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Pacific Islands Development Program, East-West Center

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

Proposed Vanuatu Government Budget Almost $219 Million
Since 2010, state budgets have ended in deficits: finance minister

By Jonas Cullwick

PORT VILA, Vanuatu (Vanuatu Daily Post, Feb. 25, 2013) – For the first time since Independence nearly 33 years ago, the Vanuatu Government’s operating budget this year will reach Vt20 billion, or approximately US$219 million.

The budget deficit has existed over three consecutive years, according to information from reliable sources in government.

The increase will mean the Government’s budget is set to go up by 25% over the 2012 budget of Vt16 billion [US$175.4 million] approved by Parliament.

The 52-member Parliament has been called by the Speaker, George Andrew Wells, to meet in its First Ordinary Session for 2013 from March 08 through 22, to discuss the Appropriates Bill (2013) No. of 2013 which is Government’s budget estimates for the year.

Meanwhile, the Minister of Finance and Economic Management, Charlot Salwai, has expressed serious concerns about the general expenditure levels of the Government, which meant that since 2010 to last year, government’s budgets have all ended in deficits.

He voiced his concern while opening a workshop for senior ministerial and departmental officials and those of other government agencies last week and called to find ways and means to improve government revenue.

Minister Salwai highlighted his concerns to the meeting stressing that the government’s obvious inability to exercise expenditure control has meant that government was now breaking its own law on prudent financial management, which is the Public Finance and Economic Management Act No. 6 of 1998.

The Act requires, under Part 4 titled Fiscal Responsibility and its subsequent Financial Regulation, that government must not operate budget deficits for three consecutive years.

In his address, the Minister of Finance strongly appealed to both civil servants and political leaders in government to exercise prudent fiscal responsibility when it comes to spending of public money.

Each group blames the other for the state of government’s budget.

Politicians say civil servants are sometimes slow in carrying out ministerial instructions.

While civil servants, government’s technicians are often times concerned about ministerial decisions that result in unwarranted spending that places additional pressures on government finance and its service delivery commitments.

There have been numerous incidents of the latter in recent years. But the public wants both parties to work together and to exercise responsible decisions and be good managers of taxpayers’ money.

"At the start of the year, government sets the budget approved by parliament. But decisions that place additional burdens on the budget have caused the figures to end up in deficit at the end of the year.

"That’s what’s been happening, and it would be good for the leaders of government to exercise sound and responsible financial decisions all the time," a reliable source stressed.

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