Monrovia – The Unity Party-led government, under President Joseph Nyuma Boakai, came to power with promises to improve the struggling Liberian economy and the lives of all citizens. President Boakai often stated that Liberia is too rich for its citizens to live in poverty, pledging to use his expertise to assemble a team dedicated to serving the people.
By Gerald C. Koinyeneh – [email protected]
However, six months into his administration, many Liberians feel that conditions are harder now than they were six months ago, with some expressing that they were better off under the previous Weah-led government.
“Last year July 26 and this year cannot be compared, because some of us who had people working in government used to see the light before the day, ” said Abigail Miller, a small business owner and staunch Boakai supporter. “Bags of rice and oil used to be given to our people to share with us, but this year we are yet to see that. Maybe things will be good before the day, but up till now, we have seen no light. And it is frustrating from what we are seeing.”
Budget Outperforming but Low Disbursement: Where is the Money?
Despite these hardships, Liberia’s revenue generation is reportedly on track. Dorbor Jallah, Commissioner General of the Liberia Revenue Authority (LRA), reported to the House of Representatives in June that out of the total approved budget of US$738,860,000, US$316,449,000 (43%) has been collected, surpassing the mid-year target of US$308,612,000. The remaining amount to be collected is US$434,368,000, all generated from domestic sources.
The Senate Public Accounts and Audits Committee, led by former Finance Minister Amara Konneh, noted that tax revenue outperformed projections by 11% in the first quarter, with US$163.4 million collected against a projection of US$151.4 million. However, the committee highlighted concerns over a decline in GST and taxes on residents, as both fell short of projections by about US$4 million each.
The committee also noted that non-tax revenue was down by 8% against projections, attributed to slow starts at revenue-generating entities like the Liberia Immigration Service and the Ministry of Foreign Affairs due to passport issuance issues. It called for special attention to State Owned Enterprises (SOEs) and their fiscal impact, noting that none contributed to government revenue in the first quarter despite a projection of US$2.1 million.
Commissioner General Jallah had identified the Liberia Petroleum Regulatory Authority, the National Port Authority, and the National Fisheries and Aquaculture Authority as agencies failing to remit their budgeted revenue. He expressed concern that tax incentives on goods and services are reducing revenue and urged the Legislature to reconsider these incentives.
Expenditures
On the expenditure side, the Ministry of Finance and Development Planning (MFDP) allotted US$144.97 million but disbursed only US$77.1 million (53%) in the first quarter. This disbursement is only 10% of the full-year appropriation. The committee warned that low spending could have a contractionary impact on the economy and hinder the government’s ability to deliver critical services, especially during the festive July 26 season when economic activities are expected to be high.
Citizens expressed similar concerns. Satta Morris, a resident of Careysburg Township, said, “Last year July 26 was alright more than this year because things are hard and money business is hard. Last year, things were not hard, but now, even when you have a market, buying is hard and when they don’t buy, how do we buy clothes for our children and food for our children?”
She continued: “How will we go to the hospital, especially pregnant women, when we don’t have money, how will we eat? I want the government to bring changes in Liberia. Women should start selling so that when our husbands are working, we can help them and things will not be hard in Liberia.”
Moses Flomo, a used clothes seller in Kakata, Margibi County, echoed these sentiments, noting that business is slow and customers are scarce. He said, “The July 26 activities look very bad because business is not as it used to be.”
The committee suggested that the low spending might be due to the slow formation of the government. It also highlighted concerns about off-budget expenditures, particularly the Ministry of Public Works’ use of pre-appropriated funds for contracts worth US$8 million to rehabilitate laterite roads.
“It is important to mention the fact that disbursement on Infrastructure activities for Q1 was greater than the allotted amount,” the committee said.
Economic classification by recurrent expenditures
The Ministry of Finance allotted $78.7M for compensation of employees but disbursed 54% or $42.5M, according to the committee. It also allotted $17.2M on domestic liabilities but released only 29% or $4.9M, and budgeted $16.6M on foreign liabilities but expended 30% or $5M.
The committee noted that this suggests that many government employees may not have received salaries and servicing of both domestic and foreign debts was low. Goods and services received 37% or just $3.8M over the allotment of $10.35M for Q1, noting, this is not good for businesses.
Disbursement on Social Benefits was 49% of allotment, just $1.8M for the Q1. This means that socially disadvantaged individuals might have missed out on important services.
“GoL disbursed only 12% of $643M recurrent expenditures for the year. The low or delayed disbursement might lead to loss of economic opportunities and higher costs, weakening the job market as recurrent expenditures can protect jobs and, in some cases, create others, and could reduce aggregate.”
On the PISP, the committee reported that MFDP allotted and disbursed only US$259,000 for Q1, adding that the MFDP did not prioritize public sector investment activities even though this is a key component of the ARREST agenda of the President.
Areas for improvements
The committee called on the MFDP to execute the budget in line with the approved appropriations and to disburse funds timely to stimulate the economy and provide essential services. It emphasized the need to align the ARREST agenda with sector classifications for better impact analysis and to account for SOE debts as contingent liabilities.
The current economic challenges highlight the need for efficient budget execution and timely disbursements to mitigate the hardships faced by ordinary Liberians. The government’s ability to address these issues will be crucial in fulfilling its promises and improving the lives of its citizens.
