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.
April
2013
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