Fiscal rules needed

THE $2.3 BILLION budget supplementation was passed in the Senate late on June 11. Subdued cries of “Aye!” from government senators ended what was an unusually cacophonous mid-year review process that began in the House of Representatives the week prior.

Yet for all its heat, there are still a lot of questions.

What is the state of the economy? How well have finances been managed? The answers to such questions depend, it seems, on who you ask and even when you ask them.

The mid-year review of Finance Minister Colm Imbert clarified many things, but as is the case with any exercise manned by querulous politicians with vested interests in spinning economic data or in going overboard with baseless rhetoric, it also raised a whole new set of questions.

All of it would support the view that there is a need for robust fiscal rules to manage the annual budgetary process, including as it relates to reporting and accounting to the population.

What’s clear: VAT is not going up.

Also clear: of the $2.3 billion, the largest sums are for the Ministry of Energy and Energy Industries ($571 million), the Ministry of Public Utilities ($528 million) and the Ministry of Health ($495 million).

Whether and when any of this money will trickle down to ordinary citizens remains to be seen.

Some of the issues most affecting those citizens right now are the cost of living, lower purchasing power, lack of job security, a stagnant social security net, and a crime-plagued environment that erases improvements in our quality of life and hampers business.

Opposition Leader Kamla Persad-Bissessar’s gambit of querying whether the Government has a menu of taxation plans has arguably backfired, in the sense that it has drawn attention away from all of this.

For the past few days, the Government and Ms Persad-Bissessar have engaged in a back-and-forth over VAT and documents. What government officials first said were “fake papers,” became, it seems, an appendix to a Cabinet note containing the routine costings drawn up by public servants to aid decision-making.

All of this kangkatang was only made possible because the public seldom has sight of any document that is ever before the Cabinet, whether relating to fiscal policy or otherwise.

We don’t have a culture of transparency. We don’t have savvy think tanks that can access up-to-date statistics and generate similar estimates to inform debate. Reports of the Central Bank and the Central Statistical Office are often dated by the time they are released.

That is why we believe, with the global economic outlook as uncertain as it is, this country should eschew political grandstanding in budget matters in exchange for a more tempered, rules-based fiscal framework premised on improved budget processes, transparency, and accountability, as recently recommended by the IMF.