by Linda Straker
- Government must operate within a framework where it is generating savings
- Bain was appointed to chair FROC in September 2022
- 2022 FROC report is scheduled to be tabled in Upper House on 5 May
Laurel Bain, chairperson of the Fiscal Responsibility Oversight Committee (FROC), said that the recommendation from the Committee that Government should amend the Fiscal Responsibility Act to eliminate the fiscal rules of real growth of 2% in primary expenditure and the wage bill of 9% of GDP, will not result in the Government having reduced or zero savings.
Admitting that the Government needs to stick to the rules of the legislation because among the positive outcomes will be savings, she said that there are other avenues for Government to generate savings.
“Sticking to the rules does allow for the government to generate savings; however, the ultimate indicator of whether a government generates savings or not is not whether its primary expenditure increase or its wage bill increase but whether it is able to generate more and spend less, in other words, generate a positive fiscal balance,” she said during a news conference to launch the FROC annual report for the year 2022.
“So, while the FROC is saying eliminate these rules, and this is because of further research we have done of this rule, are not giving a blanket elimination. We are saying that the government must operate within a framework where it is generating savings.”
Bain pointed to indicators of savings. “What are the indicators of savings? It is your balance, your total revenue less your total expenditure, and that is supposed to be positive for you to generate savings. When we look at the expenditure rules and the wage rule, we look at it in terms of what has been the impact.”
Bain was appointed to chair the FROC in September 2022.
“Now the expenditure rule is what is linked with inflation; that means that Government could spend depending on the trend in inflation…When we look at countries and inflation, the inflation rate as an indicator is not workable,” she said.
The FRA was enacted “to establish a transparent and accountable rule-based fiscal responsibility framework in Grenada, to guide and anchor fiscal policy during the budget process to ensure that government finances are sustainable over the short, medium, and long term, consistent with a sustainable level of debt, and for related matters.”
The Fiscal Responsibility Oversight Committee (FROC) was established under the Act with a mandate to monitor and report to the House of Representatives on the compliance of the Government with the legislation which engenders discipline in the way in which Government spends its money. The current 5 members are Chairperson Laurel Bain, Leon Bullen, Kim George, Kippling Charles, and Annette Henry.
The members have presented the annual report to the Houses of Parliament in April since it was established. The 2022 report was recently tabled in the House of Representatives and is scheduled to be tabled in the Upper House on 5 May.
