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EDITORIAL - More cause for concern at finance ministry

Published:Thursday | April 1, 2010 | 12:00 AM

After his fumbles with the Budget during the last fiscal year and the embarrassment of the bungled tax package last December, we had expected that Audley Shaw would by now have a firm grasp of the finance ministry.

Indeed, the minister, buoyed by the Government's rescheduling of $700 billion of domestic debt and the completion of a US$1.3 billion loan agreement with the International Monetary Fund, has in recent time exuded confidence. So, even the late presentation of the final supplementary estimates did not bother us too much.

But the developments in the legislature this week, where parliamentarians have been reviewing the administration's projected expenditure for the fiscal year that starts today, are cause for concern.

A week ago, Mr Shaw tabled a Budget of $503.9 billion, which was just under $100 billion less than the expected final out-turn for 2009/2010 - the result of the impact of the debt rescheduling on interest costs. Even though the Budget document did not reflect fully the expenditure changes for the prior fiscal period, making comparisons difficult, most people were willing to give Mr Shaw the benefit of the doubt.

Small amount

But on Tuesday, Mr Shaw turned up in Parliament with an additional $4.6 billion in expenditure. In the larger scheme of things, this is a small amount, just around one per cent of the original budget. It is untidy, but such adjustments happen.

But what gets our goat, and we dare say of most people, is Mr Shaw's stated reasons for the largest chunks of the increase. After all the public discussion and debate about public-sector salaries, upon which Prime Minister Bruce Golding had pronounced and prognosticated, the finance ministry somehow failed to allocate an additional $2 billion to the public-sector wage bill to pay some of the arrears owed to government workers.

But worse was the cause for an additional $1.7 billion, about which Mr Shaw was embarrassingly frank, so it has to be true. He explained: "This is due to a miscalculation in the terms of the exchange rate that was used. The euro should have been used, so there has to be an adjustment."

Shouldering the responsibility

This snafu smacks of amateurism, or negligence, or both. The culprit here is not only Minister Shaw. Dr Wesley Hughes, the financial secretary, must shoulder a major part of the responsibility. He was brought in to shore up the management and technical capacity of the finance ministry after the international financial institutions were apparently not overly impressed with Mr Shaw's initial picks.

As the top technocrat and accounting officer in the ministry, Dr Hughes should not, in the first place, have allowed the tabling without up-to-date comparative data. That failure was then compounded by their confusion over whether to use euros or US dollars for exchange-rate calculations.

The minister is responsible for policy, but it is Dr Hughes' job to ensure that the numbers in the documents make mathematical sense - that the arithmetic is right. If the minister insists on presenting preliminary data, then Dr Hughes has a responsibility to protest - to even let us know.

Such bungles can undermine confidence in the Budget and all that rests upon it.

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