Gov’t makes u-turn on loan reporting legislation

The Minister of Finance will now be obliged to report details, reasons and securities of a loan to the Parliament after raising a loan.
In the past it was the opposite where the minister reports the details of the loan to be approved in Parliament first and then raise the loans.
This came about in the Bill for the Public Finance and Economic Management (Amendment) Act No. of 2012 which passed in Parliament on Monday with 26 votes.

The Finance minister told Parliament the amendments target three pending projects in the pipeline-the Port Vila main wharf, the Interisland shipping project and Urban infrastructure.

When questioned when and which projects the government will be signing loans off to soon he informed it would be the last two projects (as above) this Friday, August 31.

But former minister of Finance MP Sela Molisa questioned the action to commit the country to three projects and its implementation when the Parliament life ends on September 2 and the politicians are geared into full time campaign mode.

“I understand the Port Vila main wharf project has been undersigned with Japanese authorities so perhaps it does not apply that much to this loan, the other two are long time projects so I fail to see why the government needs to take the loan (s) now,” said the Santo MP.

“In the beginning the first Public Finance Act was repealed in 1998 because the process then was the government acquires the loan then approves it in Parliament.

“It was repealed because the government is responsible to the parliament; it is only proper the people of Vanuatu through the reporting of a loan in parliament know and understand our actions.

“Article 2 stated no taxation shall be taxed or altered except by a loan passed in Parliament. The government has the majority now but straight after election this amendment must be repealed.”

PM Kilman pointed out Parliament life may end but not the government.

“It is just a change of mode; the new government will succeed the caretaker government,” he said.

“Nevertheless it will be interesting to see if the next government after election will amend this, as it stands there are many criterias to be met before a loan can be acquired”.
Minister Carcasses agreed the three are long time projects and public knowledge; however the amendment was done with wide consultation.

He further assured that the signing a loan does not mean the money can be used as he is required to present the appropriation in Parliament.

Deputy Leader of Opposition Edward Natapei was the first to voice the Opposition’s difficulty in accepting the changes presented immediately after Minister of Finance and Economic Management Moana Carcasses tabled the Bill.

“Up to the present the Parliament approves a loan before the government endorses it,” he said.

“These changes create room for abuse and will open up many misinterpretations and misuse of funds as now the government will raise the loan and then bring it to the Parliament.

“And how can the next government explain the loans made by this government? Can the government explain how it will use the loans in its caretaker capacity prior elections when the life of this parliament is at its end?”

Minister Carcasses replied that section 54(2) sets out provisions and fiscal responsibility in the public interest, with due processes which must be followed including consultations with the Director General, advice from the Attorney General and Council approval.

In a supplementary answer Prime Minister Sato Kilman said while now the process is the government to get Parliament approval prior to acquiring a loan in practicality the parliament is to legislate and the government has a duty to run the country.