… Fails to reach the US$1 billion mark as envisioned by government; massive chunk based on recurrent expenditure
President George Weah has submitted his government proposed budget for the fiscal year 2023 in the amount of US$777.9 million — down by nearly US$29 million when compared with the US$806.5 million approved budget for fiscal year 2022.
The proposed budget for 2023 is not different from the last five years, featuring massive recurrent expenditures, and yet fails to reach the US$1 billion mark that has been envisioned by the government and less than the fiscal year 2022 budget.
“We present the Draft National Budget noting that over this fiscal year, domestic economic activities have been reasonably robust with revenue performing better than expected at mid-year,” said Tanneh Geraldine Brunson, Deputy Finance Minister for Budget and Development Planning, during the submission of the Budget to the Office of Speaker Bhofal Chambers.
Brunson noted that despite external shocks and depressed export earnings, “the macroeconomic fundamentals of our economy, by and large, remained resilient with the Liberian dollar maintaining a stable exchange rate against the United States dollar and inflationary pressures kept in check.”
The total resource envelope of the Weah’s proposed budget consists of US$667.9 as domestic revenue (85.9% of the budget amount), while external resources on-budget account for US$110 or 14.1% of the proposed budget cost of US$777.9 million.
US$295.6 million of the amount has been set aside for salaries for all 65,000 government employees and all other personnel related expenditures.
The Public Sector Investment Projects budget is US$153.99 million, key of which includes a US$46 million allocation for the TRANSCO CLSG power grid, which the World Bank has pinned its hopes on to drive Liberia’s future economic development; US$26.82 million National Road Fund, and and US$37 million for next year's elections.
The Weah government, regarding the road fund budget usage, has US$10 million allocated for the construction of roads and bridges and US$14 million as government contribution for the South Eastern Corridor Rods Asset Management Project (SECRAMP), which is financed by a grant from the International Development Association.
However, US$2 million, under public investment, was set aside for vulnerable small business support, while US$1.5 million was budgeted for continued renovation of the executive mansion and US$700,000 for humanitarian outreach by the President.
The proposed budget also allocated US$91.6 million or 11.8 percent of total budget for public debt servicing, which includes interest and principal payments to domestic and external creditors.
Total domestic creditors account for US$35.1 million or 38.3 percent of the total debt service projected, while external creditors account for US$56.5 million or 61.7 percent. Domestic creditors include the Central Bank of Liberia, commercial banks, and other businesses.
US$18.4 million was allocated for basic healthcare delivery services. Of this amount, US$8 million is for drugs, vaccines, medical supplies and consumables, food, fuel and lubricants, as well as repairs and maintenance of public health facilities. This also includes additional US$8.4 million of government transfers (Grants and Subsidies) to public and private health facilities. There is also additional new funding of US$0.8 million for the renovation and furnishing of C.H. Rennie Hospital.
Another US$57.8 million was therefore allocated US$2 million for the acquisition of Navigation Aid Equipment for the Roberts International Airport (RIA) and US$12.4 million in government transfers to support public and private institutions for delivering basic social services of education and at local government level.
This includes US$3 million for County Development Fund, US$6.1 million for Social Development Fund to be contributed by Western Cluster Mining, Arcelormittal Liberia and Firestone Liberia Incorporated. It also includes US$2.8 million for tuition free policy. Additionally, there is US$0.9 million in community forest sharing agreement and direct support for the running cost of county service centers.
US$13.1 million is made as investment in the provision of social development services: US$5 million in fulfillment of presidential county tour promises; US$3 million for implementation of GRPB Program, the SGBV Roadmap including support for vulnerable small businesses for women economic empowerment, and the continuation of the Albino Society Headquarters Project.
US$2.6 million is allocated for national priority supports (including the national teams and county sports meet) and youth programs. US$1 million for coastal sanitation project, US$0.5 million for renovation of sports facilities, and US$1 million as government contribution to at-risk youth rehabilitation programmes.
Another US$9.4 million is allocated to support education services, including US$5.6 million for basic education materials and supplies, examination fees for 12th grade candidates for WASSCE and 9th grade candidates for WAEC, US$2.5 million targeted towards the elimination of registration fees and all forms of financial burdens imposed on parents over the long term.
Additionally, there is a US$0.5 million for the completion of rehabilitation works at University of Liberia, and US$0.7 million for the acquisition of machinery and other equipment for the Engineering College and support for the expatriates Indian Professors at William V.S. Tubman University.
Lastly, US$.US$4.8 million is allocated for electricity bills to the Liberia Electricity Corporation as well as US$2.3 million for the promotion of sanitation and hygiene for the collection and disposal of garbage under the transformation of solid wastes management.
Financing for the budget, which is crucial to its sustainability, is expected mostly from these key components of the country’s domestic revenue, which include tax revenue, comprising: US$237.5 million taxes on income and profit; US$235.9 million taxes on international trade; and US$63.4 million goods and services tax.
Others are US$5.2 million real property tax accounts; and US$6.1 million other taxes. Non-tax revenue also comprises: US$95.3 million property income tax; US$19.6 million administrative fees and US$0.341 million fines, penalty and forfeits.
The Weah administration’s proposed budget, which is submitted behind schedule, comes as the macroeconomic outlook for the country looks strong.
“Real GDP is projected to expand at 3.7 percent in 2022 and to average 5.3 percent in the medium term (2023-2025),” the Ministry of Finance and Development Planning says. “This is against the backdrop of strong growth of 5.0 percent experienced in 2021.”
Export is projected to rise due to anticipated increase in major commodities and sectors of the economy; and import is expected to increase as economic activity recovers, according to the Ministry of Finance.
Domestic revenue is projected to increase given the expected rise in primary commodity export; and government expenditure is projected to rise because of capital expenditure and inflation expected to rise in 2022 but remain in single digit over the medium term, the ministry said.
“The medium-term objective is to further enhance macroeconomic stability by upgrading the monetary policy framework and concluding the currency swap, said Brunson.
Meanwhile, House Speaker Chambers, while receiving the budget, noted that though “it is a bit late, it is better than never.”
According to the amended and reinstated Public Financial Management (PFM) Law of 2009, the 2023 proposed budget should have been submitted by the end of October — two months to the end of the current budget year; giving the legislature time to consider its passage.
The President, in a communication to the Legislature dated November 1, requested an extension of 22 working days, which should have been November 30.
But that did not happen until the budget was submitted on December 5.