Sheriff : Budget 2021
The 2021 Budget has been passed by parliament today. This is round1 — policy stage. It will now go into round 2 — the committee stage Starting from Nov 30, MPs will debate ministry by ministry to examine their budget allocations.
I hope the MPs will pay particular attention to the projects that will be implemented by ministries, including those carried out thru the off-budget mechanisms such as privatizations, PPPs (Public Private Partnerships ), and PFIs ( Private Financing Initiatives ). These off-budget project mechanisms are the most prone to abuses of cronyism and favoritism, making the public worry whether the govt is paying the right price. These projects are often implemented thru direct nego instead of competitive bidding. There are concerns that direct negotiations may not result in fair pricing. The govt shd return to the system of competitive tendering and bidding to allay public concerns abt the leakages and wastages in public expenditure.
The concept behind the PPP and PFI is good — to utilise the financial resources and the management expertise of private sector companies to enable the public sector projects to continue being implemented under the national development program, without being held back by the fiscal constraints in the Federal govt budget. These off-budget mechanisms of implementing govt projects were introduced twenty years ago after the 1997 financial crisis which saw the govt facing rising fiscal deficit ratios, higher than ever experienced before. Instead of cutting down on development projects, it was decided where there are private sector companies interested to undertake the projects on behalf of the govt on lease-hold terms, their participation should be welcomed to enable the development momentum to continue uninterrupted. The govt will pay back to the companies by installments for the value of the work done. This will include their interest costs and profit margins. The question is whether the value charged to the govt is determined under a proper system of governance.
Altho the concept of PPP and PFI is good, the implementation has given rise to issues abt transparency and accountability. Our MPs should propose to the MoF that as a condition for parliamentary approval, there shd be an independent and professionally qualified oversight committee within each ministry to check on the terms of the contract award to verify that it’s done under best practices with no political interests in the contract. The ministry oversight committee shd be required to issue a public statement on the contract to confirm that everything is done properly. The committee will be held legally responsible for the integrity of its statement.
The current mood in the country is that although the public is prepared to trust the govt, they want a system of governance to ensure they can trust the politicians in power.