House Passes ‘Harmonized’ 2019/2020 US$526M Budget

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House of Representatives unanimously voted to pass the "harmonized" 2019-2020 National Budget

— Forwards to Senate for concurrence

In unanimous vote, the House of Representatives on Tuesday, October 1, 2019 finally voted to ratify the Fiscal Year 2019/2020 National Budget of US$526 million or its Liberian Dollars equivalent of L$110.46 billion. The decision was taken at the House’s 24th Special Day Sitting in Monrovia.

Members of the House of Representatives approved the Budget with a respective cut of 31% or US$2,586 from each member and 36% or US$3,600 for each Senator from net of monthly income tax for salaries and allowances and other reduction to include 50% cut in gasoline so as to address the compensation gap.

Judges of the Supreme Court will experience 16% reduction in salaries and benefits, while there will be 6% reduction in salaries of all employees of the Judiciary as well as State Owned Enterprises (SOEs), and proceeds realized shall be deposited in the Consolidated Accounts for subsequent appropriations by the Legislature.

Considering the salary cuts across the branches of government, the SOEs and the appropriation of the proceeds, the House of Representatives passed the National Remuneration Standardization Act of 2019.

The Act aims to ensure that salaries, allowances and benefits across government are uniformed and equitable for work done.

According to the House Joint Budget Committee, the revenue envelope of the US$526 million budget include: tax revenue (US$377.9 million); non-tax revenue (US$87.2 million) and external resources (projected as US$60.8 million).

The Committee, in its report, scrubbed the contingent revenue of US$7 million to minimize budgetary risks or shortfall, and also an amount of US$10.4 million identified as additional revenue accounting for Road Fund arrears and contributions from SOEs and to be reserved as a “buffer” pursuant to standard for enrollment in the International Monetary Fund (IMF) program.

“… Considering that there is a need to improve and support the proper collection of government revenues, the Committee wishes to inform you that these revenue projections are contingent on a number of factors including measures to be taken by the Liberia Revenue Authority and the passage of some legislation,” the Committee said.

The summary by economic classification of the budget include compensation of employees, US$296,992,923; Use of goods and services, US$72,272,618; Subsidy, US$430,500; grants, US$57,528,644; social benefits, US$US$1,491,628; non financial assets, US$36,264,534; domestic liabilities, US$35,945,775; and foreign liabilities, US$25,073,388; totaling US$526,000,010.

It can be recalled that President George Weah, through the Ministry of Finance, submitted the 2019/2020 draft budget to the House of Representatives of US$532,906,966.

According to the summary of the budget expenditure, compensation of employees is US$296,992,913, which is significantly less than what was earmarked in the 2018/2019 Budget (US$322,672,329), which would suggest reduction in some public (civil) servants’ allowances and probably salaries.

The ‘Use of Goods and Services’ is US$72, 272618; Subsidy US$430,500; Grants US$57,528,644; Social Benefits US$1,491, 628; Non-Financial Assets US$43,171,500; Domestic Liabilities US$35,945,775 and Foreign Liabilities US$25,073,388.

The 2019/2020 budget has the highest domestic liabilities in recent years, and the total budget has dropped US$37 million, as compared to the 2018/2019 Budget. However, there were huge budget shortfalls, and with this little over U$53 million, there is heightened concern that this year’s budget could suffer a similar fate in the face of an economy in free fall.

3 COMMENTS

  1. Well, the passage of the harmonized budget by the lawmakers is okay news.

    There seems to be a conflict in the numbers as the math heats up. There shouldn’t be any conflict at all because if the answer to a problem is 4 + 4 = 8, it can proven that the answer is correct in China or anywhere in the world.

    If there is a thirty-one percent pay cut from a monthly gross income of $15,000, the figures should match in Monrovia as well as in Oregon, USA. Let’s take a look:

    $15,000 × .31 = $4650.
    $15,000-4,650 =$10,350.

    $10,350 × 12 = $134,200 should now be the yearly take home pay of the Lower House legislators. But the calculation above is creating a conflict!

    Maybe senator Teahjay has a flow chart explanation for the conflict. Who knows?

    Please see the second paragraph above. 31% of $15,000 ( which is what Lower House lawmakers earn) is not $2,586. That’s the conflict!

  2. But what is interesting about the salaries cut for the present budget , which is not exactly salaries reform as the so-called cuts may likely be returned to what they were before, the amount being cut is what is actually interesting. Because no lawmaker is spending two thousand US dollars in the economy every month or every two months. No lawmaker in the Senate is spending three thousand US dollars in the economy not even a year’s time. Those cuts when added to the lower wage earners represents new financial resources added to the economy through the purchasing power. That is someone earning 60 US dollars and now through the budget harmonization, and that person receives additional US 25 dollars , that 25 dollars is now being spent in the economy. Giving the economy a boost. The lawmakers were just sitting on their money every month, and not spending it in the economy. So someone making 125 per month or 160 per month or 200 per month gets to spend that cash that the lawmakers were sitting on and doing nothing at all. The salaries cut means good Christmas present , means good New Year’s present, means some parents will be able to send their children to school , buy uniforms. So if the amount cuts from the salaries from the lawmakers and judges and executive employees and State owned companies are extra 5 million to 10 million US or more dollars, that is 5 million dollars, that is 10 million dollars or 20 million dollars now being pumped into the economy that lawmakers and judges and State owned companies Directors were not spending but sitting on all that cool good cash that the struggling citizens could used. That is what is interesting. The salaries cut should not be about the 2019 / 2020 budget, but a total reform of the payroll system needs a re-do . This is just a short solution, because taxes alone can not grow the economy. Another hard choices have to be made. James Davis welcomes this nobel act by the George Weah government.

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