State-Owned Enterprises (SOEs) will no longer be allowed to make discretionary disbursements of funds approved by self-serving Boards of Directors that are not in conformity with the priority of the government of Liberia’s (GOL) goals, Liberian President Ellen Johnson Sirleaf has declared.
According to the Liberian leader, the measure is part of the GOL’s moves to address some of the shortcomings in government expending.
In her Annual Message last week, the President noted that stringent guidelines relating to the decision would be released soon.
Many challenges remain in improving public financial management, a situation exacerbated by what the Liberian leader called “unduly long procurement processes.”
She called for a correction of challenges facing procurement process including SOEs. State-Owned Enterprises are public autonomous agencies owned by the government. These entities are mostly run by respective managements with their various boards of directors having direct oversight.
“We will implement stringent guidelines relating to the State-Owned Enterprises which will no longer be allowed to make discretionary disbursements, approved by self-serving Boards that are not in conformity with our priorities and goals,” the President stated.
She added “We are addressing these shortcomings by strengthening the Medium-Term Expenditure Framework (MTEF) budget process; strengthening the technical capacity of the Project Management Office in the Department of Budget; and reviewing the laws, provisions and organizational arrangements in the procurement process.”
The President stressed the need for reduction in waste in recurrent expenditure, and increase public sector investments to the level of minimum annual US$150 million, as required to achieve its growth targets.
“If we are to achieve our development goals and respond to the calls of our citizens for better roads, more lights, available and affordable power, more water, more schools and more hospitals, we must reduce waste and recurrent expenditure,” the President added.
She called on members of the legislature to, in the interest of a smooth budget process in the 2014 political year, exercise caution and consultation in their (legislators’) view and action on the budget submitted by the Executive.
“We too want more development in the rural areas, but this can only be achieved through a realistic budgetary process and a collaborative effort that recognizes respective constitutional mandates,” she said in an apparent reaction to a recent bill submitted by House Speaker Jenekai Alex Tyler seeking US$73 million as development funds for members of the legislature.
The Speaker’s bill has received backlash from the public and key actors from the academia.
Meanwhile, President Sirleaf has reported that the financial system has continued to expand under the guidance of the Central Bank of Liberia (CBL) – in branch networks, foreign exchange bureaus and credit unions.
The Liberian leader noted that the expansion of the financial system resulted in significant expansion in credit which, she observed, was buoyed by policy measures relating to more stringent action by the CBL and the Commercial Court, resulting in a decrease in non-performing loans (NPLs).
She insisted that credit expansion will be positively impacted once the delay in implementation of the decision to reduce the reserve requirement of commercial banks is made, thus bringing the CBL in harmony with similar institutions in the region.
“Credit expansion,” the President observed “will also have greater potential and maximum impact when citizens demonstrate their responsibility by repaying their loans, a factor which continues to weaken access to credit for local companies.”