….. “To ensure that year-end spending is in line with available resources, adjustments in spending entities' program allocation balances have been made such that the risk is absorbed by all and sundry,” Pres. Weah said.
In a significant blow to Liberia's economy, President George Weah has admitted that the country would experience a budget shortfall of US$23 million.
The president's admission comes as he requested the House of Representatives to recast the budget from its approved amount of US$782 million to US$ 759.4 million with a variance of US$23.5 million.
According to Weah, the shortfall represents 3.5 percent of the total projected domestic revenue of US$672 million, which has been deemed a risk and untenable.
“[I] herewith submit a proposed restatement of the fiscal year 2023 budget in the amount of US$ 759.4 million,” Weah said in a letter to the House. “To ensure that year-end spending is in line with available resources, adjustments in spending entities' program allocation balances have been made such that the risk is absorbed by all and sundry.
“The realization of the aggregate amount of US$23.5 million has been deemed a risk and untenable. Critical priority allocations for the ensuing elections and the national electricity grid have been ring-fenced.
The development as announced by Weah would have adverse effects on the country's economy and its ability to provide essential services.
The original budget had been meticulously crafted to address the country's pressing needs, prioritize key sectors, and invigorate economic growth. It had received broad support from various stakeholders and aimed to uplift the lives of Liberians by focusing on infrastructure development, education, healthcare, and job creation. However, the sudden budget shortfall threatens to derail these efforts.
Weah, in his recast budget, acknowledged the challenging circumstances faced by the government and emphasized the need for fiscal discipline and prioritization of resources to ensure the efficient delivery of essential services.
He explained that the decrease in revenue was due to “the confluence of reduction in the volume of trade, expiration of surcharge on petroleum, and reduction of tariff on excise on petroleum.”
The president also cited a six-month-running slump in global market prices of export commodities in the mining sector that has engendered revenue underperformance in both tax and non-tax categories since the beginning of the current fiscal year.
The decline, according to Weah, has significantly hampered revenue generation, forcing the government to reassess its financial plans as “underperformance in the first two first two-quarters” of the budget has posed a challenge and prompted an early reprioritization and program deferrals in some instances.
The shortfall implies that the Weah government is now curtailing spending, and rethinking its priorities. Education, healthcare, and infrastructure development are among the sectors most likely to be affected by this funding gap.
However, these measures would potentially impose additional burdens on Liberians, especially on those already struggling to make ends meet.
This raises concerns about how the government plans to navigate this challenging situation without disproportionately affecting vulnerable populations.
“Critical priority allocations for the ensuing elections and the national electricity grid have been ring-fenced,” the President said. “The total adjusted recurrent expenditure is estimated at US$612. 5 million or 80.7 percent of the total proposed expenditure. The revised expenditure estimate for public sector investment is US$146. 8 million or 19.3 percent of the total proposed expenditure.”
Critics argue that the budget shortfall indicates a failure in projecting and managing revenue streams. Questions arise about the accuracy of the initial budget projections and whether adequate contingency plans were in place to address unforeseen circumstances.
Meanwhile, critics have argued that the budget crisis highlights the need for diversifying Liberia's revenue streams. Over-reliance on mining and external assistance, they say, makes the country particularly vulnerable to external shocks.