Auditor General Sonia M. Webster has recommended that the Deputy Governor’s Office and the Ministry of Finance should provide explanations as to why Cabinet and the House of Assembly were not informed of the potentially greater cost for implementation of the salary increases in 2024. Photo: VINO

According to the Auditor General, in her Conclusions, the Deputy Governor’s Office and the Ministry of Finance should provide explanations as to why Cabinet and the House of Assembly were not informed of the potentially greater cost for implementation of the salary increases. Photo: VINO/File

This was revealed in the 2024 Audit Report by the Auditor General, who sought to ascertain the reasons for the discrepancy between the PricewaterhouseCoopers (PwC) estimate and the actual cost of implementing the recommended salary regime.

According to the Report, PwC estimated that implementation of this option would require a $9.4 million increase over the 2023 salaries. The PwC report was accepted by the Deputy Governor’s Office, and steps commenced to secure implementation of the new salary regime.

Over $20M shortfall

Funding for the implementation of PwC’s recommended option was approved by Cabinet on November 20, 2023. Cabinet agreed that the estimated amount of $9,445,701 was to be included in the 2024 budget for the new salary structure to be effective from January 1, 2024.

In keeping with this decision, the $9.4 million was added to the 2024 budget together with a markup for social contributions (Social Security, National Health Insurance) for a total of $11.7 million. According to the Audit Report, this was approved by the House of Assembly on December 19, 2023.

Applying PwC’s projected $9.4 million into the 2024 budget, however, resulted in a shortfall of over $20 million.

Explanations needed- Auditor General

According to the Auditor General, while the PwC computations were based on the information provided and included a request for verification by the Ministry of Finance, the absence of a reliable, independent estimate to support the figures contributed to discrepancies between projections and actual expenditures.

The Report noted that on October 26, 2023, the Budget Unit forwarded to the Deputy Governor’s Office a schedule that showed that implementation of the new regime would require an additional $25.5 million for salaries. This, together with the related statutory obligations (payroll taxes, SS and NHI) of $2.2 million, brought the overall total to $27.7 million.

“There were indications that the cost of the implementation would be substantially higher than the Consultants’ estimates, but this information was not presented when the decision was brought before Cabinet."

“Despite this, increased emoluments were provided for within the initial 2024 authorised budget without full explicit disclosure of the actual cost. This ensured that the increases were covered financially, but subsequently led to concerns about fiscal transparency and public accountability in the House and the broader public.”

According to the Auditor General, in her conclusions, the Deputy Governor’s Office and the Ministry of Finance should provide explanations as to why Cabinet and the House of Assembly were not informed of the potentially greater cost for implementation of the salary increases.

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