Population Decline and DFID’s Restricted Funding Affecting Montserrat’s Economic Growth Potential, Says Auditor’s Report

A new report on the Government of Montserrat’s strategic plans and budget has highlighted that the island’s falling population, and the Department for International Development’s (DFID) restricted funding is stifling growth.
The Office of the Auditor General presented the report Government of Montserrat’s Strategic Planning and Budgetary Processes to the Legislative Assembly in its last sitting on July 28th, 2020.

Read the full report here….PERFORMANCE AUDIT – GOM’S STRATEGIC PLANNING & BUDGETARY PROCESSES Final…

According to a release from the OAG, each year, Ministries and Departments provide their proposals and requests for spending, and these are evaluated and ranked against the Cabinet’s Policy Agenda and other criteria. Funds are then allocated across Departments, programmes and projects according to their urgency and priority, subject to the total available budget for the year. The Ministry of Finance & Economic Management co-ordinates these processes across the public service.
The report’s key findings were:
(1) Good governance overall. There is adequate oversight of strategic planning, budgeting, and projects. Actual spending is kept strictly in line with actual revenues.
(2) Restricted funding. The DFID’s emphasis on containing costs and headcounts creates rising pressures in all Departments. Very low to no growth in nominal terms means either stagnation or a decline in real spending and in real economic output.
(3) Population is declining. The 2018 census showed a decline in Montserrat’s population since year 2011. GOM’s SDP Goal #5 requires a doubling of the population from current levels. Falling population leads to (a) shortfalls in local tax revenues from budgeted levels, (b) very low growth or declines in real spending, and (c) little or no growth in real economic output.
(4) Progress made in local economic models, forecasting, and statistical bases. The MOFEM has developed reliable home-grown econometric models and forecasts for Montserrat’s economy, earning high scores against the international PEFA benchmarks. Since 2018, the Montserrat Statistics Department has launched a website, done a national census and labour-survey (in 2018), and published extensive data (in 2019 and in 2020).
(5) Little/no insurance of public assets. Across the public sector, with very few exceptions, risks and assets are not independently insured. The GOM has a stated policy of self-insurance, but there are no funds or reserves to support this and this ultimately pose a potential unlimited liability.
In response to Audit Report (on page 26) the Honourable Financial Secretary Colin Owen commented: “It is good to see that overall Governance is deemed to be good, which includes strategic planning, budgeting process, project management, and the procurement of capital assets, with spending in line with revenues. A number of concerns raised by the Auditors have been raised by the Financial Secretary on many occasions to the DFID and it is pleasing to see the Auditors reflecting those points.”

Key Recommendations include:
(1) Increase the funding for infrastructure to meet residents’ needs and rising health & safety standards.
(2) Increase immigration & repatriation.
(3) Plan better for inflation, contingencies, & currency fluctuations.
The full audit report highlights several other findings and recommendations. Their implementation will bring significant improvements, said the OAG release.

Read the full report here….PERFORMANCE AUDIT – GOM’S STRATEGIC PLANNING & BUDGETARY PROCESSES Final…

The report in its entirety can also be found at the Montserrat Public Library or by requesting an electronic copy from the Office of the Auditor General by E-mail: audit@gov.ms; Telephone: (664) 491 – 3460 or 491 – 4569.

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