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Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i

Vanuatu Government Fails To Secure Proposed Budget
Lack of support from donors means tight budget controls

By Ricky Binihi

PORT VILA, Vanuatu (Vanuatu Daily Post, Feb. 4, 2013) – The failure of the Prime Minister Sato Kilman led-coalition government to secure a Vt700 million [US$7.7 million] budget support from aid donors has now forced Vanuatu's Ministry of Finance to impose tight expenditure control measures.

The Daily Post has been told that at a Council of Ministers meeting before the 2012 budget was approved it was approved that Vanuatu would approach the People’s Republic of China for that amount of money.

But the budget support from China and other Vanuatu aid donors was not forthcoming and the government must be forced to borrow locally to support its budget.

Now the government has a serious cash flow problem and a circular has been issued by the Ministry of Finance to all the Ministries and Departments advising them of the shortfalls and its intention to impose a tight fiscal management.

Daily Post has been told the cash flow problem the government is facing is due to the many deeds of release the Ministry of Finance was forced to enter this year but was never approved in the budget.

The cash flow problem has caused the Parliament to pay only 50 percent fees of the MP allowances when Parliament met to debate the motion of no trust against Prime Minister Kilman.

And there shall be no recruitments and vehicles bought for any government departments until the dire financial situation is corrected.

Meanwhile the Daily Post is told the revenue collection of the government is very good but Politicians must learn to spend on services and goods that are budgeted for and not spend as if they own the taxpayers money.

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