Kwasi Thompson: IMF holds ‘serious concern’ on fiscal reforms


Tribune Business Editor

The Opposition’s finance spokesman yesterday asserted that the International Monetary Fund (IMF) had voiced “serious concerns” over legal reforms that seemingly reduce the Fiscal Responsibility Council’s (FRC) independence.

Kwasi Thompson, former minister of state for finance in the Minnis administration, conceded to Tribune Business he had not been directly informed of the Fund’s position but rather the Opposition was “advised” it had misgivings over legislation to replace the existing Public Financial Management Act 2021 and Fiscal Responsibility Act 2018 via one consolidated Bill.

The Government, while not addressing the IMF or any purported misgivings it may have, reiterated its long-stated position that both those Acts as well as the Public Procurement Act had proven “unworkable” in practice because they were not tailored to the -on-ground realities of The Bahamas. The Prime Minister again accused his predecessors of implementing the legislation without any of the systems or human resources expertise to give it proper effect.

“The Bills before us are the product of deep consultation with public sector financial management and procurement experts who have communicated great concern about the lack of practicality in the existing legislation,” Philip Davis KC said in the House of Assembly. 

“We must let common sense reign as far as effective policymaking and legislating is concerned. Rules that cannot be practically implemented are not good rules. A policy that is introduced without preparatory work being done is doomed to fail. A law that does not account for local context cannot effectively address the legislative needs of the Government.”

Mr Thompson, addressing parliament on the Public Finance Management Bill 2023 soon after the Prime Minister, alleged that the IMF harboured concerns over reforms that will see the minister of finance appoint the Council’s five members instead of them being recommended by the House of Assembly speaker as happens currently.

The east Grand Bahama MP, who had previously questioned this change given that it will mean the Council’s members have to judge the performance of the very same person who appointed them, told the House of Assembly: “The IMF itself said they have serious concerns with what is being done to the Fiscal Responsibility Council.”

The Council is a key fiscal watchdog, charged with reviewing the annual Fiscal Strategy Report; annual Budget; mid-year Budget review; pre-election economic and fiscal update; the Government’s annual accounts and any deviation from the established fiscal targets, and Mr Thompson repeated the IMF-related charges in a subsequent interview with Tribune Business.

“My understanding is that at least one of the agencies, the IMF, had serious concerns with respect to the provisions as it relates to the Fiscal Responsibility Council, and so those concerns should really be dealt with by the Government,” he asserted. “We have not seen that the Government has in any way adjusted to accommodate any of those concerns.”

Conceding that he has had no direct contact with the IMF on the matter, Mr Thompson said: “I haven’t spoken to them, but we were advised the IMF did have concerns with respect to the Fiscal Responsibility Council. What also concerns us is that it does not appear the Government has heard from the Fiscal Responsibility Council which will be subject to the reforms.

“I think the Government should pause and listen to these stakeholders because the direction we are headed in is the wrong direction in relation to accountability and transparency. It is a complete turnaround from the legislation that was previously put in place as it relates to the Public Financial Management legislation.”

Mr Thompson argued that the Government, through repealing and replacing the existing Act, was watering down controls and safeguards such that it was lowering “the standard” for fiscal responsibility, transparency and good governance of taxpayer monies rather than seeking to improve and meet the existing benchmark.

“We shouldn’t reduce the standard that has been set,” he told Tribune Business, “and this Bill reduces the standard that has been set. We must cause ourselves to rise to that standard, and do what is necessary to cause ourselves to rise to that standard.”

The Public Finance Management Bill was tabled in the House of Assembly with the mid-year Budget debate just over two weeks ago, meaning that the Opposition and external stakeholders both in The Bahamas and outside have had very little opportunity to review the legislation, compare it to the existing versions to see what changes have been made, and properly benchmark it against other jurisdictions.

The House of Assembly debate often veered into a political battle rather than deal with the substance of reforms to critical legislation that is vital to countering corruption, waste, patronage and the misuse of taxpayer funds, as well as fostering greater trust, trust and accountability in government. The Public Procurement Act is also key to fostering economic growth via the development of small and micro businesses via the award of public contracts in a competitive process.

Mr Davis and his Cabinet ministers yesterday argued that the Minnis administration had sought to give the impression it was committed to fiscal transparency and accountability, but in reality was only paying lip service to such concepts as shown by the fact it waited more than five months to bring the Public Procurement Act into effect on September 1, 2021 - just over two weeks before that year’s general election.

Noting that the Act was passed and received the governor-general’s assent on March 26 that year, Mr Davis suggested that the dates and timing showed the former administration was simply seeking to portray itself as wedded to good governance so as to win general election votes. He argued that it had done nothing to ensure the legislation was properly implemented and that there were sufficient systems and resources in place to do so.

Referring to both the Public Financial Management and Public Procurement Acts, the Prime Minister said: “Now, while I am sure the many technical experts who developed the framework for these Acts put in a lot of hard work, there was a clear failure on the former administration’s part to ensure that these two pieces of legislation were practical and consistent with sound public policy.

“While the stated purpose of the legislation was to demonstrate that the former administration was reform-minded in its approach to managing the country’s finances, the legislation itself was unworkable from the start. After all of their talk and empty rhetoric about raising standards, the truth is that their legislation failed to meet the reality test.

“An administration that waits to pass transparency and financial management laws until the very last days of its term in office is not a group that values transparency or financial management. That is how we ended up with laws that were passed with none of the pre-requisite work done for successful implementation,” Mr Davis added.

“There was no new investment in technology and no comprehensive training programme for public officers to facilitate buy-in and ensure that the public service was prepared. None of the things needed to implement this very complex  compendium of legislation were put in place.”

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