Saunders

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