‘Government spending appetite growing’

 

THERE has to be real concerns for cash management at Treasury and risks for the country’s general fiscal posture of the Government for the rest of the year.

Hon Rick Hou, Member of Parliament for Small Malaita and Chairman of the Public Accounts Committee (PAC) raised the concern on the floor of Parliament this week.

“Sir, that economic analysis I provided earlier would suggest most of the broad indicators remain as they were in the previous quarter, that is, at the end of December 2016.

“However while the effects from a persistent negative inflation rate continue to impacted badly on revenue collection, coupled with a relentless surge in public expenditures, there has to be real concerns for cash management at Treasury and risks for the general fiscal posture of the government for the rest of the year,” Hou said.

He then highlighted from the PAC report on the 2017 Supplementary Appropriation Bill 2017 that he has great concerns with the Government’s cash flow situation.

“Sir, only the Minister (of Finance and Treasury) can inform the House, and the people of this country, of the real picture.

“But I am very concerned that the trend I observed from the last quarter of 2016 to March this year is already indicating we may be facing a cash flow problem sooner than later,” Hon Rick Hou enunciated.

He then added that he is aware of the cyclical nature of government revenue flows and expenditure pressures at this time of the year.

“However, I have to warn that the real pressure is yet to come, and most of that extra pressure is coming as a result of the Government’s own making,” Hou strongly added.

Chairman of the Public Accounts Committee added that it is not very clear what measures the government is taking to turn around the current weakness in revenue collection and that it cannot be allowed to continue – and it cannot happen by itself.

The government he added, must be bold to take tough measures because the major cause for this problem – negative inflation – is not going to go away on its own.

“Meanwhile on the expenditure side, there appears to be no abating. And Sir, given the government performance so far on financial management, I do not see the current trend in government spending to stop. If anything, the appetite for more spending is growing,” the PAC Chairman added.

Hon Rick Hou then said his next concern to this would be how the Government is responding to mounting expenditure pressures.

“Sir, we have barely gone through two months of the year and already some departments are facing funding difficulties in their normal operations.

“Either funding allocations are quickly drying up, or more commonly now, payments have not been forth coming,” said the MP for Small Malaita.

He then further added that even in terms of the 2017 Appropriation we are already facing the situation where funding of normal budgeted programmes and activities is already very slow.

“This is unprecedented. So the question is: what is the government doing about the situation? We are entitled to know,” said Hon Rick Hou.