The Government, through the Ministry of Finance and Treasury, has responded to a front page story in the Islands Sun dated 6th April, 2021, titled, “DCGA to Table $4 Billion Superficial Budget”, describing it as totally misleading.
The Permanent Secretary, of the Ministry of Finance and Treasury, Mr. Mckinnie Dentana refutes the claim that, “the 2021 estimates of the budget is not based on 2020 actuals but on 2019’s”. This is not only misleading, but also lack sound understanding of fundamentals of Public Financial Management.
First and foremost, as all may aware include the claimed Accountant, the first puzzle to solve before any budget process is to know how much fund or revenue will be available to support the budget. Contrary to the claim, the revenue forecast that feeds into the 2021 budget is not based on 2019 actuals. The Ministry clarifies that the 2021 revenue estimates are based on a positive GDP growth forecast using a robust macroeconomic modeling framework. Based on the model outcome, the Ministry forecast 1.0 per growth in real GDP in 2021. This growth outlook estimated to generate $3,008.6 billion in revenue. Furthermore, donors’ partner support towards the 2021 budget is also factor into the estimate.
Second, after the above exercise is completed, the 2021 budget expenditure is based on the Government’s Policy Redirection priorities, after applying fiscal assumptions on the overall 2021 fiscal envelope were carried out accordingly. These are then compared with both the 2020 Original Budget estimates and preliminary actuals. The Ministry wish to confirm that there is no mismatch in the 2021 Budget allocation against Policy Redirection priorities.
Third, the Ministry further adds that the 2020 Budget actuals would not be appropriate to use since there was a huge reallocation exercise carried by the government to fund the COVID-19 Preparedness and Response Plan in 2020. “Around more than $200 million of savings were secured within the 2020 budget and reallocated to government ministries assigned to implement the COVID-19 Program. The 2020 Budget actuals will reflect major increases to the ministries responsible for the COVID-19 plans, while the other ministries will be disadvantaged as a result of the 50 percent cut in all discretionary items” the Ministry says.
Therefore, the claim that government had used the 2019 actuals were unjustified and do not constitute any basis for determining the 2021 budget.
The Ministry of Finance and Treasury wish to confirm that the preliminary 2020 Budget actuals were produced in early January, 2021, and provided to its key stakeholders as part of the 2021 Budget process. Therefore, the claim that the 2020 Budget actuals are still not finalized or summarized is not true.
Meanwhile, the Ministry has urged journalists to practice ethical journalism. It has become a trend that journalists no longer report balanced stories.
“A simple email or appointment with the Ministry would have been very helpful rather than reporting half cooked truths in the media”, according to the Ministry.
The Ministry appreciates the good work of the media on informing citizens on Government Budget, but raised deep concern on the ongoing misinformation by the media. If media is genuine about informing the public, then the Ministry is happy to clarify any queries.