A ‘COLUMBUS BUDGET’ of expedition, uncertainty and discovery. ‘Deliverance’ is far, far away!!
Budget pretends that the Government does not have a fiscal problem which needs to be corrected. Preferring to score cheap points, the Government does not commence the process of structural adjustment… NNP is buying time!
The game plan has been to talk the right words i.e. get the psychology right, but hide the real substance and meaning. The budget is nothing more than an extension of the NNP campaign rhetoric. On the face of it, they offer sweeteners to virtually all sectors as if there are no financial constraints facing the economy. Those who not getting honey will get milk!
Therefore, the real stuff will come when the debt re-scheduling negotiations take place. At that point, Grenadians will begin to bear the burden of NNP’s 13 years of recklessness.
Notice that except for the Citizenship Programme which is expected to bring in $27 million, there are no other revenue measures. So that the NDC’s revenue program is left intact. This is alarming, given the criticisms against the NDC policies which Mitchell claimed had led the country to bankruptcy during the 2012 budget debate and in his elections campaign. On the NNP’s own account of things, that revenue program was not reliable as it consistently under-performed!
Notice he has not announced any new loans. Government’s ability to borrow is now severely constrained. This being the case, all those who thought that ‘money go flow’ have gambled and lost!
They have used a device of calling numbers without pointing to the net difference in most cases between the NDC allocation and the current provisions. Take, for example, the IMANI programme. The net increase from the numbers under the NDC’s Youth Upliftment Programme is a few hundred (2000 vs. 1500) plus he announced a higher stipend. So there is a false impression that 2000 new jobs for young people will be created under the budget. Young people must know the facts. When the NDC had about 1500 in the Youth Upliftment Programme, the number of unemployed young persons was said to be in excess of 5000. Therefore whatever attachments occur under the NNP in 2013 that would still leave about 4500 youths unemployed! Only about 500 youths will be engaged as the net increase over 2012. TALK ABOUT FOOLING THE YOUTHS!
Throughout the speech they make no attempt to quantify the job creation effect of most of the measures. This is telling! One would have expected NNP to trumpet the job numbers as this was their big promise to the young people in particular
Furthermore, the estimated growth in the economy is projected at not much more than 1.5 to 2 per cent over the medium term. That rate of growth cannot deliver 8000 jobs!! So unemployment will remain very high! In any case, the projected growth for 2013 is highly fictitious and laughable.
Seriously speaking, jobs will come from economic growth but that growth depends on investment. The sources of investment are as follows: government borrowing (loans), government current account surplus, foreign direct investment, grants, and local private sector investment. If you look at the budget, you will have little difficulty in realising that none of these elements is set at a significant level to produce the jobs that are needed
The announced current account surplus is unrealistic and untrue largely because the Government has simply re-distributed the so-called savings from the 20% cut in discretionary expenditure and the projected revenue intake cannot occur within the available timeframe. THE SUMS JUST DO NOT ADD UP!
Government will have to find some resources to meet the demands of the public sector unions. They will not give up what they have for nothing.
In summary, the Government is deliberately seeking to avoid a rush of criticism and public loss of hope so early in its term. When the arithmetic is done, the 20% cut in non-personnel expenditure and the estimated intake from the Citizenship Programme cannot pay for the moneys Mitchell distributed in the budget. Notice that he never said how much that 20% cut amounted to! Secondly, that is money on paper not actual money that is assured to go into the Treasury and, on Mitchell’s own account, the budgetary shortfall in 2012 amounted to over $100 million. So there is serious lack of disclosure here
Somewhere in that budget is the hidden issue of deficit financing, something which Mitchell heavily criticised the NDC’s 2012 budget about and which criticism he renewed during his own budget presentation.
Furthermore, one the big effects of that cut will show up at the doors of the private sector because this is where government purchases its goods and services. With less being earned by the private sector and no clear sources of compensation, then employment in that sector is likely to be affected negatively
Nonetheless, there were some positives like the incentives to construction, manufacturing, etc. Spending more on health care is good
The list of capital projects are all in the NDC Manifesto
Going for a residency/citizenship programme is supportable, but the legal, managerial and administrative set-up must be several times superior to what the NNP practised before
Presumably, the CASINO will be in the re-developed Riviera Hotel!!! We must all await further information on the type of casino operation the Government is about to approve
The allocation for tourism marketing and airlift projects will not materialise, nor would the counterpart money from the tourism private sector
Note that no significant foreign investment has been announced. Mitchell could not even project likely sources of foreign investment in 2014! A breach of campaign promise? Remember they told the public that they had investors lined-up to come to Grenada once they had won the elections.
Whatever they say or do, there will be retrenchment in the public sector. That will come with the debt restructuring. But Mitchell is pretending that he will not cut the public service although he had consistently argued that the size of the public service was too big and was a burden on the Treasury. Interestingly, he knows that the “smaller government” he has announced cannot happen simply by the 20% cut or waste reduction initiatives. He prefers to pamper the public and to hide the reality of our situation!
Grenada will have to face a Structural Adjustment Program very soon. The NNP will not be able to hide from that. Instead of braving the situation, Mitchell has chosen to posture now with the intention of putting the blame on the IMF when the time comes.