Contribution (Part 118 ‘21 # 12)
Is the near silence on the pandemic in the Budget Speech and the FAM MoU sending us a message?
BRADES, Montserrat, July 8, 2021 – Our Current Budget and Financial Aid Mission Memorandum of Understanding (FAM MoU), surprisingly, say very little about the pandemic and our urgent need for economic support and stimulus. Given that, at the same time, the UK likely will have spent North of £300 billion domestically on pandemic support and stimulus, something does not add up. So, it is time to look again at our planning and negotiating process, using MoU’s and Business Cases as windows to help us see what is going on behind closed doors. Then, we can make a more effective call for obviously, urgently needed change.
There is a famous Sherlock Holmes fictional detective case that was solved because of the dog that didn’t bark. As the dialogue in the short story, Silver Blaze,[1] puts it:
Inspector Gregory (Scotland Yard detective): Is there any other point to which you would wish to draw my attention?
Holmes: To the curious incident of the dog in the night-time.
Gregory: The dog did nothing in the nighttime.
Holmes: That was the curious incident.
That observation helped to solve the case. Just so, taking due note of what politicians, officials, and other public voices don’t say, can give us big clues. This is an application of the famous investment principle, signaling behaviour.[2] (As in, actions – including strategic silence – often speaks more truly than words. However, one usually has to be well informed and insightful to be able to consistently read accurately from silence and other similar behaviours.)
Our first clue, is that the FAM MoU (despite repeated, timely requests) was only released after the budget debate. As a fair comment, this act by the Ministers responsible for the Budget robbed our elected representatives, the media, and the public alike of the chance to carefully examine the terms and conditions attached to budgetary aid.
Already, that is beyond the pale of responsible behaviour.
Let us, instead, recognise that the people have a right to know what is in the FAM MoU (also, by extension, the 2019/22 Financial Aid Business Case,[3] which is included by reference in clause 1 of the MoU), and our elected representatives, who vote on the budget, have a duty to know. A responsible person does not sign up to a solemn agreement, without careful reading. In that context, clause 37 is interesting: “In line with the FCDO’s Transparency commitments, the Partner gives consent for this Arrangement (and any subsequent amendments) and associated funding to be published on FCDO’s website.”
Secondly, in the MoU, there is hardly a reference to the pandemic. For key example, notice the obviously studious silence regarding the pandemic in clause 7:
“Should there be any revenue shortfalls in the 2021/22 budget year caused by underperformance of revenue (which are not the outcome of extraordinary external factors such as a hurricane), the government [of Montserrat] will be required to undertake spending restrictions, implement cost savings or use other methods to cover the shortfall. The FCDO will not disburse extra funding to cover non-performance of revenue.”
Isn’t the pandemic an “extraordinary external factor” that has been hitting us since March 2020? One, that is riding on 26 years of impacts of volcano crisis? Shouldn’t there, naturally, be major steps taken to support those facing hardships and to counter devastating economic and social impacts, similar to what is being undertaken in the UK? If not – on UN Charter, Article 73 (acknowledged by the UK as legally binding) – why not?
Why is the dog silent here?
Then, in clause 14, we see: “The Government must submit full and timely evidence in support of claims, including . . . a breakdown [of?] any expenditure for COVID related expenditures.”
Again, why the business as usual focus, with barely a mention of the current number one global policy issue and challenge?
Thirdly, what was presented is more or less a business as usual budget, in the face of a major disaster. To see this, let’s compare the Budget support for 2020/21 with that for 2021/22:
21/22: Recurrent £20, 175,342, Access £493,151, Technical Cooperation & Capacity £2,931,507
20/21: Recurrent £19,230,000, Access £1,560,000, TC&C £2,810,000
—————————————
Changes: Access falls £1.07 million, recurrent is up £ 945 thousand, TC&C is up £122 thousand; net, fall, about £30 thousand.
This does not look anything like a move to support a strong response to a major disaster.
Fourth, as we noted last time, while in the Budget Speech, there were remarks on the global economy, the UK economy, and even the EC dollar region, there was no summary of specific facts and figures on Montserrat’s economy, just some general references. Fifth, on finding or hearing ECCB and local figures, we recognised the ‘extraordinary event,’ that the economy swung about 14% adverse in its growth rate. Yes, from strong positive growth to sharp recession.
That would normally require far more than business as usual. The contrast with the UK Government’s (UKG’s) domestic response, therefore, speaks for itself. Something is wrong. Especially, when several classes of construction, maintenance, and similar “kick-start” projects have long been on the table. Where, too, the same message comes out in the missing balance to clause 16: “GOM should identify, quantify and implement efficiency savings that aim to reduce future Financial Aid settlements from FCDO.”
Turning to the 2019/22 Business Case, we see:
“HMG has a responsibility under the UN Charter to meet the reasonable needs of dependencies in the overseas territories, where financial self-sufficiency is not yet possible . . . UK Financial Aid to Montserrat will continue to help GoM bridge the gap between their domestic revenues and necessary expenditure . . . This enables, among other priorities, health and education services, access to the island, and supports the development of the government’s own capacity through the provision of skills and expertise through a Technical Cooperation program. This support is vital to ensure HMG is delivering on its commitment to meet the reasonable assistance needs of Montserrat and supporting its sustainable economic growth and prosperity . . . . The program will support the implementation of the Government’s Sustainable Development Plan, Economic Growth Strategy, and the strategies and priorities of GoM ministries, which have been agreed in close consultation between DFID and GoM.” [p. 2]
That acknowledged, legally binding UN Charter Article 73 obligation, includes “ensur[ing]” economic, social, educational and political advancement and “promot[ing]” constructive measures of development. In a context of a pandemic, with the UK’s own domestic interventions as a yardstick, it is fairly clear that a business as usual GoM budget is not good enough. As a side note, the Sustainable Development Plan sets out the long-term framework for development planning. However, it ran its course in 2020, so perhaps it could be extended as an interim as the development of a successor plan is undertaken.
[1] See https://sherlock-holm.es/stories/pdf/a4/1-sided/silv.pdf
[2] See https://financial-dictionary.thefreedictionary.com/signaling
[3] See UKG Development Tracker https://devtracker.fcdo.gov.uk/projects/GB-1-204728/documents
