Stick to funding key areas: Economist

 THE Government has been advised to stick with its more traditional conservative assumptions in budget forecasting.

Institute of National Affairs executive director Paul Barker said commodity prices could somewhat  recover but the Government must stick to funding key areas in education, health and law and order to avoid taking remedial actions at the last minute.

“Times continue to be tough and budgets tight,” Barker said. 

“The Government made the mistake in December 2014 of not revising the 2015 Budget to reflect changing circumstances.”

He said the Government did that on the basis of what it perceived as short-term fluctuations. 

He agrees that the Government’s aim was to manage the economy on a longer term perspective, hence a function of mechanisms such as the Sovereign Wealth Fund.

But in the absence of such mechanisms, borrowed money should be carefully focused on real development priorities.

“Clearly the core functions of Government should be investment in human capital (health, education, and water supply/sanitation), law and order, maintenance and upgrades of basic infrastructure, notably for access,” Barker said. 

“At the end of 2014, it was clear that oil (and gas) prices would likely be down for some time, considering the global energy supply surplus, and reticence of major producers to make shorter term cuts,” .

He said it was clear that it could take some time to adjust supplies, in response to lower market prices.

“Early adjustment in 2015 would have enabled better reallocation of expenditure according to priority, and avoided the relatively heavy expenditure cuts made in late 2015, much of which fell on priority recurrent expenditure, including church health services.”