The move by the Unity Labour Party government, on Monday, to secure the approval of Parliament for EC$120 million in capital borrowing next year, even before the Budget is passed, “smacks of some desperation in the government trying to find funds”.
This was the view expressed by Leader of the Opposition Godwin Friday, as lawmakers debated the Public Sector Investment Loan No. 2 Act 2020.
The bill was passed into law without opposition support.
In debating the bill, Friday noted that Finance Minister Camillo Gonsalves had said passing, on Monday, the law which usually comes as part of the budget process had to do with timing, convenience, and the securities market condition.
“And it gives the impression that this was a strategy that was thought out and was going to be implemented by the government.”
Friday, however, said that the opposition had gotten two different versions of the order paper for Monday’s meeting of the national assembly.
The first version of the order paper did not include the investment loan bill, he said.
The opposition leader said that this suggested that “it was added as a matter of some calculation as to the urgency of the situation and made a part of the agenda for today when, ordinarily, we discuss these matters during the budget debate”.
He said that the explanation that the country ought to do it now so as to get a jumpstart on the budgetary process for 2021 “begs the question, ‘What are we financing in 2021?’”
The bill is the second such piece of legislation brought to Parliament this year, and together, allow for over EC$200 million to be borrowed under the public sector investment loan programme in 2020, Friday said.
However, the finance minister rose and said that the passage of the legislation does not constitute borrowing on the day that the law is passed.
“So to say that because the legislation was brought today we have borrowed $220 million this year is erroneous,” Gonsalves said.
“It is simply saying that when we normally bring it at the budget time we don’t end up borrowing until many months after. So if we bring it now, post-budget, we will have the opportunity to begin borrowing immediately instead of waiting thereafter,” the finance minister said.
But Friday said that Gonsalves’ response was “rather condescending”.
“Of course, I know you are not borrowing the money today. When you pass the bill in the Parliament, it is to borrow the money. That is what we are doing here. I don’t know when you are going to go out and which bank you are going to talk to and borrow it.
“The point is you are asking the Parliament to approve borrowings of EC$125 million today when we approved over $100 million in January or February. So it is approval from the House you are seeking now for over $200 million under this programme.”
The opposition leader said that the minister explained that the law is to be acted upon sometime in the future.
“… and in any budget, whether it comes at the end of the month or the beginning of January, we pass the bill, we borrow the money, but more importantly, for transparency, you have in the estimates a programme.
“What is this $125 million going to finance? You said it is going to finance the budgetary process. What is the budget? I don’t know what is in the estimates, so you are basically asking me to give you not quite a blank cheque but a big cheque and I still don’t know yet what we are going to spend it on.
“Now if you say that doesn’t matter because we are going to do the Estimates, then that is an even more serious breach, in my view, of what are the accountability procedures in this honourable house because when we approve the public sector investment loan, when it is brought to the house, it is in my understanding of the process from many years in the house that it would finance the public sector programmes going forward, the investment programmes, usually capital programmes.”
He said that lawmakers should know what the money is going to be spent on, as a matter of principle, so that the national assembly is not used as a rubber stamp.
“… we ought to discuss that before you ask me to approve the loan,” Friday said.
“And it is not sufficient to say that this is just a matter of timing and my convenience. What about my duty as a member of this opposition?”
He said that opposition lawmakers have repeatedly raised questions about the accountability measures, abuse of the overdraft provisions, failure to bring supplementary bills, and the abuse of special warrants over the years.
“And we are letting these accountability and transparency processes slide because it is convenient. That is not how we are supposed to conduct the business of the house. I didn’t come here to pick a fight but I understand that the government has a need for money, in fact, the rushing of this bill now, the fact that it was not on the order paper before and how it’s here and all of a sudden you need this money, it smacks of some desperation in the government trying to find funds.
“Why we can’t go through the normal process of passing the law and going through the bonds, whatever measures we use and we continue the financing of public programmes in due course as was done before, even under this government, whatever time it takes? That’s how it’s normally done. What is special about now that this bill, in particular, that is to invest in public programmes must be done preemptively?”
The opposition leader said he had thought about the matter, having mentioned it briefly to the prime minister Monday morning and he was waiting for the finance minister to present his rationale and explanation.
“And I am not satisfied. So I won’t support this measure today,” Friday said.