Fiscal rule will change method of budget presentation
McPherse Thompson, Assistant Business Editor
Speculation about new taxes or additional tariffs that might be imposed by the minister of finance as part of the Government's annual Budget is expected to be mitigated by changes to the conventional manner for Budget presentations.
Starting in fiscal year 2015/16, the minister of finance will table the spending plan, the Estimates of Expenditure, and his financing programme or revenue measures in Parliament at the same time.
The changes are mandated under the new fiscal rule legislation meant to help entrench financial discipline in the Government, and adherence to debt-reduction programmes.
It marks a shift from the conventional system whereby the minister tables the Estimates of Expenditure, and the standing finance committee of Parliament then vets it over a three-day period and approves it without knowing how the Budget is to be funded.
"While they are doing that, Parliament is not provided with any forecast or any outturn as to what's happening to the revenue. They are only seeing the expenditure, but they don't know what are the resource projections to support those expenditure," said Courtney Williams, senior director, Fiscal Policy Management Unit in the Ministry of Finance.
Under the current system, the minister of finance returns to Parliament about two weeks after tabling the estimates to inform the country how the Budget will be funded.
Emphasising the significance of the change in the Budget presentation, Williams said the next Budget should be tabled in about February 2015 and will include the estimates of expenditure, revenue measures, the fiscal policy paper and the debt-management strategy - all at the same time.
"So rather than the minister coming two weeks after to tell the country how the Budget is going to financed, how much revenue will be there, everything will be there for the public at the same time," said Williams in an interview at the ministry's Heroes Circle office in Kingston office.
"And the Budget is to be approved by Parliament before the end of the fiscal year, so the Government will have a full year to execute it," he said.
The Standing Finance Committee will also retain its role of reviewing and approving the budget ahead of the House vote.
CHANGES ARE IMPORTANT
Williams stressed that the changes are important, given that parliamentarians in the past did not have the benefit of examining the revenue along with the estimates of expenditure to make informed decisions and to assess the credibility of the budget.
"So when they are making decisions as to how much money to allocate to ministries, departments and agencies, they will also have the benefit of seeing the revenue information. They will have the benefit of having the document where we analyse and assess the performance of the economy, what we expect to happen over the next year and the next two years," said the policymaker.
Similarly, the public will know upfront whether the minister will be imposing new taxes.
"This change to the Budget process will enhance the quality of the debate and deliberations in Parliament," said Williams.
"It will also enhance the discussions that take place at Budget time. It will also help to reduce some of the speculation that is there as to what is going to come," he said.
Entrenchment of the fiscal rules required amendments to the Financial Administration and Audit Act and the Public Bodies Management and Accountability Act.