Opposition Leader Godwin Friday. (iWN file photo)

  • Finance Administration Act allows Gov’t an overdraft facility at commercial banks
  • Parliament caps the overdraft at EC$50m per year
  • The overdraft attracts 8% interest and must be repaid by year-end 
  • Gov’t routinely exceeded overdraft limit, ending one year with $85.4m to be repaid
  • Gov’t breaks the law by converting the excess to an ‘Accountant General Loan’, not approved by Parliament
  • The law is intended to be a guardrail to keep Gov’t on a ‘road of responsible financial management’
  • By flouting the law, ‘the country [is] heading to a financial cliff’

The Unity Labour Party administration has been routinely breaking the law by exceeding the overdraft allowed by the Finance Administration Act, and has unlawfully created an “Accountant General Loan” to cover the wrongdoing.

This was revealed by Leader of the Opposition Godwin Friday last Tuesday as he responded to the Budget presented one day earlier by Minister of Finance Camillo Gonsalves.

Friday said that every year, after the budget is passed, the Minister of Finance asks lawmakers to approve a motion allowing the government to borrow money by way of fluctuating overdraft to meet its current financial needs.

“There is usually no debate,” he said of the motion, adding that it is expected that such a motion would be passed “because of the intended benefit of allowing the government to meet its needs when it is expected revenues that come.”

The opposition leader, however, said this borrowing is expected to be short-term.

To illustrate, he read the motion passed in 2019, authorising the Minister of Finance to borrow by means of fluctuating overdraft or otherwise — from the First Caribbean International Bank or RBTT bank, or Bank of Nova Scotia, or the Bank of St. Vincent and Grenadines — no more than EC$ $50 million in total from Jan. 1, 2019 to Dec. 31, 2019.

The money is to meet recurrent requirements of the government, Friday explained, adding that the borrowing is authorised under sections 44 and 45 of the Financial Administration Act.

Section 44 of the Financial Administration Act says no money should be raised on the credit of government except under the authority of that law or another Act of Parliament or by a resolution of the house of parliament.

“I mean, that is categorical; that is clear. You can’t raise money unless Parliament allows it,” Friday said.

This, “is fundamental to democracy is fundamental to the way our system of financial accountability governs,” the opposition leader added.

Prime Minister Ralph Gonsalves, right, seen here during last week’s Budget Address, was Minister of Finance from March 2001 to November 2017. (iWN photo)

He said the principle is international. “Parliament votes the money for the executive to spend, you’ve got to come here and justify it.”

The opposition leader further explains that section 45 of the Finance Administration Act says, the finance minister may in a financial year, when authorised by resolution of this House of Assembly, borrow current requirements from a bank or a financial institution by means of advances to an amount not exceeding in the aggregate.

“Again, that’s an important point,” he said, noting that the resolution sets the amount at EC$50 million.

“So the Act says first, you must do it by law — either a law that was passed by Parliament or by a resolution as the only way. And it says a specified amount. That is what you have to limit yourself to.

“You can’t exceed it. To exceed it would be, as we say, in ultra vires,” said Friday, who is also a lawyer.

“But more simply put it’s illegal. You’re breaking the law,” he said.

“We tend to get very lax and loose with these things because practice seems to take precedence over what the law says” Friday said.

The opposition leader emphasized that the resolution expires at the end of the year in which it is passed.

“In other words, such borrowings are intended to be cleared off by the end of the financial year.”

He, however, said that he has figured, dating back to 2009, it shows that at the end of the year, “there is usually a huge amount left unpaid on the overdraft”.

Reminding lawmakers and media audiences that the overdraft should not exceed EC$50 million in a year, Friday said that at the end of December 2009, it was EC$85.4 million.

 “Imagine that you exceed the limits, you know, $85.4 [million] and you don’t have the decency at least bring it under the limit by the year-end when you know that it will be recorded,” Friday commented.

He said that at the end of 2010, the figure was EC$77.8 million, EC$29.1 million at the end of; EC$45.1million at the end of 2012; EC$52.5 million at the end of 2013; EC$52.7 million at the end of 2014; EC$61.9 at the end of 2015; EC$57.5 million at the end of 2016; and EC$57.4 million at the end of 2017.

“And then, in 2018, for some strange reason, they had it at the end of September … By that time is 47.7 million,” Friday said, adding that the overdraft at the Bank of SVG attracts an 8% interest rate.

The opposition leader noted that the annual budget is a framework through which the various aspects of the financial management and control of the government are performed.

“And this will be set out in the Appropriation Act and governed by the Finance Administration Act.

“So these, Mr. Speaker, if you like, these are the guardrails that really keep the minister of finance or the government from careening off the side and doing whatever the hell he likes.

“… They’re supposed to prevent the administration for the time being running the country from running amok with respect to the country’s finances.” 

Camillo Gonsalves has been Minister of Finance since November 2017. He is seen here presented the budget last week Monday. (iWN photo)

Friday said that “for the time being running the country” is important to note adding that the country “is not a plantation that you own…

“It is clear that when one looks at the performance of this government as set out above, the overdraft provision has been unlawfully used as an additional way to finance its operation beyond what was legally provided.

“So, the guardrails have been breached. The government, essentially, they run off the road of responsible financial management and they have the country heading to a financial cliff.”

He said that by 2017 the overdraft facility stood at EC$72.8 million.

“That’s a lot of money, Friday said.

The opposition leader said that the government, over the course of time, realised that they had to do something about this situation because this overdraft just keeps ballooning every year.

