Calling out the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government for its ‘consumption-based’ financial philosophy with mediocre preparations for the future, Vice President Bharrat Jagdeo has listed this as the reason for its incapability to see the bigger picture in Budget 2022.
In the midst of the ongoing heated debate this week, the Vice President called a press conference on Thursday to address Government’s vision through the budget and also respond to rhetoric from the Opposition that has been floating around.
In sharing the difference in philosophies of the two sides, Jagdeo pointed out that the numbers over recent years tell a holistic tale of the APNU/AFC’s financial agenda.
In 2014, the last year of the People’s Progressive Party/Civic’s previous Administration, it presented a budget before coming out of office; the total budget was $220 billion – $138 billion for recurrent expenditure and $81 billion for capital spending.
The last budget presented by the APNU/AFC in 2019 saw a significant change in these figures. The budget grew to $300 billion of which $231 billion was recurrent expenditure. The capital budget declined to $69 billion within these years.
Capital spending refers to investments in tangible infrastructure that contributes to long-term growth for the country. Recurrent spending looks at goods and services among other intangible allocations, and this grew by 67 per cent.
“The expenditure over a five-year period declined on capital spending. Capital spending is where you build your schools, hospitals, roads, bridges, power plants, sea defences. This was accorded very little priority. They set up the basis for future growth in the economy, because if you don’t have your port facilities and roads and power, then you can’t have long-term growth in the economy…On the other hand, the current expenditure – that is money for rentals of buildings, vehicles, goods, and services are the things that recorded the greatest priority. It’s consumption-based,” he zeroed in.
Jagdeo, who is also an economist, said looking at these priorities in the area of spending, the former Government is regarded as a consumption-based party.
“That is why we say it’s a consumption-based party that is focused heavily on that philosophy. It doesn’t think about future growth. And the numbers tell that story. They not only spent a lot, but tax revenues grew from $175 billion to $225 billion, an increase of about 67 per cent… When I listen to people speak in a National Assembly about the future of this country and about future growth and well-being, if we had continued with their philosophy, we were going to end up consuming everything we earn with no provisions for the future.”
Looking at the PPP/C agenda since taking office, the Vice President said the intention was to make investments that will prove monumental to the country in years to come. In 2021, the recurrent expenditure was $279 billion – whereby the capital expenditure grew from $69 billion in 2019 to $103 billion.
In this year’s budget, the current expenditure increased again to $335 billion – an increase of 20 per cent from the previous year. The capital budget has climbed from $103 billion to $270 billion – a 160 per cent increase.
Consequently, the Vice President contended, “That is building for the future. That’s where we’re spending our money on the future well-being of this country, investing in things that the country would be able to see and touch; not things that will disappear…That left room for a lot of thievery when you talk about corruption. People love to spend on the recurrent side, because it disappears. You don’t see it.”
He added, “Imagine us growing for the last budget that we presented –- $69 billion on capital to today $270 billion on capital. And this tells the story of PPP Governments and the story of the transformation of this country.
“They run off on the small issues and they miss the big picture. They miss the big picture of we didn’t have enough money here or we have too much fear. But they miss this big picture.”
In this $552.9 billion budget, 23 per cent of it was fuelled by oil revenues. The VP said the financial model undertaken by the PPP/C to use the money for capital works would ensure that the country did not fall prey to the Dutch Disease that befall many.
“This is crucial to the spending of money because many countries in the world, when they had all the money or they got the windfall, what we did immediately, they started paying themselves higher salaries, pushing up the current budget of the country. And when the oil money goes, you’re stuck with those expenditures or when you have a downturn in oil revenue… If you spend on the capital side and you have a downturn in proceeds or revenue, you can simply forego or scale back on some of the projects, because it’s not recurring,” Jagdeo further stated.
“We were determined. We made it clear that we shall not make the mistake of other countries, that when you get the money, do like what they’re advocating here – spend all of it immediately on splurging on things that don’t bring future benefits to your people.”
