Finance Minister details processes for public spending

FACTS ARE:
* Consolidated Fund – Expenditures from which must be approved by Parliament and Parliament is defined as the 65-member National Assembly and the President.

* Statements of Excess – Foreseen expenditure not budgeted for or under-budgeted for that the Minister of Finance has the authority to approve.

* Contingency Fund – Sub-fund under Consolidated Fund, from which monies can be spent, but must be “urgent, unavoidable and unforeseen” expenditures.

THE difference between the Consolidated Fund and the Contingency Fund was stressed again by the Finance Minister, Dr. Ashni Singh, at a news conference on Thursday at the National Communication Network (NCN) studio, in an effort to dispel the misconceptions being peddled.

He made it clear that the differences are clearly spelt out in the Constitution, the nation’s supreme law, and the Fiscal Management and Accountability Act 2003.
“There is a difference,” the minister said.
Dr. Singh stated that the Constitution, which was inherited from the former People’s National Congress (PNC) Administration, is crystal clear regarding public spending and the legal parameters within which this is done.
“There is no deficiency in the language of the Constitution. The Constitution is crystal clear…there is no lack of clarity,” he emphasised.

CONTINGENCY FUND IS DIFFERENT
The Finance Minister pointed out that the use of the Contingency Fund has to meet different criteria than that of the Consolidated Fund.
Article 220 (1) and (2) of the Constitution addresses the establishment and use of the Contingency Fund.
It states that: “(1) Parliament may make provision for the establishment of a Contingencies Fund and for authorising the minister responsible for finance to make advances from that Fund if he is satisfied that there is an urgent need for expenditure for which no other provision exists.:
“(2) Where any advance is made from the Contingencies Fund a supplementary estimate shall, as soon as practicable, be laid before the National Assembly by the Prime Minister or any other minister designated by the President for the purpose of authorising the replacement of the amount so advanced.”
Also, according to Article 218 (3) of the Constitution, no monies shall be withdrawn from public funds other than the Consolidated Fund. It further states that the issuing of those monies must have been authorised by or under “an Act of Parliament.”
The majority of spending from the Consolidated Fund is done via the Parliament’s approval of the annual national budgets – the approval being “an Act of Parliament.”
As it relates to the Contingencies Fund, Parliament in 2003, approved the Fiscal Management and Accountability Act. This Act would be regarded as, “an Act of Parliament” according to Article 218 (3) of the Constitution.
Section 41 of the Fiscal Management and Accountability Act 2003 defines in part one, under the heading “Schedule”, the definition of a ‘Contingencies Fund advance.’ Such an advance refers to “an expenditure out of the Consolidated Fund,” which is made according to Section 41 (3) of the Act.
The Contingencies Fund is further defined as a sub-fund established by the Finance Minister, made according to Section 41 (1) of the Fiscal Management and Accountability Act. Mentioned in Section 41, the Contingencies Fund is established as a sub-fund of the Consolidated Fund.
Sub-section (2) of Section 41 of the Fiscal Management and Accountability Act 2003, mandates that the Minister of Finance shall have the sole authority for the release of monies from the Contingencies Fund and this authority is not to be delegated to any other authority.
In order to access the Contingencies Fund, the minister must satisfy that there is an “urgent, unavoidable and unforeseen need for expenditure”, which the monies from the Contingency Fund will be used for. This urgency, according to paragraph (c) of Section 41 (3), would be justified if withholding the money would otherwise result in “injury to the public interest.”
Considering that part one of the Fiscal Management and Accountability Act 2003 provided the definition for a ‘Contingencies Fund advance’, Article 41 stipulates that the minister may approve a Contingencies Fund advance as monies to be spent out of the Consolidated Fund by issuing a drawing right.
Sub-section 5 of Section 41 of the Fiscal Management and Accountability Act 2003 notes that the minister shall report at the next sitting of the National Assembly on all advances. The report must include the amounts paid, whom they were paid to and the impact of the payment.
The Act under Section 41(6)(b)provides that after the National Assembly has approved of the Contingencies Fund advance or advances, and upon the passing of a supplementary appropriation Act, the amount of the advance or advances shall be added back, in the amount of the total authorised, by the National Assembly under subsection (4) to the Contingencies Fund.
Finally, Section 41 (7) provides that once the National Assembly has approved the advance or advances, the Contingencies Fund shall be replenished to the sum of the amounts approved.
The Finance Minister addressed the fact that the combined Parliamentary Opposition, A Partnership for National Unity (APNU) and the Alliance for Change (AFC), has only approved 92.6 per cent of the spending from the Contingency Fund during the 10th Parliament.
To date, the current 10th Parliament of the National Assembly has considered six Financial Papers related to the use of the Contingencies Fund collectively valued at approximately $9.358B. The Assembly, comprised of the Opposition, has approved 92.6 per cent of those Financial Papers valued at approximately $8.7B clearly demonstrating agreement with the use of the Contingencies Fund in most cases.

IMPORTANT TO NOTE
Another important point, the Finance Minister underscored was the use of another instrument for spending, that of the Statement of Excess.
He explained that Statements of Excess do not reflect spending from the Contingency Fund.
Section 218 (3) of the Constitution states that: “If in respect of any financial year it is found: (a) that the amount appropriated by the Appropriation Act for any purpose is insufficient or that a need has arisen for expenditure for a purpose for which no amount has been appropriated by that Act;
“Or (b) that any monies have been expended for any purpose in excess of the amount appropriated for that purpose by the Appropriation Act or for a purpose for which no amount has been appropriated by that Act, a supplementary estimate or, as the case may be, a Statement of Excess showing the sums required or spent shall be laid before the Assembly by the Prime Minister or any other minister designated by the President.”
According to Dr. Singh, given that the law states that spending from the Contingency Fund has to be “urgent, unavoidable and unforeseen need for expenditure,” the Statements of Excess cannot reflect monies spent from there.
He noted that the Statements of Excess are indeed spending from the Consolidated Fund.
To date, in the 10th Parliament, four Statements of Excess have been tabled, 58 per cent of which have been approved by the combined Opposition.
The fourth statement of Excess, Financial Paper 1/2014, was tabled in the National Assembly on June 19 and will be considered by the House at the next sitting. It reflects spending from January 1, 2014 to June 16, 2014 to the tune of $4.6B.
“This very Parliament is familiar with the concept of a Statement of Excess,” Dr. Singh said.
He also referenced the Parliamentary Standing Order 78 (1), which deals with supplementary estimates of expenditure and statements of excess.
The Order states that: “If in respect of any financial year it is found:- [a] that the amount appropriated by the Appropriation Act for any purpose is insufficient or that a need has arisen for Expenditure for a purpose for which amount has been appropriated by that Act;
“Or [b] that any monies have been expended for any purpose in excess of the amount appropriated for that purpose by the Appropriation Act or for a purpose for which no amount has been appropriated by that Act;
“Or [c] that advances have been made from the Contingencies Fund for Expenditure for which no other provision exists, a minister may present a Paper with the Supplementary Estimate or, as the case may be, the Statement of Excess showing the sums required or spent and that Paper shall be ordered to be printed and shall stand referred to the Committee of Supply without question put and shall be appointed to be considered on a day to be named by the minister presenting the Paper but not earlier than one(1)day after that on which the Paper was presented.”
The Finance Minister maintained his contention that all public spending advanced by the current Administration has been done within the stated legal parameters and can withstand any level of scrutiny.

By Vanessa Narine

excerpts from Guyana Chronicle