Delroy Chuck THE ANNUAL budget exercise invariably affects people's lives. At one time, in the seventies and perhaps to the middle of the nineties, Jamaicans were glued to their TVs or radios, listening keenly to the budget, pondering its effect on them and the country. Nowadays, Jamaicans are cynical and expect nothing meaningful, hopeful and dramatic to emerge from the budget. In truth, the budgets for the past ten years and more have dragged Jamaica deeper into the gutter and from which there seems no immediate escape.
To be sure, the annual budget exercise allows the government to present its programmes, policies and projections for the fiscal year. In many respects, it is the blueprint for capital expenditure, national development and social transformation. It sets out the fiscal parameters within which the government is expected to spend and manage the economy and the country. Good and prudent fiscal management demands that the government spends and manages within the budgetary allocations. Yet, one feature of our present socialist government is its propensity to spend, and always to spend much more than it collects in revenue, loans or from the sale of assets.
FISCAL RECKLESSNESS
As a matter of common sense, any individual, commercial institution or social organisation that spends lavishly and continues to spend profligately, without the earnings to do so, will soon get into financial difficulties. In the case of our present government, when enough revenue was not collected, it turned to loans, sale of assets and fiscal deficits to continue its fiscal recklessness. Then, to compound its financial difficulties, the government breached every simple economic principle as it relied primarily on monetary, instead of fiscal, measures to stabilise the economy. At present, the annual budget exercise probably serves only to inform the country how much deeper it has sunk in debt, how much of the budget will be used to service the debt, and how much worse off we will be at the end of the fiscal year.
DAMAGING BUDGET
Whereas, budget exercises in the distant past have been blueprints for development, progress and hope, recent budgets have created more debt, caused grave agony to the business and productive sectors and distributed deeper poverty to most Jamaicans, especially the already poor and vulnerable. In effect, the government's failure to practise fiscal prudence, frugal spending and limited governance has damaged virtually every social and economic activity.
Through the government's overbearance, the whole society has become complacent, dependent and reaching out to government to solve every problem. The financial community, agricultural sector, manufacturing entities, utilities, health care, education, sports, community development, and so many other areas that should be self-sufficient, are now largely dependent on government for financial support, trade protection and in some cases for everything.
The reality is that when the government tries to do too much it ends up doing nothing really well, which is exactly what has happened. We simply need to face the reality that government is spending much more than it collects, and that cannot continue forever. It is crunch time, and unless we prioritise what expenditures must go, painful as it may be, it won't be long before the whole country is brought to its knees.
BUDGET SURPLUSES
Quite simply, to date we have been lucky. We have been able, through exorbitant interest rates, to borrow heavily on the global market. Actually, I would not be worried if the borrowed money was utilised for infrastructure, capital development and other activities that can pull the country out of its crisis. However, the loans are used mainly for recurrent expenses and, in spite of the doubling of our national debt, the country is still mired in poverty. Now, it is time we stop living off the surpluses of others and start to create surpluses of our own. There should immediately be a cap on our national debt and, in fact, a primary aim of future budgets should be to create budget surpluses to reduce the debt.
We must in fact demand credible budgeting. I think the government has to take some tough decisions and cut some of the ministries, most of the consultants and public relations spin-doctors, reduce interest rates, cut the waste and inefficiencies in every area of the public sector, allow inefficient and uncompetitive economic entities and industries to die instead of wasting billions of dollars to keep them afloat, and remove the excess layers of bureaucracy, which only impede instead of facilitate development.
The country cannot continue to live with the present fiscal deficit, and it will be to no avail to borrow money to close the gap. In truth, it is a farce and an illusion to argue that the fiscal deficit is narrowing when to do so is not to cut expenditure, or increase earnings, but to borrow and to put the country into even further indebtedness, which would be continued fiscal madness.
The consequence of more borrowing, I suspect, may delay the financial crash but when it comes the impact will be even more thunderous. Why not face the reality that increased indebtedness continues to burden and constrain the economy and the whole society. For the country to emerge from the financial gutter in which it steadily slides, the government must take the lead, reverse the debt accumulation, rethink the economic model, and extricate the nation from the fiscal abyss.
Delroy Chuck is an attorney-at-law and Opposition Member of Parliament. He can be contacted by e-mail at delchuck@hotmail.com.
