Finance Minister Responds

Finance Minister Gaetan Pikioune. Photo: File

Minister of Finance and Economic Management, Gaetan Pikioune (MP) wishes to clarify the Opposition concerns over the “Air Van Loan ‘Illegal’: Opposition”, published in Daily Post issue no. 5700, Saturday April 27, 2019.

In his response to the article, Minister Pikioune thanked the Members of Parliament (MP) on the opposition Block for being very proactive on issues of national interest.

“Overall, I would like to assure the general public including the MPs that the public finance advanced to the national airline, Air Vanuatu (Operation) Ltd, were legally constituted under the Public Financed and Economic Management (PFEM) Act [CAP 244],” Minister Pikioune said.

“As the Minister responsible for Public Finance, I would like to outline, step-by-steps the legality of expending public fund through lending to the National Carrier.

“Foremost, in June 2018 the Parliament ratify a total supplementary budget of VT5.0 billion under Section 34 of CAP 244. Of the VT5.0 billion; VT3.0 billion was allocated towards ‘Government Projects’ managed within the Ministry of Finance and Economic Management (MFEM) Budget Head 3519-MFEC-OVER.

“It was the Government’s intention to allocate this funding towards infrastructure development initiatives under the heading ‘Government Projects’. The appropriation of such lump sums was not very specific of the projects, which the VT3.0 billion is to be expended on. However, the matter of fact is that there was an Appropriation, which was ratify against a specified ‘Activity’ (i.e. MFEC) for government projects, presumably for development projects.

“The practice of reallocating appropriated fund for efficient and effective use, without raising the parliamentary appropriated amount has been the practice; some very recent examples include the Tanna Games, the ICT Global Symposium, Scholarships funding etc. The fact is, the additional spending remains within the appropriated ceiling of the financial year.”

Section 32 of the PFEM Act provides for the following:

(1) The State must not incur any expense or liability unless the expenditure in relation to the expense or liability is capable of being charged to a program or activity of an agency.

(2) A Bill for an Annual Appropriation Act or a Supplementary Appropriation Act must indicate the proposed expenditure under programs and activities of agencies.

(3) Any draw down of amounts from the Public Fund made under a standing appropriation must indicate the programs and activities of the agencies for which the amounts are drawn down.

“It was my understanding that the ratification of the Supplementary Budget in 2018 for Government Projects against Activity 3519 MFEC OVER satisfy Section 32 of CAP 244,” said Minister Pikioune.

Further, Section 58 of the Act empowers the Minister to Lend Money. Finally, Section 42A of the PFEM Act (Amendment) provides for the Release of Public money in excess of VT10 million, which is the mandate of the Council of Ministers (COM).

“The COM Decisions were the subjects of the same, highlighted in your article for your readers,” the Finance Minister said.

“They are COM Decisions 13/2019 and 80/2019 dated February 7 and April 11, 2019 respectively. Both COM Decisions were very clear that funding was to be advanced from the Government Projects fund which are reimbursable whenever the window of Supplementary budget presents itself over the first Parliamentary Session in 2019.

“It must only be advances because it the COM’s understanding that such a pool of fund was already ratified and that rolling out of expenses towards Government identified projects may take a little bit longer before realisation. Further compliance with the Act noted the satisfaction of Section 58 (1): ‘The Minister, on behalf of the State may from time to time, if it appears to the Minister to be necessary in the public interest to do so, lend money to any organisation, whether within or outside of Vanuatu but only on commercial terms and conditions.’

On these fronts, that the Government has negotiated the terms and conditions of both lending agreements with the National Airline resulting in the executed lending agreements.

“As Minister responsible for Public Finance, I wish to clarify to the citizens that both lending to Air Vanuatu (Operation) Ltd were Advanced and not Guarantee as stipulated on paragraph 6 of the article. These were lending which must be repaid under the Act,” Minister Pikioune said.

“However, in the event that the sum paid to Air Vanuatu constitute guarantees then the Ministry will be subjected to Section 60 of the Act. In this regard, I would like to request for correction on the VT4.0 billion (guaranteed) stated on your newspaper, which is to many, is a cause of concerns.

“The Government realises the potentials the country has in its development pathways under the Vanuatu National Sustainable Development Plan (VNSDP) 2030, further expanded and linked to the Tourism Development and National Policy created the ‘Shared Vision 2030’ powered by Airports Vanuatu Limited (AVL), Air Vanuatu (Operation) Limited and the Vanuatu Tourism Office (VTO).”

The COM endorses the ‘Shared Vision 2030’ in December 2018; COM Dec 222/2018. Within the COM Decision, the Government has committed itself to certain undertakings, including resolution “(4) For MFEM to explore possibility of funding combination from different sources to support Air Vanuatu with VT3.0 billion for Air Vanuatu’s implementation of the Shared Vision 2030”.

“I am glad that COM has started to progress some of the resolutions of COM Dec 222/2018,” Minister Pikioune said.

“Your readers were led to believe that since no narratives on such lending in the 2019 Budget Documents could be error on our part; which is to the contrary except the procedural requirements.

“Unless your readers understand the national budget processes, Daily Post readers and the general public anyone will gladly accept the assertion given that only a handful understand the overall budget processes of the national government. At the time, the Shared Vision was brought before COM, Budget 2019 final prints were already delivered to the MPs, observing the Standing Orders of Parliament prior to debating of the Appropriation bill.”

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