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ANNEX 17
BUDGETARY AID PROCEDURE : SECRETARY OF STATE'S DESPATCH OF 22 AUGUST 1977 (see paras 15.3.3, 15.8 and 16.12)
DFB Le Breton Esq
HM Commissioner
ANGUILLA
HW 093/5
22 August 1977
Sir,
1.
The arrangements under which budgetary aid is provided to West Indian Dependent Territories have recently been reviewed and in order to facilitate and encourage the more effective pursuit of our common objective of budgetary self-reliance, a series of changes has been introduced. The features of the new system are as follows:
2.
(a) A rolling three year planning horizon; this will enable budget decisions to be related more effectively to the evolving economic context within which they are made, and will allow better co-ordination of budgetary aid with development aid and technical co-operation;
(b)
Examination of budget projections by the Development Division will concentrate so far as possible on aggregates rather than on detail; this will extend the discretionary powers of territorial governments in financial matters;
(c) Territorial governments will be allowed, within a specified limit, to retain a proportion of surplus revenues and will accordingly share the benefits of good economic management and performance.
I have the honour to enclose at Annex A details of the revised rules, together with the budgetary aid framework for the triennium 1977-79 agreed with your Government after the first of the annual budgetary aid reviews carried out by the British Development Division in the Caribbean and as subsequently amended for 1977 in FCO telegram number 137 of 8 December 1976.
3.
The essential feature of the new system is that the British Government agree in advance and over a three-year period, rolled forward annually, maximum annual levels of budgetary aid. Recipient territories will be responsible for ensuring that their annual recurrent budget deficits do not exceed the limits. Any excess deficit in any year save in the exceptional circumstances as described in paragraph (ii)(d) of the rules will therefore become a first charge on local revenue in subsequent years and will not be eligible for funding through budgetary aid. At the same time territories will be permitted to retain a proportion of any surplus in accordance with the procedures set out in paragraph 4(ii)(c) of the enclosed rules.
4. In determining appropriate levels of budgetary support the British Government will take into account both their responsibility to ensure that the dependent territories enjoy an appropriate level of Government services and their wish to keep such expenditure to a minimum. At the same time territories will be required to maximise revenue at levels which fully reflect local taxable capacity and economically realistic fees and charges for services provided by the Government.
October 1978
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