An independent Office
of Budgets would constantly review, prioritize, measure
and report on traditional and new sources of revenue collection initiatives,
via its Ten-Year Budget, which would guide Fiscal Policy, improve Revenue
Generation and control Recurrent Expenditure. A non-political office, to tell
the population, how every change would affect individuals’ lives.
Think of a
breadwinner, needing to earn a basic wage, taking on any odd job and may still
have to borrow to pay bills. The Public-Sector Core Revenue Receipts
comprise of; Taxes on Incomes and Profits, Property, Goods and Services,
International Trade, Other Taxes, Property Income, Other Non-Tax Revenue,
Repayment of Past Lending, and Capital Revenue, plus other Cash Inflows; from Borrowings
and Extraordinary Receipts withdrawal from Savings, which are used to balance
against losses.
The breadwinner must
make a serious effort to control the bills. Public-Sector Expenditure is
categorized as Personnel, Goods and Services, Minor Equipment Purchases,
Current Transfers and Subsidies, Current Transfers to Statutory Bodies, Debt
Servicing and Development Programmes, and must also be controlled through the
national budget. Noting that, State Enterprises, Agencies and Statutory Bodies,
fully or partially owned by the Public, may receive public funds via Transfers
and Subsidies, but are not part of the Public-Sector.
Now, if the
breadwinner gets more money than is needed, it is a gain or Surplus and should
be saved. However, if the breadwinner gets less money than is needed, it is a
loss or Deficit and a withdrawal from savings or new borrowings would be needed
to pay bills. The same is true for Public-Sector Revenue less Expenditure
resulting in a Net Surplus/(Deficit) which would increase or decrease the
cash flow.
Similarly, to a
breadwinner using envelopes to set aside and control money for specific usages.
The Nation’s Executive uses Consolidated Funds, consisting of an
Exchequer, Treasury Deposits and other Special Purpose Accounts. An Exchequer
Account, which is linked to a short-term overdraft held at the Central Bank, receives
deposits from treasury operations and transfers previously budgeted, approved
and legally allocated amounts to address Public-Sector Expenditure. Treasury
Deposits Accounts receive loan funds and payments from the public (Core Revenue)
for numerous services. Other Special Purpose Accounts receive and payout
amounts for only such legally assigned activities.
Like a breadwinner,
the Nation’s Executive is responsible for scheduled loan payments, consisting
of principal repayments and interest charges, which in many cases are automatically
paid via standing orders with lenders. This Debt Servicing comprises is
budgeted as ‘Charges on Account
of the Public Debt’ plus other charges borne directly by the Treasury.
Unlike the standard
breadwinner, the Government engages in various types of borrowings. Total
Public Debt refers to the Public-Sector Debt plus Off-Balance Sheet
Financing. Such Public-Sector Debt monitors; Local and External Loans, Crystallized
Guarantees/Letters of Comfort (Debt which the borrowing
quasi-government entities can no longer honor), Principal Repayment and New Funds.
Whereas, Off-Balance Sheet Financing captures; Treasury Bills/Notes, Loans or
Credit Guaranteed by the State, Letters of Comfort, Promissory Notes, Balances
outstanding on BOLT (Build, Operate, Lease, Transfer) Projects and Loans
Assumed by the State. Noting, as a breadwinner may borrow, under special terms
and conditions, from friends and family, so to can the Collective Nation borrow
from its public by issuing various types of Bonds.
The breadwinner
should constantly save and invest to eventually receive income greater than
expenditure without having to work. So too, the Nation’s Sovereign Wealth
should be built up over numerous years, via Savings & Investments
activities. Hence, Investments in Infrastructure from previous years and in
ongoing Productive operations, Savings in both Local and Foreign Currencies,
Cash Investments, such as; Stabilization Funds built up over preceding years from
net surpluses for use in future deficit reduction, and Heritage Funds deposits from
the sale of depleting non-renewables natural resources to offset future revenue
declines, are crucial strategies.
The wider population
must therefore, understand, track and relate the Nation’s Core Revenue, Public-Sector
Expenditure, Net Surplus/(Deficit), and general Fiscal Policies to their personal
lives:
Core Revenue
Did We (the Nation)
get paid? Taxes are withheld on transaction days, checked and collected by
Inland Revenue and deposited into the Treasury at specified times. So ask, did
Treasury Deposits meet the Budgeted Projections?
Public-Sector Expenditure
Did We pay (the
Nation) Bills? Public Personnel and other budgeted expenses must be paid periodically.
If not, no-one would have to ask, there will be strikes, shortages and work
undone. Still ask, did Exchequer Withdrawals meet the Budgeted Amounts?
Net Surplus/(Deficit)
Did We (the Nation) Gain
or Lose? Core Revenue should ideally be more than Public-Sector Expenditure for
the nation to be better off. Ask, were Treasury Deposits greater than the Exchequer
Withdrawals?
Consolidated Funds
Did We (the Nation) improve
the Cash position? Cash must be legally deposited into these accounts to pay
specific obligations, even if money must be printed (devalued). Ask, was there
enough cash to service commitments and reduce the current overdraft?
Debt Servicing
Did We (the Nation)
repay previous Borrowings? The Nation’s Credit Rating, its cost of borrowing,
is at risk, if debt obligations are missed. Please ask, are all loan payments,
correct and up to date?
Total Public Debt
Did We (the Nation)
increase or decrease the Debts held? Paying off or reducing high interest Debt,
affords the Nation special privileges to access soft and long-term loans to build
or repair its infrastructure. Ask, is year on year Debt/GDP decreasing?
Sovereign Wealth
Did We (the Nation)
deposit or withdraw from Savings & Investments? Put money to work in saving
bonds or investing in foreign or local corporate shares helps to diversify
income by generating more Capital Revenue. Ask, is year on year S&I/GDP
increasing?
Rationale
T.A.J
& Associates Company Limited
uses this occasion to comment on topics that have been covered, both academically
and by the mainstream media, to add its opinion and point out investment
opportunity, not to invoke any social action.
