Liberia: 2023 Budget May Not Pass before January

Senate Pro-tempore Albert Chie has ruled out swift passage of the draft 2023 budget, saying issues of macroeconomic stability and controlled public sector spending would delay passage.

Chie's warning means that legislative works on the budget, which President George Weah is expected to submit in the next couple of weeks, would be finished by January of next year.

“This Sitting will be devoted mainly to the discussion of the National Budget for 2023 and economic issues which impact the budget,” the Grand Kru County Senator said during the final sitting of the 5^th session of the 54^th legislature on October 18. [And] due to the huge amount of work that has to be done on the draft 2023 national budget when proposed and the procedures involved after its presentation, we don’t envisage its passage before adjourning for the third and final constituency break on December 8, 2022.”

“Since the 2022 Budget is the highest since the birth of our Republic, we will be keen on its performance (especially for the first three quarters).  This will determine whether an increment or decrease in the total budget figure for 2023 will be justifiable.”

The Senate Pro-Tem then defended the proposed delay, saying the issue of macroeconomic stability and an enabling environment for public sector spending is crucial at this time. He reinforced it by citing reports of widespread misuse of duty-free gasoline and diesel (fuel) for government agencies and institutions, causing millions of dollars to be wasted.

“The actual beneficiaries are not the government functionaries. There is a need to totally scrap this privilege for all three branches of Government. The government will save millions of dollars on the budget. The Senate Judiciary Committee needs to look into this matter and, if appropriate, prepare the relevant legislation or amendments to that effect.”

Chie's position comes as the Liberian economy is expected to end the Fiscal Year 2022 with a softening growth of  3.5 percent, according to the African Development Bank. 

However, 2023 growth is projected at 4.3% and is expected to be primarily driven by expansion in mining, services, manufacturing, and agriculture. Inflation, according to the Bank, is projected to surge to 9.8% in 2022 and 8.1% in 2023, driven by food and energy inflation, while the fiscal deficit is forecast to widen to 5.5% in 2022 and to 3.5% in 2023, due to lower grants and higher subsidies. 

The current account deficit is forecast to widen to 20.8% of GDP in 2022 and 17.5% in 2023 due to a higher import bill, as fuel and food constitute about 50% of total imports, the Bank said.  

Downside risks include a prolonged Russia– Ukraine conflict; deterioration of the terms of trade on the main exports, especially gold and rubber; and non-adherence to prudent macroeconomic policies,” the Bank said on Liberia's outlook and risk. 

Meanwhile, Chie has reminded the Liberia Revenue Authority of the need to pay key attention to the extractive industries, which hold significant potential for revenue generation. 

“This includes mining, logging, commercial farming in palm, rubber, coffee, and fishery. Transparency and accountability in the extractive industry is key to raising revenue for the Government while at the same time stimulating economic activities in the host communities and helping to lift the local communities out of poverty,” he said. 

“The small and medium scale mining sectors (ie, Class C and B licenses) have excellent potential as a source of revenue for the Government and to help improve the lives of the mining communities. But this sector is in dire need of reform.  Presently, there is no order in the sector. Foreigners have invaded the sector, aided sometimes by some of the local authorities in the mining areas.  Some private sector actors with means also participate in the sector without paying their correct dues to the Government. There is also an allegation of the participation of some Government functionaries and operatives.”

However, Chie claimed that the Ministry of Mines and Energy is struggling to control widespread illicit mining and the associated smuggling of mineral commodities.

Only an inter-agency effort involving the security architecture and other relevant agencies, such as the LRA, with appropriate financial support, will bring the needed results, he said.

“There is some order in the large-scale mining sector, as production and exports are easily monitored; but the host communities and workers often complain of unfair treatment. We mandate the Senate Committee on Lands, Mines, Energy and Environment, the Public Accounts Committee, and the Committee on Internal Affairs to look vigorously at the small to the medium-scale mining sector.”

Chie's suggestion for more regulation of the mining sector comes amid his claim that the logging sector is also in need of reform since the high-potential revenue earner has performed dismally over the last 17 years.

Logging companies, according to the Senator,  in yesteryears used to maintain feeder roads but they no longer do so — depending on the government to maintain the roads they ply.“We take this opportunity to reiterate once more, that there is a need for the Executive Branch to review the various mining, forest, and other concession agreements to bring them in line with profound changes in circumstances that have since occurred,” Chie noted.

“In its 13^th Report, the Liberian Extractive Industries Transparency Initiative (LEITI) listed many mining and logging companies that are not in compliance with the terms of their various agreements or licenses. We urge LEITI and other stakeholders to ensure, through their established procedures, that these companies are brought into compliance.”