Budget 2018 Preparations underway; Minister of Finance addresses participants of sensitisation workshop

Address by Hon. Winston Jordan, Minister of Finance at the Opening of the Budget 2018 Preparation and Sensitisation Training Workshop, Georgetown Marriott Hotel, July 24, 2017

 

Heads of Budget Agencies; Other Senior Officials of the Government; Members of the Media; Ladies and Gentlemen:

Good morning!

I am pleased to be able to be with you at the opening of this very important Budget Training and Sensitisation Workshop. Coming from a budgeting background – having been in the business for over 30 years – I could not pass up the opportunity to address you, when I was invited to do so by the current Director of Budget, Ms. Sonya Roopnauth, whose sterling work and accomplishments in the field of budgeting and public financial management was duly recognised, this year, with the award of the Golden Arrow of Achievement, our country’s fourth highest national accolade. Sonya, may you continue to render yeoman service to the nation for many more years to come.

Ladies and Gentlemen, when this Government acceded to Office, in May 2015, it did so with a promise to improve transparency and accountability. In the very first budget, we laid out our Vision for development of country, and the plans, programmes and policies that we propose to pursue so that all Guyanese can achieve the Good Life. In each of the subsequent two budgets, we have continued to stress the importance of building a strong, resilient economy capable of withstanding shocks and sustaining high growth levels. If I may be allowed to quote from Budget 2016, at page 15:

“… the policies, programmes, reforms and measures envisaged in this budget are designed to stimulate the economy to achieve higher growth rates. It is an economy which is growing at ever higher rates, with benefits being more equitably distributed, which will enable us to bring the ‘good life’ closer to reality. We cannot continue to have the see-saw growth that has been witnessed over the past three decades and expect to solve pressing issues such as unemployment and poverty. We have to be innovative in our approach and bold in our measures, if we are to build an economy that stands on a foundation of granite…”

Again, in Budget 2017, at page 3, we emphasised the importance of achieving strong growth and accelerated development to the benefit of our people. In particular, we said:

“… we have resolved to pursue a growth strategy that breaks with the monotonous cycle of a few highs and perennial low prices of primary stage commodity production. We have to match the expectations of our people for a better life. But we would not be able to deliver if we stay the current course. To do so would allow the confluence of adversities and challenges to continue to constrain us from seizing the opportunity to chart a new direction.”

Mr. Chairman, I have chosen to recall those two quotes from the respective budget speeches, not only because of their aptness – in the context of the focus of this training and sensitisation workshop – but, also, to remind us of our mission, as implementers of Government’s policies, projects and programmes. Achieving the Good Life is neither a mantra, a slogan, an abstract concept nor nirvana; it is our fixation, our constant reminder, that we were put in Government to improve the quality of life of all Guyanese, through the improvement in the quality and quantity of goods and services that we must deliver to them: whether they be safer communities; quality education and health care; greater access within and among our 10 regions; improved governance; sustainable job creation; and a stable economic environment, among the myriad number of outputs.

All of these will be embodied in the Green State Development Strategy, which we are currently developing with support from United Nations Environmental Programme (UNEP). These national goals will incorporate the relevant Sustainable Development Goals and any outstanding targets related to the Millennium Development Goals. I note that listed on today’s programme is a presentation on the GSDSF. I am sure that you will be hearing much more about this exciting development that is occurring at a time of great expectations for the exploitation of our recently-discovered oil and gas resources.

Our administration continues to champion good governance and transparency, as we go forward, and, to that end, the national budget, as a policy tool, is the main vehicle through which policy is communicated and implemented, and results are achieved.

Today, we are, once again, at that time of year in the budget cycle, when Budget Agencies are required to revise and update their plans for the next four years. In the process of doing so, you will need to be cognisant of the vision of the Government and, in the context of your specific agency, articulate your strategic goals and objectives as your contribution to achieving this vision. You will need to examine your performance framework, and ensure that requests for allocations of resources will directly and measurably contribute to the achievement of programme deliverables, that is, the RESULTS.

It is also a time for serious reflection on past performance; a time to determine what works and what doesn’t; what is contributing to the expected outcomes of the programme and what is not; what programmes need to be scrapped altogether, what needs to be re-engineered, what needs to be expanded and what needs to improve. It is a time to ask yourselves what is the theory of change being pursued for this programme and whether it is being achieved. In all my years of being associated with budgeting, I have stressed, repeatedly, the need to have a planned approach to managing your agencies, often with undesirable results. But, I will reiterate here: Do not wait for the Budget Hearings in September to be asked these questions by the Ministry of Finance.  You need to be doing that all year round and with greater intensity, now, so that the quality of what you request from the national treasury is worthy of consideration.

At the macro level, the Government will be spending sometime analysing and reflecting on the performance of the economy for the first half of the year. Based on the outcome of this examination, and given the outlook for the second half of the year, a determination would be made as to the expectations for the entire year and how those compare with the budget. Growth performance of the various sectors of the economy, inflation, financial stability, the level of economic activity, job creation, earnings from exports, the amount that we expend on imports (I daresay that I find some of it to be totally unnecessary), and the rate of implementation of public sector investment are among variables that will be microscopically examined.

