Spending Cuts!

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President Ellen Johnson Sirleaf has submitted the country’s draft 2014/15 fiscal budget to the National Legislature, calling on lawmakers to observe a period of “national sacrifice for better efficiency” as they allocate available resources.

“This draft Budget calls for a period of national sacrifice – a sacrifice that calls for better efficiency in the allocation of available resources – as government combines aggressive revenue generation with careful debt management and scaled up spending in security, energy and the road network,” President Sirleaf said in her budget statement issued on Wednesday, May 21.

The draft budget is in the tune of US$557million about 4 percent higher than the updated projection of the 2013/14 budget of US$486 million and 12 percent below the 2013/14 budget.

The regular costs of running ministries and agencies have been cut drastically and savings moved into key public investment programs. The new draft budget cuts millions in expenses such as cars, fuel and lodging. It also limits public officials’ travels as they will now be required to fly economy class.

The number of foreign trips will also be limited to three per year, with the exception of the President, the Vice President, the Minister of Foreign Affairs and the Minister of Finance due to the many statutory meetings they are required to attend that bring dividends to the country; and there will be a limit of no more than five members on any travel party.

The budget was developed after several months of consultations and hearings with all spending entities. It is technically not different from the 2013/14 fiscal budget in tem of its targeted programs, except for its core revenue envelop.

President Sirleaf defended the austerity policy direction of the budget and quickly informed the public that the government is cutting waste and channeling more funds to infrastructure development spelled out in the country’s development platform, the Agenda for Transformation (AfT). The Liberian leader noted that the proposed fiscal budget is consistent with Section 11.1 of the Public Financial Management (PFM) Act of 2009.

The 2014/15 draft fiscal budget is the last cycle of spending under the government’s rigorous three-year development plan encapsulated in the Medium Term Expenditure Framework (MTEF), which was introduced in 2012. The MTEF focuses on sustained public investment in key areas including energy, roads, ports, security, technology, health and education, etc. that the government has earmarked as projects that have the potential to engender massive socioeconomic returns to the Liberian economy.

The Ministry of Finance Wednesday observed that the first two years of implementing the MTEF budgets have seen some notable successes including the acceleration of public investment spending, paving the way for the start of works on the Mount Coffee hydroelectric dam, the construction of an 18-megawatts Heavy Fuel Oil Plant on Bushrod Island, the settlement of government contribution to the West Africa Power Pool (WAPP) arrangement that will bring electricity through Liberia from neighboring La Côte d’Ivoire, the expansion of rural electricity to eastern Liberia as evidence by electricity in the city of Ganta, Nimba County and the commencement of the Monrovia-Ganta-Guinea border road works across the main economic corridor in the country, amongst others.

The Ministry explained that the Government has also been able to reduce fraud and waste totaling approximately US$4 million through the clean-up of the payroll by the Civil Service Agency; and has also improved service delivery by increased resource allocation to health, education and security.

For his part, Finance Minister Amara M. Konneh has observed that the rigorous measures in the budget show the Executive Branch’s strict determination to allocate money to more pressing areas. According to Mr. Konneh, the economic growth and development of Liberia begins with fiscal discipline. He maintained that the draft budget will invest in areas that hold the greatest potential for inclusive economic growth, expansion and development in Liberia. He also assured the public that government will track public expenditure aggressively.

Konneh explained that the Ministry of Finance worked closely with the Liberia Revenue Authority, ministries and agencies, private sector actors and other relevant stakeholders to derive realistic revenue envelop for the Fiscal Year 2014/15 draft budget. “The revenue numbers reported in draft budget are the best estimates to which planned expenditures have been aligned to mitigate the risk of budgetary shortfalls during execution,” Minister Konneh said.

He added that the government will broaden the tax base, strengthen enforcement and eliminate fraud in order to realize the projected revenue. “This is expected to intensify further as the Liberian Revenue Authority comes on-line in July,” he stated.

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