EDITORIAL - When Mr Shaw unveils new Budget

During his stint in the finance ministry, before returning to his job at GraceKennedy and later becoming its CEO, Don Wehby proposed to put the Government on a system of accrual accounting. He also wanted, except in the most extreme of circumstances, to eliminate the habit of bringing supplementary estimates to Parliament.

With the former, the Government would be forced to match its revenues with its expenses at the time when transactions are done, rather than booking these at the period of payment. The accrual system, therefore, would, as is the case with firms, provide a clearer, and truer, picture of the financial condition of the Government, thereby allowing more economically rational, and so better, decision-making.

This process, in concert with the ending of supplementary budgets, would bring greater discipline to public-sector management. The budgets of government departments, in the circumstance, would have to be based on rigorous analyses of projected inflows and expenditure, rather than on-a-whim additions to, or subtractions from, budgets past.

Whatever the reason, when Mr Wehby departed the Government he had not completed these initiatives. We are reminded of the proposals because of Mr Audley Shaw's planned presentation of a revised Budget to Parliament next week to accommodate a $10-billion payment of salary arrears to public-sector workers, and to slash expenditure elsewhere.

Mr Shaw's new Budget is also part of a programme to rescue the Government's derailed standby credit facility with the International Monetary Fund (IMF).

But what Mr Shaw will do next week is symptomatic of the situation of budgets that are initially presented by finance ministers and passed by Parliament: they are cynical mirages to fulfil constitutional obligations. Ministries can never bank on the spending programmed in the Govern-ment's budget documents. So, supplementary estimates are never minor adjustments to proposed expenditure, but major reconciliations of accounts and the rubber-stamping of prior actions.

Discussions missing

It is this kind of behaviour that Mr Shaw and the administration undertook to change with the fiscal-responsibility legislation that was passed by Parliament but, so far, not robustly engaged. We are not yet having the expected discussions of substance on the Government's spending plans and/or proposed taxation proposals within parliamentary committees or with interests ahead of the passage of budgets, as was envisaged in the Moses Committee recommendations of a dozen years ago.

The figures the public sees are, at best, opaque. No one, for instance, knows the real state of the Government's finances, including its payment arrears to the private sector.

We would expect, therefore, that Mr Shaw lay it all bare next week, including disclosing how much withholding tax reimbursements is owed and when it will be paid.

The minister should also outline the timetable for the implementation of the much-touted public-sector reform programme, particularly those elements that require no expenditure.

The public expects to hear why tax reform has been so slow in coming. And it would be worth Mr Shaw's, and the public's, while if he give a simple, full, frank and honest account of the status of Jamaica's existing agreement with the IMF and the Government's current negotiations with the Fund.

Important, too, he must give people reason to believe that the revised Budget will be credible.

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