Students express interest in budget process

Concerns about government’s sources of funds, how these are spent and how people can become involved in the budgeting process were some of the issues raised by UWI Public Policy Analysis students during a guest lecture by Opposition MP Dr Roodal Moonilal.

Moonilal gave a detailed outline of how the budget is compiled prior to being brought to Parliament by the Finance Minister, and the process leading up to the budget being assented to by the President. He reminded the students that no payments could be made until the budget was passed.

Moonilal explained the purpose of budgeting in terms of government.

"Government has to account for every dollar they collect and how they spend it. The budget is the government’s public financial policy for a given period. It states how much money the government intends to spend during a year (expenditure), what it intends to spend it on (appropriation), and where it expects to get the money to pay for that spending (revenue)."

One student asked how thoroughly the standing finance committee in the Upper House examines the budget.

Moonilal said, "The standing finance committee interrogates, goes through, examines every single ministry, department, statutory authority, including the police, which has a separate accounting department by law, but accounts to the Parliament through the National Security Ministry. The judiciary as well, we have to know where the money is, because it is taxpayers’ money and they have to account for it. Nobody should be getting taxpayers’ money and not be held accountable."

The same student asked whether a President had ever denied a budget. Moonilal said this had never happened in TT’s history.

"The budget is government policy. A government is elected by the people, and while the President in law can say he/she wouldn’t sign this, that same government can impeach the President."

Another student asked, "They do projections for each fiscal year for each ministry to determine how much each ministry would need. What would be some factors in determining those projections for any particular ministry?"

Moonilal said when there is a general election, promises and commitments are made to the population by political parties.

"When you win an election, you have a manifesto and you have to implement it by changing laws. That is the policy driver. Things change in a ministry because we promised we would do something."

Moonilal gave the example of what would happen if a government wanted to make St Augustine/Tunapuna an educational city like Ithica in upstate New York or Oxford University.

"It means not just a building but having all the service support centres, research institutions, making it a publication house, creating jobs, creating new industry. But to do that I have to develop policy and pass laws.

"So if we win the election, we say the people vote, so we have to build the educational city and to do that, we have to change laws. Maybe we have to change the taxation laws so when someone builds an educational centre, they don’t pay tax, maybe they can bring in certain equipment without paying customs duties.”

The same student asked what the difference was between estimates and revised estimates. Moonilal related the question to the budget of a UWI student.

"If your transportation budget is $1,000 as a UWI student, but your good friend has a car so you’re not paying to travel, you have $1,000. You could spend it on something else.

"Government operates on the same principle. They allocate money to ministries but sometimes the money is unspent because the purpose you want it for, you don’t spend it (on that). You can take the money and spend it on something else."

He said budgetary cycles are only for 12 months. He said sometimes money is allocated for a project which is not completed in that year, and so the money is transferred somewhere else.

"In the real world, when you go to the Parliament, you discover the money budgeted has not been spent and when you ask the minister what happened with it, they said well we were going to start the project but then it started to rain so we couldn’t do it. Then when we went to tender, something went wrong with the tender process and we had to re-tender it.

"Another famous one was when people had to be hired for a particular project but no one was hired, and this could be for many reasons, and the money is sitting there doing nothing, so you wire (transfer) the money to something else. In our experience, things you can do quickly is pave roads, build drains, and hire more CEPEP workers. You can’t build a building quickly."

A student asked how the public could become involved in the budget process and/or lodge objections to the budget. Moonilal said there were several methods.

"If the people have an objection, they vote out the government. You can go on the pavement and protest. The people protest in many ways. In the parliamentary system, there are several committees where members of the public can go to meetings and raise their issues and complaints and ask for consideration.

"There is direct participation of people now. Regional corporations have monthly statutory meetings and members of the public are invited to raise concerns. The regional health authorities and the police have meetings where you can go and raise complaints. There are avenues for complaint in democratic structures.”

Another student asked how government would find funds to meet the budget deficit. While one student immediately said IMF and borrowing, Moonilal said there were several methods including borrowing money, taxation, sales and royalties.

"When you borrow money from the IMF and the World Bank, the IMF gives you the balance of payments support, where they give you money to balance your budget. They have strict conditionalities that have created a lot of chaos in developing countries worldwide. They insist on retrenchment and closing down companies, they want to tell you how to spend the money they lend you.

"The World Bank is more of a development bank that gives you money for projects. The government borrows money from banks like the Asian Development Bank, Caribbean Development Bank, Inter-American Development Bank, Andean Development Bank, etc.”

Moonilal said money is also borrowed from governments. He said sometimes money was borrowed for projects which were not completed.

He said money is put aside to pay loans in the budget.

Moonilal said government made money through taxation, borrowing money, "fire sales" – selling things to make money, and royalties taxes fees in the energy sector.

He said TT has historically made money from oil and gas in the energy sector.

A student asked how long it would take Guyana’s energy sector to develop given its recent discovery of oil. Moonilal said it would be approximately 20 years before the industry and human resources for the sector would be fully developed, as had happened with TT.

One student asked what the future of the Dragon gas field in Venezuela would be following the general election. Moonilal said the government had put all its eggs in one basket.

The Dragon gas deal is an agreement between TT, Venezuela and Shell to explore the Dragon field located between the two countries, with any gas found being exported to TT and the proceeds of sales being split between TT and Venezuela.

TT was also granted permission by the US government to trade with Venezuela through the granting of an amended Office of Foreign Assets Control (OFAC) licence on October 17, 2023, which permits Shell, NGC and contractors to continue the works being undertaken to explore, produce and export natural gas from the gas field. The licence is valid until October 21, 2025.

"These are gas fields where we share a border with Venezuela, which is politically unstable, for a long time now and maybe for a long time to come. Working with a country like that is very difficult because things can change overnight. Then there’s the language issue as well. Managing risk by international companies is very difficult because remember when you run a country, the government can change, the president can wake up one morning and decide to stop the deal.

"To this day Shell and other companies have not signed off on the Dragon gas deal to my knowledge. That is drilling in waters jointly owned, if not managed, by TT and Venezuela. To this day they have not drilled one hole. They’re estimating to get gas by 2027. One is never sure about that. Companies have to do the work. We don’t know how much money we have to pay to drill."

On December 20, 2023, the Energy and Energy Industries Ministry, NGC Exploration and Production Ltd (NGC), Shell Venezuela S.A. (Shell) and Venezuela’s Ministro del Poder Popular de Petróleo (MPPP) signed the Dragon Field exploration and production license for a period of 30 years.

Moonilal said there should be alternative policies in the energy sector. He said if the Pointe-a-Pierre refinery was open, it could be refining oil from Guyana and sending the products abroad.

One student expressed worry about TT getting caught up in the geopolitical situation between Guyana and Venezuela.

Venezuela and Guyana have been in dispute over the Essequibo area since 1899. The situation became tense in 2023 when Venezuela declared the area an annex of the country, after Guyana granted drilling licences to oil reserves in the disputed area. After a meeting between Caricom leaders in December 2023, both sides agreed to not use any force or escalate tension.

"If Guyana and Venezuela have conflict, could that not open the door for further conflict? Could that create conflict between TT and Venezuela? If they’re trying to reclaim Guyana and we’re basically the annex of Venezuela, where does that leave us if they try and do the same thing to us?"

Moonilal said the conflict would have to be managed in the interests of the people of TT.

"Every geopolitical relationship is potentially conflictual, so you have to manage in the interest of your citizens. You have to put your national interest first. You have to manage that with international relations through the UN and so on."