When he pre­sent­ed the 2013 na­tion­al bud­get on Oc­to­ber 1, 2012, Min­is­ter of Fi­nance Lar­ry Howai pro­ject­ed that his Gov­ern­ment would col­lect $50.73 bil­lion and spend $58.4 bil­lion dur­ing the cur­rent fis­cal year.

These arrange­ments would re­sult, ac­cord­ing to Mr Howai, in the Gov­ern­ment's bud­get­ing for a fis­cal deficit of $7.67 bil­lion, which would be equal to 4.6 per cent of the coun­try's GDP.

In ad­dress­ing Par­lia­ment on Wednes­day, dur­ing de­bate on a sup­ple­men­tary ap­pro­pri­a­tion, Mr Howai an­nounced that he was seek­ing leg­isla­tive ap­proval to in­crease the al­lo­ca­tion by $2.9 bil­lion, of which $1.8 bil­lion would go to fund salary ad­just­ments across the pub­lic ser­vice.

The fact that, once again, a Min­is­ter of Fi­nance is com­ing to Par­lia­ment to seek ap­proval to pay the in­creased salaries of pub­lic ser­vants ex­pos­es a fun­da­men­tal weak­ness in the bud­getary process.

No busi­ness op­er­ates on the ba­sis of not be­ing able to ac­cu­rate­ly es­ti­mate the cost of labour. Nei­ther should the Gov­ern­ment.

Clear­ly, this is an is­sue that war­rants some new think­ing–in­volv­ing a re­al­is­tic as­sess­ment of fu­ture in­fla­tion and con­sul­ta­tion with trade unions.

While 62 per cent of the re­quest­ed ad­di­tion­al al­lo­ca­tion is go­ing to fund high­er salaries, it seems much of the re­main­ing $1.1 bil­lion is sim­ply a re­sult of in­creased ap­petites by some min­istries.

An in­creased al­lo­ca­tion of $8 mil­lion for the Hoops of Life ini­tia­tive; $10 mil­lion more for the Con­sti­tu­tion con­sul­ta­tion; ad­di­tion­al fund­ing for food-price sup­port, the se­nior cit­i­zens' grant and the ex­pan­sion of Cepep seems like the be­gin­ning of a dis­turb­ing trend of some min­istries spend­ing their an­nu­al al­lo­ca­tions by the third fis­cal quar­ter and then stretch­ing out their hands for more.

In ad­di­tion, the re­cent firetruck fi­as­co–and the Prime Min­is­ter's ad­mis­sion that Cab­i­net was not scrupu­lous enough in de­mand­ing the ev­i­dence for the pay­ment re­quest–rais­es ques­tions about the ex­tent to which all min­is­ters have been re­quired to jus­ti­fy their claims on the Trea­sury.

Cer­tain­ly, min­istries that are re­spon­si­ble for un­ex­plained ex­pen­di­ture and/or mis­man­age­ment of funds should face con­se­quences, per­haps by be­ing forced to cut and con­trive in some ar­eas to bal­ance off their re­quests for more.

Mr Howai needs to start say­ing no to such slack­ness and un­re­spon­si­bil­i­ty, which is the way that coun­tries get them­selves in­to se­ri­ous fi­nan­cial prob­lems.

Al­so, run­ning right through the min­is­ter's state­ment was the un­der­ly­ing theme that be­cause rev­enues have been high­er in the cur­rent fis­cal year, the Gov­ern­ment can af­ford to loosen its belt a lit­tle.

While that is one ap­proach to fis­cal gov­er­nance, sure­ly the more pru­dent ap­proach would be for the ad­min­is­tra­tion to main­tain its fis­cal dis­ci­pline and se­quester the in­creased rev­enues in ad­di­tion­al sav­ings.

Di­vert­ing ad­di­tion­al rev­enue to sav­ings rather than dis­cre­tionary spend­ing is com­mon sense for a small, open econ­o­my that is so heav­i­ly de­pen­dent on volatile en­er­gy earn­ings.

Fi­nal­ly, in the 2013 bud­get pre­sen­ta­tion, the Fi­nance Min­is­ter said of the pro­posed 4.6 per cent deficit: "I pro­pose to re­duce this deficit by the equiv­a­lent of a min­i­mum of one per cent of GDP per an­num over suc­ceed­ing years."

While in­creased rev­enues may al­low the Gov­ern­ment to achieve its bud­get fore­cast in 2013, the min­is­ter should not be san­guine that the in­ter­na­tion­al en­vi­ron­ment will be as ac­com­mo­dat­ing dur­ing the 2014 fis­cal year.

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