NNP unveils its first Billion Dollar Budget
Under the theme “Restoring Hope, Building the New Economy, and Empowering our People’, The Prime Minister and Minister of Finance Dr. Keith Mitchell presented the 2013 Budget Statement.
This Budget comes on the heels of the NNP’s 15-0 win in the recently concluded elections. It comes at a time that the country is in the midst of a prolonged period of economic crisis which will hang over the country well into their medium term.The anemic economy is bedeviled by structural problems which are compounded by low growth and a nagging Debt overhang.
The reality of assuming the reins of government is in sharp contrast to the cushion of opposition benches where they lambasted the NDC administration about every ill under the sun. They were tripping over themselves trying to make us believe that the problem was management and the international economic situation and the debt crisis which they created was of little significance. Any casual observer will conclude that the fiscal stability of the state is the number one priority of the government. This will require a mixed bag of measures which must include the following
- Revenue Enhancement
- Tight control over recurrent expenditure
- Debt restructuring as opposed to rescheduling
- Investment and job creation
Dr. Mitchell tried skillfully to admit that successive governments “lived above their means’ so he could put his administration in the same boat as the outgoing NDC administration. He did not go on to admit that the NNP did so for 13 long years and delivered the loins share of high priced debt which is now hanging around our (and their) necks. The present administration has a mandate and experience in government for more than a decade which means that they must be acutely aware of the problems and constraints of managing the economy. Excuses will not work.The issues were glossed over with generalities and innuendoes which brought many yawns to an audience which became increasingly bored by the time the speech came to an abrupt end.
The arithmetic of the budget allowed for the politics of it to dish out goodies to all sectors as if the country was not in a recession. Probably the most amusing is the allocation of $50,000 to support a National Unity Commission. The same Prime Minister went about his opposition politics in the most divisive manner that the country has ever seen. The Green Band brigade now wants to spend this pittance in a vain attempt to hoodwink the population.The debt restructuring program is probably the most critical issue that this budget statement should have addressed. Prospects for growth will come to naught if this is not successfully negotiated. This is the second time in less than a decade that the country will engage with international creditors on this issue. The growth commitments were never realized and the country finally had to declare that it could not pay its debts under the current arrangements. It was the same NNP led administration that signed on to those same arrangements. There is no doubt that the country will have a weak negotiating position and an IMF solution may well be in the making. The IMF standard prescription is well known. Expenditure cuts, increase taxes and other measures can well mean that the situation will get worse before it gets better.
The proposed changes in VAT were not clear and the limited stimulus package in Agriculture, Construction and manufacturing will not have the anticipated impact. Agriculture is still plagued by inefficient methods of production, manufacturing is too dependent on expensive foreign produced inputs and high energy costs and the lack of Foreign Direct investment and disposable income will render the construction component ineffective. The 50% reduction in sand prices could only mean a return to send mining on our beaches.
The multiparty committee is an important forum in addressing the country’s ills, however attempts to promote this during the last administration was stifled by the intransigence of one union leader. The question is what has changed to give this initiative a fighting chance of success. Public sector reform is vital but how will greater efficiency be achieved in the sector with the pervasive politics of the NNP where party loyalty is more important than competence.
The revenue generating initiative of selling passports is not new and the NNP past record in handling this issue has been appalling. The changes at the level of the management of the Immigration department will surely raise eyebrows both home and abroad. The proposed spending cuts is easier said than done and token pronouncements of curtailing travel is of little value in the scheme of things. The ability of the administration to raise $66.5 million in grants is also questionable.
With a projected growth rate of 1.2%, the foundation of a new economy cannot be constructed and come December this year, the nation will get a new cocktail of excuses for the failure of the NNP to deliver. The fairy tale that the population bought into prior to the elections will be exposed. No amount of political grand charge and empty promises will change that.