Tuesday, October 20, 2015

Anguilla Public Finance Order

[1]     The above draft and proposed Order in Council to be made by the British Government and to apply to Anguilla, has been widely and publicly circulated in Anguilla in the past days.  I have now read it, and can explain that its essential provisions are contained in 12 sections as follows:
(a)     By section 1, the Order replaces and supersedes any Act of the Legislature or Order in Council which is in conflict with it.  This expressly includes the present Anguilla Constitution, 1982.  If any provision of the Constitution were to conflict with this Order, the Order would prevail.
(b)     Section 2 deals with interpretation and definitions.
(c)     By section 3, certain General Principles are set out.  Principally, the Government will be obliged to formulate a new Fiscal Framework which will set limits on levels of public debt.  This Fiscal Framework will be agreed with the Secretary of State before its adoption, and which will replace the existing Fiscal Responsibility Act, 2013.
(d)     Any decision of the Government, or any Government policy, or any Act of the House of Assembly which would, in the opinion of the Governor, exceed the Fiscal Framework will require prior approval of the Secretary of State.
(e)     The Minister of Finance will be required to report to the House of Assembly every 6 months on the performance of Government in implementing the Fiscal Framework and on the state of public finances and the state of the economy of Anguilla.
(f)      When any proposed Appropriation Bill (the Government’s annual budget) would not be balanced, the Minister shall explain the reasons for the failure to the House of Assembly.
(g)     Where, in the opinion of the Secretary of State, Government is likely to be in breach of the Fiscal Framework then the following consequences arise.  (i) The Governor will have the power to enact any legislation, by Order published in the Gazette, thought fit to ensure compliance.  (ii) Government shall agree with the Secretary of State a Medium Term Fiscal Plan to meet key debt ratios.  And, (iii) the Governor may appoint a Chief Financial Advisor who shall be obliged to comply with any direction given to him or her by the Governor.
(h)     By section 4, no variation of any tax, rate or other levy shall be made by any Minister or the Government except under the authority of an Act.  Where an Act authorizes any person to vary a tax, rate or levy, that person shall report to the House on such exercise of power not less than every 6 months.
(i)      By section 5, the Minister shall ensure that all contingent liabilities of the Government (including pensions and healthcare) are subjected to independent actuarial assessment every 2 years and shall report to the House within 2 months.
(j)      By section 6, all monies received by the Government shall be paid into the Consolidated Fund.
(k)     By section 7, no money shall be withdrawn from the Consolidated Fund except to meet expenditure charged on the Fund by a law in force in Anguilla.
(l)      By section 8, the Minister of Finance shall at least 6 weeks before the beginning of each financial year lay before the House the estimates of revenue and a document setting out targets for revenue and expenditure, and the House shall publish them without delay.
(m)    By section 9, the Minister is required to introduce into the House an Appropriation Bill and any necessary Supplementary Appropriation Bills, and the Governor may refuse to assent to any such Bill if it would be inconsistent with the Fiscal Framework.
(n)     Section 10 limits Government’s power to borrow except as authorized by an Act and in accordance with the Fiscal Framework.  If the UK’s Department for International Development guarantees any borrowing by the Government of Anguilla, the guaranteed borrowing shall be repaid as quickly as possible.  The Governor may on behalf of Government enter into counter-indemnity arrangements with HMG in connection with any borrowing by Government and shall ensure compliance by Government with any obligations under any such arrangements.
(o)     By section 11, the Governor may act contrary to any advice by Executive Council if compliance with such advice would be inconsistent with the Fiscal Framework.  The Governor may give directions to any Minister or public officer to ensure compliance with the financial obligations of Government, and the recipient shall be obliged to comply.  The Governor may after consultation with the Chief Financial Adviser make legislative proposals to Executive Council and may establish an independent review of the performance and functioning of any statutory body and may dissolve the Board of any statutory Board and reconstitute it.
(p)     By section 12, the Governor’s functions under the Order do not have to be in accordance with the advice of the Executive Council.
[3]     A hermeneutical analysis of the contents of the draft Order indicates that the following problems are perceived by those responsible for its drafting to exist in connection with the finances of Government:
(i)      The macro-economic and fiscal policies of the Government are not being formulated and conducted for the sustained long term prosperity of the people of Anguilla.
(ii)      Anguilla’s public funds are not being managed according to established principles of value for money, affordability and regularity and in the interests of long term financial stability.
(iii)     The Government has no framework document setting limits on the levels of public debt relative to public revenue.
(iv)     The Minister of Finance does not report regularly to the House on the financial performance of Government or the state of the public finances and the state of the economy of Anguilla.
(v)     The Governor does not presently have sufficient power to ensure that Government does not breach the existing fiscal framework and the Governor needs power to enact law to ensure compliance with the new Fiscal Framework.
(vi)     The Governor needs a chief financial officer, who will be under the Governor’s control, to carry out any functions which may be prescribed by the Governor (which will, presumably, mean enforcing compliance by Ministers and public servants with the government’s legal and financial obligations).
(vii)    Ministers of Government are imposing, waiving and varying taxes, rates and levies without the authority of a law, and this needs to be stopped.
(viii)   Where Ministers waive and vary taxes, rates and levies, they do not report or account to the House of Assembly.
(ix)     There has not been any actuarial assessment of Anguilla’s contingent liabilities.
(x)     The public monies of Anguilla are not being paid as required by existing law into the Consolidated Fund but are being paid into unauthorized accounts.
(xi)     The public funds of Anguilla are not presently being invested or used according to law, but are being kept or handled in unauthorized ways.
(xii)    Monies are presently being withdrawn from the Consolidate Fund contrary to law.
(xiii)   The Minister of Finance is not placing the Estimates promptly before the House as he is expected by law to do, nor is he setting targets for government’s revenue and expenditure, nor are the Estimates being published promptly, as is presently required by law.
(xiv)   Excessive expenditures by government departments, over and above that authorised by the annual Budget, are not being legalised by an appropriate Supplementary Appropriation Act as required by law, and government’s spending of public money needs to be better regulated.
(xv)    The Anguilla Government is not complying with its existing undertakings to the British Government to regulate borrowings by the Government.
(xvi)   DfID may, as a consequence of mishandling of public funds by the Government of Anguilla, be required to lend money to the Government of Anguilla, and there is a need to ensure that such borrowing is repaid promptly.
(xvii)  Ministers and public servants are acting against the interests of the public of Anguilla, and they need to be further regulated.
(xix)   The statutory boards of Anguilla (such as the Social Security Board, and the Anguilla Health Authority), which are appointed by Ministers, are not reporting accurately on their financial performance, and they need further regulation, including giving the Governor the power to dissolve and reconstitute such Boards.