No Election Budget – Davies

Minister of Finance and Planning, Dr Omar Davies, has dismissed claims that the $39 billion allocated for projects in the capital budget was for election spending, noting that a large portion of the sum represented past expenditure.
“Fact is, nothing can be further from the truth,” Dr. Davies, as he opened the 2007/2008 Budget presentation in the House of Representatives yesterday (April 12). He explained that $14 billion of the sum represented past expenditure that was now being brought in for transparency and accounting purposes.
“When this sum is subtracted from the total for the capital budget, the fiscal deficit in terms of actual spending in 2007/2008 is two per cent of the Gross Domestic Product (GDP), less than the accounting figures would indicate,” Dr. Davies told the House.
Outlining how the $14 billion was made up, the Finance Minister informed that $5.3 billion was for projects executed using the Deferred Financing methodology; $3 billion represented expenditure on road construction activities using PetroCaribe funds; and $3 billion for Consolidated Fund payments.
The remaining $2.7 billion represented debts, which the Ministry of Finance had taken over from public sector institutions in order to “clear up their books,” he added.
He explained that the Consolidated Fund payments “relate to projects in which no cash was received but the country received benefit in terms of equipment, consultancy, buildings, technology, transfer, etc. These goods and services were paid for directly by the relevant funding agency upon receipt of an invoice for work done. When these payments are made by the funding agency, an equivalent amount must be paid by the relevant Ministry into the Consolidated Fund and explicitly recorded in the expenditure budget.”
He noted that this accounting approach, which was required by the Auditor General’s Department, was consistent with proper fiscal management and was important for transparency.