On the Audacity of Fiscal Profligacy: Letter to the Minister of Finance
It has been a couple of days since I wrote to you seeking answers to a few questions regarding the prudence (or the lack thereof) of your proposed 50% salary increase for civil servants in the 2019 fiscal year. As foretold in that epistle, you never responded. Even tough you didn’t respond, I thought the reflections in that missive would have helped in making you and your team at the Ministry of Finance to think twice before coming up with any other alarming policy proposals in the public domain. Alas, what was to follow is nothing but a demonstration of bravado in the disingenuous practice of Fiscal Profligacy.
To come up with a massive request for additional resources in the last 3 weeks of the year intended to cover shortfalls of funds in the budget for the current year while projecting further fiscal expansion in 2019 despite an outcry against your 2019 numbers is akin to the classic ‘ndongo’ response in Wolof: ‘Maa tei!’ But the old saying is as real as gravity: “the road of I don’t care leads you to the city of had I known”. Verify I am worried about the potential impact of your current policy steps on our cities in 2019 and beyond.
Let me clarify, before proceeding, that I do not share the views of those in blanket opposition to the Supplementary Appropriations Bill. I actually believe that an SAP (within the legal remit) could be reasonable as well as necessary, given the realities of our challenging macroeconomic environment in which domestic policy is driven more by external policy prescriptions of our development partners than what we desire as a government. But having said that, the foregoing caveat is not an excuse to run amok with wastage of our meagre resources.
Honourable Minister, it is unconscionable to present an SAP of more than 1 billion Dalasis (twice the projected number for net domestic borrowing for 2018) in the second week of the last month of the fiscal year. Moreover, how can you present a proposal for a 50 percent increase in salaries for the 2019 budget and then only a few days after that is approved, you come back to the same National Assembly that approved that monumental jump in salary levels asking them to approve extra 203 million Dalasis to cater for a shortfall in funds required to pay for personnel emoluments in current year?
The above scenario reminds me of a Mandinka folk tale where a man goes to the bush to fetch firewood and when he was ready to lift the bundle of firewood unto his head to carry it home, he found that the bundle was too heavy; strangely what the man did was to untie the bundle of firewood and add more logs of wood to the same bundle, tied it again and tried to lift the bundle unto his head. What result would you expect?
With your current problems of late receipt of promised budget support and other myriad challenges, I refer you to my main question in my previous epistle, where will you get the funds to finance your proposed quantum jump in salaries starting next fiscal year?
Honourable Minister, what really worries me is that you have a lot of experience in fiscal management. Therefore such moves as you are proposing now really baffle me and I would like to know what is going on. We have had a lot of experience in terms of promised budget support not being realised as expected to the extent that at some point during me tenure as budget director we decided that we were not going to capture budget support numbers in the national budget ex-ante until the funds arrive because of the several disappointments we had with our development partners and the sometimes unreasonable triggers embedded in our agreements with them for fiscal support. So why did your institution bank on these same donors for budget support without serious contingency measures.
You stated that the quantum of resources in the proposed SAP would be sourced from the domestic money market, but are you sure that the market can handle your request. The very market that your current macroeconomic management team used and dumped, disingenuously crashing the key interest rate in the market without due regard to its obvious ramifications on the stability of our financial system? What is going to be the impact of such a jump in borrowing on our key policy variables?
Why are we borrowing money to fund an SAP who’s key planks are spending on embassies, funding new agencies that were created with the impression that they would be financed by donors? And finally (to keep this letter short) why is it that our payment of contributions to international organisations becomes an emergency? Didn’t government know that we were going to join some more international organisations?
I did warn Gambians that some of these organisations that Gambia was rushing to join would not earn us a net gain but rather a loss. Despite the insults of the attack dogs of the status quo I did posit that our payment of contributions to certain international organisations far outweigh the benefits that we may gain from them; especially if you add to the contributions, the per diem we have to pay our public servants to go attend unproductive meetings of some of these organisations. So when I saw the whopping some of 226.36 million as part of the funds requested in your current SAP, I laughed! Now if you request 226 million as additional resources to pay for our obligations with international organisations, then what is going to be the grand total paid as membership dues to international organisations by the end of the fiscal year?
Unfortunately, the matter under discussion is not a laughing matter and the signs on the horizon do not bode well for our macroeconomic fundamentals. Therefore, I urge you, Honourable Minister, to go back to the drawing board immediately and make reasonable adjustments to your expenditure matrices as well as come up with some creative proposals to ameliorate the expected damage that your current dash into fiscal Profligacy is sure to create.
And lest I forget, I have just one more question: is it the case that the resources you seek in this supplementary appropriation were already spent and you are seeking retroactive approval? The question is necessitated by the trending discussion that you cannot spend a billion Dalasis in less than 3 weeks.
While wishing you good luck in your current undertakings, kindly accept the assurance of my consideration and esteem.
Former research economist and National Budget Director, Momodou Sabally has undergone extensive professional training in macroeconomics and public financial management at the IMF Institute, the Central Bank of England’s Center for Central Banking Studies, Harvard University’s John F. Kennedy School of Government and holds a masters degree in Economics from Georgia State University in the US. During his tenure as Budget Director he also represented The Gambia in the ECOWAS Admin and Finance Committee, the body with oversight responsibility for the regional body’s budget formulation and implementation process.