Mr. Chairman, this is the third budget in just over two years of this Administration. So, under intensive consideration will be the achievements of this budget and the expectations of the upcoming fourth budget. Upon reflection, this is what we found: As at end June, less than 30 percent of the public sector investment programme was expended. What is the reason for this continued sloth in the implementation of the PSIP, at a time when it was touted as a boost to spending in the economy? No late budget excuse is applicable any longer, because for Budget 2017, the presentation to Parliament was on the 28th of November, 2016 – a signal accomplishment of this administration.  Where is the benefit from early budget presentation when, for example, we still have budget agencies, in June, figuring out specifications of items to be purchased; we have awarded only 53 percent of the PSIP and expended a mere 28 percent on maintenance of infrastructure within the recurrent budget. While we happily and deservedly bask in the glow of improved Grade 4 examination results, we need to wake up to the reality that less than 50 percent of our Grade 6 children passed mathematics this year. Drugs and medical supplies are still in short supply at GPHC and in all of our regions.

Mr. Chairman, what lessons can we learn from this under-achieving performance? For one, it is that goals can be ambitious but not realistic. Grand hot air balloon ideas, not based on robust evidence, will never get off the ground; neither will they get anywhere. For those that do make it from the drawing board to the arena of implementation, ineffective management, and poor monitoring and supervision will compromise and depreciate the quality of the undertaking.  Thus, it is opportune to remind you that you are servants of the people charged with spending tax-payers money (including your own taxes) prudently, efficiently and effectively. Wastage and inefficiency are to be abhorred; they rob the people of this country of broader, targeted and timely benefits such as better services, better infrastructure and, ultimately, a better quality of life.

We need to be in a BETTER position and in a BETTER place, for where we are currently can neither be countenanced nor endured. I trust, therefore, that, as a collective, we will use the opportunity of reflection to renew our energies towards improved performance and better results across all sectors.

The 2018 Budget is being crafted at a time when domestic revenues and other sources of financing are not expected to be substantially higher than 2017. You are well aware of demands by certain groups for removal of one tax or the other. You are well aware that as a result of our upper middle income classification, concessional resources are dwindling. So, we will have to exert greater effort to widen the tax net through greater efficiency in the administration and collection of taxes. Here, I want to pause to congratulate the Commissioner General of the Guyana Revenue Authority (GRA) and his hard-working staff for the work they having been doing to safeguard and collect the country’s revenues. On the other side of the coin, expenditure pressures continue to mount. For example, in 2018, we have to find new monies to finance Local Government Elections and re-build the country’s prison system, even as we continue to support GuySuCo, which continues to consume billions of dollars.  So the math should be clear: lower expectations for revenue juxtaposed against higher demands for spending equals bigger budget deficit, which, in turn means bigger debt and debt repayments for present and future generations.

Only an irresponsible Government will contemplate such a scenario. We are not such a Government! It is, therefore, incumbent on Agency heads to understand the reality we face and develop realistic and achievable budgets. Here, I am moved to observe that too many Budget Agencies adopt a horizontal approach to preparing their budgets, that is, spreading resources evenly and adding a “top up” to what was given in the previous. Even as we have employed a more programmatic approach to our budgeting, too many budget agencies remain steeped in line item budgeting – focusing on inputs, rather than outputs. My admonition to you, right now, is: STOP IT!

Begin to adopt a vertical approach to budgeting. This means that those programmes that are core drivers to achieving critical performance targets must be prioritised over those that do not. Be guided by the strategic plans and the sector’s medium-term objectives. Be guided by value for money and cost efficiency measures. Above all else, be guided by results.  Your job means achieving a balance of all of these.  You must demonstrate a persistent and keen interest in managing in a timely manner.  Know your sector. Collect the data, know the data, and use it for your evidence-based submissions to the Ministry of Finance and within your own agencies. Nothing less is good enough! Nothing less is demanded of you!

Your role as Heads of Budget Agencies and the role of your teams are to be change agents – change agents who effectively design and implement theories of change to ensure you are achieving the intended results. At an individual level, if I gave you my hard-earned money to deliver better education, better health care and improved roads and bridges and drainage and then discover that you went off and bought chocolates, alcohol, imported fruits, televisions for entertainment, fancier curtains, etc., then tell me what should I do next? I hope the answer is obvious.

Heads of Budget Agencies, Other Senior Officials of Government, which of the following qualities do you recognise in yourself and, importantly, which of them would others be able to recognise in you?

  1. Proactive.
  2. Gives effective feedback.
  3. Does continuous follow up.
  4. Offers sound technical advice.
  5. Demonstrates prudence in discharging fiscal responsibilities.
  6. Plans for effective implementation, including use of procurement planning tools.
  7. Displays keen interest, ownership and leadership in the sector.
  8. Uses evidence and data to drive decision making.
  9. Understands and applies the legislation that guides your sector, such as the FMAA and the Procurement Act.
  10. Uses performance indicators to monitor and manage within a theory of change approach.

If these 10 qualities are demonstrated by everyone in this room and their supporting teams then Budget 2018 will show significant improvements over Budget 2017 in terms of results achieved.

I trust that you are all up to the task. Please take advantage of the training opportunities being afforded to you.  I wish you a productive day. I look forward to hearing of, and seeing an, improved quality of budget submission.  The proof of the effective execution of the remaining months of Budget 2017 and the upcoming Budget 2018 would be in the achievement of the targets.

Thank you!