Liberia: House Approves US$806.5M Recast Budget

— But a massive chunk of the US$806.5 million budget goes to recurrent expenditure — salary arrears, goods, and services, servicing public debts — leaving limited capital investments — investment towards infrastructures and other assets that are crucial for rapid economic growth and development.

 The House has speedily approved a US$806.5 million recast budget for the fiscal year 2022 inclusive of grants as submitted by President George Weah.  

The measure, which is now lingering in the House due to a motion of reconsideration, reflects a net upward adjustment of US$20 million or 2.9 percent over the originally approved budget of US$785.5 million. 

Weah, in a letter to the House, said that the extra fiscal space was yielded through internal reprioritization of existing programs, identifying additional resources, as well as a World Bank Loan of US$15 million and that the remaining US$5 million would come from the mining sector.

“The restatement is necessitated by the need to address urgent and unforeseen national expenditure demands through reprioritization of the country spending plan,” the President’s Communication said.

This came as the rebound momentum of the Liberian  Liberian economy appeared to be on course — achieving the target of  4.5 percent in 2022, up from 4.2 percent experienced in 2021 — and is expected to be driven mostly by increased activities in both mining and the non-mining (agriculture, manufacturing, and services) sectors. 

However, a massive chunk of the US$806.5 million budget goes to recurrent expenditure — salary arrears, goods, and services, servicing public debts — leaving limited capital investment towards infrastructures and other assets that are crucial for rapid economic growth and development. 

A significant driver of recurrent spending as it relates to the government budget is its massive wage bill. Before the recast budget, US$292.4 million accounted for 37.5 percent of the total budgeted expenditure as approved in the original budget of US$785.5 million in February. 

In that budget, appropriation for capital expenditure including the public sector investment plan amounts to US$132 million which represents 16.9 percent of the total budget passed. And this recast budget is not different as it follows the same trend. 

Lawmakers however voted to approve the President's request in a very hurried manner without any due diligence. The budget, usually, after being submitted, goes through its first reading and is sent to the relevant committees for deliberation and public hearings before reporting to the plenary for action.

This rule and procedure were suspended so the first reading of the budget bill in the session was regarding the second and third reading — leading to a vote through a motion from Montserrado County District #8 Representative, Acarous Gray, who is a member of the ruling governing Coalition for Democratic Change. 

The vote was 15 in favor of passage, three against, and no abstention. 

This means that the House Committees on Ways, Means, and Development Planning and Public Account and Expenditure will not have a chance to probe the budget as traditionally done. Thus, its diverse members, including that of the opposition, miss out on the opportunity to scrutinize and streamline appropriation. 

However, a motion for reconsideration by Maryland  County  District #1, Rep. P. Mike Jurry,  if passed, might return things to status quo ante, leading to committees room revision before the House acts.

Jurry’s motion frowns at his colleagues’ behavior of hurriedly passing the budget without following the traditional process, thus calling for a relook before the enactment of the recast budget.

His motion is expected to be trialed on July 12, but the chance of survival is slim as the vast majority of his colleagues are bent on keeping the votes that led to the budget passage.

Appropriation 

The budget, according to Weah, has an upward adjustment of US$20 million that will be added to a reappropriation amount of US$21,375,000, to sum up the total available of US$41. 3 million.

Recurrent expenditure, as per the draft recast budget is estimated at US$648.5 million, while expenditure for the public sector or capital investment is US$158 million. 

The recurrent expenditure is expected to focus on pension for retired civil servants, subsidy for the provision of electricity, and repayment of a foreign obligation, which has fallen due.

Other priority areas are the completion of the 15th Judicial Circuit Court Complex in River Gee County and the 3rd Judicial Circuit Court Complex in Sinoe County and funds for Solid Waste Management and funding for the government at-risk youth program. 

Meanwhile, total revenue plus grants realized by the government during the first quarter of FY2022, the budget amounts to US$134.4 million at the end of March 2022 which shows 17.1percent of the total resource envelope. 

The government, according to the Ministry of Finance and Development Planning, spent US$154.3 million to finance its programs which accounts for 115.8 percent of total collected domestic revenue and 19.6 percent of the total resource envelope. The US$154.3 million expenditures against US$134.4 million in revenue resulted in a deficit of US$19.9 million in the overall balance.

“During the execution of the first quarter of the FY2022 approved national budget, Public Administration, Security and Rule of Law, Education, and Health account for a substantial portion of budget execution,” the Ministry said in the fiscal outturn report for January 1 – March 31.

“On the basis of economic classification, compensation of employees, use of goods and services, and capital expenditure account for a significant portion of budget execution. Government allotment by sectors and economic classifications at the end of the first quarter of FY2022, compared to the same period in the previous fiscal year, increased by 28.4 percent.”