Financial crisis looms after April – Former Auditor General, Goolsarran

Apr 28, 2020 News

According to former Auditor General and Chartered Accountant, Anand Goolsarran, Guyana may very well be facing a financial crisis due to the political shenanigans which have left the nation without a credible conclusion to its March 2 General and Regional Elections.

Chartered Accountant and former Auditor General, Anand Goolsarran

In explaining his analysis of this worrying issue, Goolsarran reminded that since May 23, 2019, there has been no sitting of the National Assembly. The former Auditor General said that this was mainly due to the December 21, 2018 vote of no confidence in the Government and the prolonged court battle to establish its validity, among other issues.
On that note, Goolsarran pointed to the possible implications for the national budget. According to the Chartered Accountant, Article 218(1) of the Constitution states that no withdrawals can be made from the Consolidated Fund except to meet expenditure charged upon the Fund by the Constitution or any Act of Parliament; or where issues are authorized by an Appropriation Act.
By Article 219, he posited that the Minister of Finance is required to prepare and submit to the National Assembly, Estimates of Revenue and Expenditure within 90 days of the commencement of the fiscal year in respect of that year. After the Estimates are approved by the Assembly, Goolsarran said that an Appropriation Bill is prepared and approved by the Assembly authorizing withdrawals from the Consolidated Fund to meet expenditure contained in the Estimates. The Appropriation Bill becomes Appropriation Law when it is assented to by the President.
For the years 2017, 2018 and 2019, Goolsarran said that the budget for the following year was tabled in the Assembly and approved before the close of the fiscal year, a move that was considered a progressive one. Unfortunately, Goolsarran noted that the President proceeded to dissolve Parliament on December 30, 2019 without first ensuring that a budget is in place for 2020.
Pending the passing of an Appropriation Act, he said that the Minister of Finance can authorize withdrawals from the Consolidated Fund up to four months to meet the cost of essential services. He said that the amount withdrawn is limited to one-twelfth of the preceding year’s expenditure by each budget agency for each of these months.
These are provided for under Article 220(1) of the Constitution and Section 36 of the FMA Act. By Article 220(3), where Parliament is dissolved before any provision or insufficient provision is made to meet the cost of public services, Goolsarran noted that the Minister can authorize similar withdrawals for up to three months.
The Chartered Accountant said, “In all probability, the Minister would have used Article 220(1) to access funds up to April 30, 2020. With no Parliament currently in place to approve of the 2020 Estimates, there is no provision for the Minister to access the Consolidated Fund for the month of May onwards.”
He added, “By Article 220(4), he nevertheless has recourse to the Contingencies Fund to meet expenditure that is urgent and for which no other provision exists. Section 41 of the Fiscal Management and Accountability (FMA) Act elaborates by stating that the expenditure must also be unforeseen and unavoidable, and cannot be deferred without jeopardizing the public interest.”
The former AG noted that the total of the amounts to be withdrawn is limited to two percent of the preceding year’s approved Estimates while adding that for 2019, it amounted to $300.7 billion. Considering this, he said that the maximum amount that could be withdrawn from the Contingencies Fund in 2020 is $6.014 billion. Even if no funds were withdrawn for the year, Goolsarran said that the amount of $6.014 billion will be insufficient to meet the cost of essential services until the next session of Parliament is convened.
“How the difference to be funded is anyone’s guess!” the Chartered Accountant concluded.