He said that more likely, what happened is that the Bank of St. Vincent and the Grenadines, put some pressure on the government to do something about it, at least to make the bank look good.

“So, beginning in 2011, Mr. Speaker it seems to me that it had started doing something again,  Mr. Speaker, that is also illegal,” Friday said.

He said that instead of reducing the overdraft, the government converted the excess into a loan called The Accountant General Overdraft Loan.

“So you say to the bank…, chop off $40 million. Make it a loan. We go pay yo’ interest, the same interest rate, 8%. And your books look a little tidier.”

Friday said the problem with this is the government has no authorisation to take out a loan of that nature during the year.

“You have to come to Parliament to get that authorisation. You can’t just simply say, as a matter of convenience, we go borrow $40 million and put that in the following year’s estimates and Parliament doesn’t know about it until we read the estimates; there was no debate on it.

“Who gives you that authority? Is it just a matter of convenience?” Friday said.

7 replies on “Gov’t breaks finance law, hides it with another illegality — Friday”

  1. Lock them up! Lock them up! Lock them up!

    Remember Dilma Rousseff, the 36th President of Brazil, this socialist was removal from office on 31 August 2016 by impeachment. The Charges: Criminal administrative misconduct by illegally manipulating the federal budget.

    https://www.bbc.co.uk/news/world-latin-america-36028247

    We all know that the Socialist are very bad at running governments, and are always spending money that they just do not have, thus sending many of them to cook the books.

    1. James you may remember Maurice Bishop who Ralph Gonsalves helped writing speeches and advising following the revolutionary overtake of Granada. Well Bishop sent people from the Ministry of Finance to Cuba and elsewhere to be trained on how to keep two sets of books so as he could commit fraud against the World Bank, IMF, and bond holders. Of course he is dead, but Gonsalves announced he is going to finish his work.
      https://www.ieyenews.com/the-unfinished-work-of-maurice-bishop-by-peter-binose/
      https://gtcradio.wordpress.com/2013/03/27/letter-maurice-bishops-fraud-against-the-imf/

      If you put into your search engine Gonsalves to finish the work of Maurice Bishop

      The top of the page said 96,800 results, wow! The whole world was talking about it, imagine the damage that did to SVG tourism, and SVG commerce.

    2. I am sure he has already stood against a few dirty brick walls, with trembling knees.

      James, I am terrified to write anything now in case it brings fear to Vincentians and he locks me up for a year.

  2. Wicked bastard!! Kenites father and son. Now the tax payers will feel the burden to pay for this they believe in their socialism rule not hard to understand why they do what they do.

  3. Of these Gonsalves, interestingly enough, when “Friday said that “for the time being running the country” is important to note adding that the country “is not a plantation that you own…” he was making an observation, that the Gonsalves would not at all recognise, for in their minds, SVG is indeed their plantation, and they see it truly as their birth right, to so do as they so please, as any plantation owner would in the circumstance.

    Many of us here have been making this very salient observation of them for some time now, and have been saying so too, but we have been largely ignored by the resumed plantation occupants, who indeed have a false sense of their own freedom. The Gonsalves make no mistake however demonstrates precisely what is their own perception of us, our being occupants of their acquired plantation. Their contemptable and dismissive actions towards us demonstrates as much.

    Moreover, besides their usual contempt for the law and Parliament, their refusal to pass into law The FREEDOM OF INFORMATION BILL is another example of them regarding us as plantation slaves or as incapable children in need of a PAPA and also in need of some form of plantation stewardship.

    Ralph Gonsalves once openly let it be known to us, that it did not matter which or what kind of court we went to in the world for redress, we would in the end, have to return to PAPA. For sure, what we have there with these Gonsalves, is what could otherwise be termed as “the divine rights of sovereigns”! They our Sovereigns and we their subjects.

    King Charles 1 of England, once had similar ideas as these Gonsalves, but ended up losing his head on a wooden block in the middle of London for it on 30th January 1649. These days’ dictators who harbour such novel ideas, often end up swinging from gibbets. Nicolae Ceaușescu and his wife however, Romanian dictators, came to a sticky end standing up against a dirty brick wall on 25 December 1989. .

  4. It is rather sad how Vincentians have been sleeping walking themselves, for near on twenty years, into servitude, because some here having committed themselves to the Gonsalves family narrative and their attachment to both Cuba, Venezuela and other South American anti-democratic regimes.

    https://www.youtube.com/watch?v=M2rentfCTAw

    What is more profoundly surprising in this however, is that the majority of Vincentians are descended of African Slaves, and who ought to be extremely weary, and greatly suspicious of authoritarianism and dictatorships, as such rule so often leads to gross tyranny, just as it did in Europe in the 1930’s Germany, in Mao’s China and in the Stalinist Russia.

    https://www.youtube.com/watch?v=kZmduW_Ye_8

    Moreover,we Vincentians have had near on twenty years now in which to evaluate the creeping Cubanisation of SVG. Therefore Vincentian parliamentarians cannot say they are somewhat astonished and shocked at the behaviour of the Ralph Gonsalves family regime’s lawlessness and their unaccountable actions. Ralph Gonsalves anti-democratic traits were evident from the day he took up office here.

    His support for the communist Chavez and Maduro and his frequent trips to Cuba should have served as a singular warning to all Vincentians, that the man would adapt the same antidemocratic and lawless positions towards our parliamentary system of government, since his accountability is only to himself and no other, as it is with all dictators. https://www.youtube.com/watch?v=nIcV1Pf6_UM Therefore Dr Friday and his Party should in no way be at all alarmed now.

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