The government is frantically preparing the national financial and economic blueprint for 2011. It has been all quiet so far, so should the people expect a quiet or a "killer" 2011 budget? Bernard Otabil looks at the issues. Budgeting is a serious business. And the President sees it that way too. "Stay home and think about- the budget" seems to be the summarised message when he directed the top echelon of his appointees to stay "home" until the 2011 budget is fully ready, or at least when their input has been received. This show of seriousness attached to the national budget should not go unnoticed. So, Mr President Kudos! But shouldn't we all be thinking about the budget? I am, seriously, as it really does affect me. Those of us not parading on the corridors of power also do have contributions to make, I suppose! Already, some civil society groups have made their submissions known to the media. They are engaging on the budget. Trade and other business associations have also made some few statements. As a country that has scored high marks in the transparent way in which it conducts business - extractive industry and public finances - I am pretty sure that the budget planners are doing a good job to give us a befitting "transparent" budget. Indeed, there are several balancing acts to be done. For instance, a reduction in taxes would have the same stimulative effect as an increase in spending, yet it would avoid the long-term adverse effect of increasing the role of government in the economy, so which one should the government be pursuing? It is a dilemma, a serious one. How do you align the interest of specific groups to the overall national interest? What kind, of macro and micro economic approach would not only be persuasive to the people but also help in greater economic transformation, and so which support would the budget provide for the economic managers? Should the focus be on inflation?" In his book, Money Mischief, economist Milton Friedman compares inflation to alcoholism and makes some startling revelations that make it extremely dangerous to be intoxicated by it, meaning that government's economic planning policy initiatives should take more of a funnel-vision approach than a tunnel vision. Indeed, it is difficult putting together the budget but it has to be done; after all, most important decisions in life are made based on partial information, and yet we are accountable for our actions. Following through some of the budget submissions so far, one of the issues that have come up from all the groups that have so far engaged on the 2011 budget discussions is the need for the government to focus on growth. Others are calling for more spending, and the government says "Agriculture would be key". Well, it all means that you can pursue academic development paths through different options depending on which interest, to you as a government and the nation, is a priority. I must admit at this point that the government has so far done well with its management of the economy, especially by the way inflation has been controlled (should ensure no intoxication). The unprecedented level by which inflation has been held in the last 11 months really shows how the stern approach to the management of the public purse has paid off. Therefore, calling for increased spending to spur economic growth as some groups seem to suggest, should always be balanced with an effective programme to control budget deficit. Increased spending always has an impact on budget deficit and so pursuing an "aggressive" spending approach to spur growth is not a good idea at all times. All issues considered I would like to see the 2011 budget making significant strides to reduce the scope of government, which should be our most important single objective and not higher level of government spending. Private sector role must be expanded. The budget must set the scene for the managers of the economy to pursue market discipline with political considerations not allowed to overrule the importance of prudent economic management. THE CRISIS OF OUR TIME We need to be reminded and guided by the crisis of our time, the problems of the near collapse of the global financial architecture three years ago as a result of the excessive spending both by governments and individuals. It can also affect the nation if we are not careful and truthful to ourselves. Iceland and Greece are classic examples of how governments also contributed to the unprecedented levels of individual borrowing that caused the global financial crisis which, I believe strongly, we are not fully out yet. We have had a few false starts, and very quick reminders of the cracks and leaks that need to be filled before we can return to the pre-2007 financial market stability level. Locally, we do have our own little "crisis'" to handle. In early 2009, we were told that the state of the government affairs could be described in just one word: broke. Since then, we haven't had any updates, officially. We have had, I believe, a few indicators that the "broke" man is running tall again, albeit with some difficulties. But what the exact situation is lost on most of us. There is indeed some level of financial sanity that needs to be nurtured before we can really say that we are very much back on track. There is no doubt that there were some previous excess spending by the government, especially from the period 2006 to 2008, contributing to the bigger than anticipated national deficit figures. These debts are no longer the debt of any government; it is now a national debt that must be paid by all of us. By doing so many things that the government has no business doing, it cannot do those things which it alone can do well. Therefore, the 2011 budget focus must build on the foundations that have been laid to reduce the previous arrears, ensuring that the austerity approach in managing the economy is not ditched for a politically favourable budget that would all but serve as a fillip for electioneering campaign in 2012. It will not help anyone. We must be guided and informed by history. FINANCIAL COMMUNICATION How much does the ordinary person know about the national budget? How much input is coming from all of us? Okay, granted that the government has the mandate to think, borrow and commit on behalf of all the citizens of this country, how much effort has been put in place to ensure that all of us, regardless of our political affiliations support the government to move in the right direction? The answer to all three questions is a simple "not an awful lot". We are in the dark most times. We have to engage in a guessing game. Indeed, government must deepen the understanding of the role of budget in determining the course of events in the country by developing, not an ad hoc budget education policy, but a comprehensive all-year round programme. It will not be wrong to have as part of the national education curriculum a compulsory "kids and budget" course in the last quarter of every year when the government is about to develop the national budget. It is indeed foolhardy for anyone to assume that when a Member of Parliament speaks in Parliament he is really reflecting the will of the people. It is most of the time the expression of his private logic as in most cases; most of them tend to be detached from the reality on the ground. That, it is an expression of the wishes of his constituents should be dismissed; even at the district level, it has never been successful for district level organisations and communities to have input into what the district assembly is doing. Therefore one of the biggest affronts to our development and the rapidly developing severe political strain in the country is the lack of financial and economic communication that fully articulates government plans and vision, which would garner support. Budget education, I believe, is seriously limited and something that the government must do well to address. The dilemma facing the government in terms of the 2011 budget is not only limited to the inputs for the budget but also the support for the implementation of the budget. Well, let's wait and see what Parliament will say about the budget first! Written by Bernard Otabil E-mail: botabil@gamail.com Source: Graphic Business