CARETAKER Minister of Ministry of Finance and Treasury, Rick Hou, yesterday clarified the publication of the 2014 Mid- Year Budget Review.
A statement from the government communication unit stated that Mr Hou made the clarification in response to “apparent misleading interpretations, speculations and conclusions framed in the media by certain individuals”.
The caretaker minister clarified that the publication of the 2014 Mid-Year Budget Review (MYBR) simply satisfies a requirement under the new Public Financial Management Act 2013.
“The publication is not a political campaign to restore the Government’s image as suggested and speculated by some.
“The document simply provides an update to the National Parliament on economic and budgetary developments associated with the 2014 Budget.
“It provides facts and information to parliamentarians, citizens and donor partners on economic developments, revenue and expenditure up to the middle of the year.
“It also provides expected developments for the remainder of 2014,” Minister Hou said.
He clarified that the April floods and the consequential suspension of production at the Gold Ridge Mine (GRM) are both very significant negative developments for the economy since the 2014 Budget was delivered last year.
“Both these events were unexpected, and were not in the 2014 Budget forecasts.
“The reality is that the Gross Domestic Product (GDP) growth estimate for 2014 was revised down substantially to around zero percent which impacted severely on government revenue,” the Minister said.
He further clarified that it would be irresponsible on the part of the Government and the Ministry of Finance to pretend that ‘all is well and it is business as usual’, in the context of the declining economic and fiscal indicators.
Hence, the Financial Circular (which was not at all confidential) of 1st August 2014 was a normal advice and reminder to Accountable Officers.
“It was a reminder to be more responsible, efficient, effective and ethical in the management of government finances, in times of challenges and uncertainties,” Minister Hou said.
Mr Hou explained that under-collections in revenue and under-spends against pro-rata estimates in the first six months of any fiscal year are normal trends.
However, in the events of significant revisions to economic growth and revenue due to economic shocks and unforeseen calamities, the Government must act responsibly by initiating strategies and measures to manage the financial situation.
He further explained that much of the donor support and assistance provided, as indicated in the Mid-Year Budget Review, are for rehabilitation and reconstruction of physical infrastructure and damages caused by the April Floods as well as assistance that would have otherwise been met from the 2014 Budget.
These are not direct budget support to the 2014 Budget and replenishment of government assistance for the April Floods as suggested by some.
In references to unpaid bills incurred on behalf of the government, unpaid salaries of Malaita Provincial Government employees, FOPA unpaid claims, nonpayment of student fees and $15 million payment to MPs for flood victim assistance, Minister Hou said there are processes and procedures by which claims must be verified and validated.
“There are government agencies and entities that are responsible for determining their legitimacy and whether or not these are legal for the Government to bear responsibility.
“Where the legitimacy and legal responsibility of the Government cannot be established, payment claims cannot be paid.
“Besides, under the new Public Financial Management Act 2013, compliance requirements and standards have been raised,” he said.
“Unfortunately, the majority of payment requests do not make the first round due to non-compliance.
“Unpaid bills and salaries by provincial governments can only be explained by those respective provincial assemblies, not the central government,” he added.
Mr Hou said all these cannot be blamed on the Government’s inability to pay nor has anything to do with cash flow as some are saying.
The caretaker minister therefore urge that while individuals may have all the right to comment, speculate and draw their own conclusions on the MYBR, obviously some of these so-called commentators have either missed an understanding of these simple facts or chosen to mislead the public.
In the meantime, the caretaker minister assures the people that government finances are well secured and are being managed prudentially.
He said his ministry will ensure that government operations continue unhindered, essential services delivery are maintained and the 2014 budget expended efficiently and effectively.