Executive Presents Revised Budget to Legislature With Major Austerity Measures


Monrovia – The government has revised the National Budget from its original US$563.5 million to a reduced amount of US$536.2 million with several austerity measures including cutting back certain categories of goods and services amounting to US$27.4 million.

Report by Henry Karmo – [email protected]

“To address the resource constraints resulting from the challenging macroeconomic environment and the poor performance of most revenue lines, while ensuring efficient service delivery over the remaining period of the fiscal year, a number of austerity measures are proposed…” the President informed the Legislature in a communication on Thursday, March 8

The strategy is to protect essential items, such as compensation, drugs, food, amongst others as well as institutions including the Legislature and Judiciary.

The adjustment, if approved, will result to a balance budget of US$536.2m, which is consistent with the Public Finance Management (PFM) Act.

In the recast budget, there are significant cuts in the purchase of fuel for the operations of government. The 55 percent cut affects all institutions except the Liberia Revenue Authority (LRA), medical facilities, the legislature, the judiciary and the security sector.

There is also 55% cut to travels across spending entities except for the Ministries of Foreign Affairs and State as well as the Judiciary.

According to the communication forwarded to the Speaker of the House, some goods and services have also been cut by 100%. The austerity measures, according to the Chief Executive, necessitate some changes to address priorities of his government.

The recast Budget shows consequence of the adverse budget impacts of a shortfall of US$83.7M in expected revenue as at January 31, 2018, a situation that has necessitated a revision of the Original approved budget of US$563.5m to realistically align expenditure with revised revenue projections.

President Weah said government can now make tough decisions in both the short and medium term to include fiscal measures to control expenditure and can do them by developing policies that are targeted at reducing inequalities, promoting inclusion in agriculture production, developing small businesses and the private sector, providing better quality and relevant education/health services, improving the investment climate, and addressing gender disparities.

The recast budget also highlights both recurrent and non-recurrent expenditure for the rest of the fiscal year and includes “new pro-poor interventions” amounting to US$9.6m on the revenue side.

Also, a few financing options are proposed including securing grants (Contingent upon certain triggers and agreements) from the African Development Bank, European Union, and the Governments of France and of India.

“Honorable Speaker and Member of the House of Representatives, like most economies in the world, our economy continues to experience instability due in large part to the global economic downturn.

“I am confident, however, that our economy will withstand the tests of the moment and come out stronger than before.”

“Although we experienced some level of economic growth prior to the Ebola outbreak, that growth was not inclusive or equitable and made little impact on poverty,” wrote President Weah. 

The President also informed the lawmakers that the country’s Revenue has also been affected by the impasses of the 2017 general election and the lingering aftermath of the Ebola crisis.

But he expresses confidence that the economy will “withstand the test of the moment and come stronger than before”.

According to President Weah, the new administration, with a focus on alleviating poverty, promoting inclusive, pro-poor growth should be seen as a matter of urgency.

“We now have the opportunity within the Executive, as well as, the Legislative and Judiciary branches of government to make tough decisions in both the short and medium term to include fiscal measures to control expenditure,” he noted.

He called for the timely passage of the budget to allow the implementation of the government’s priority for pro-poor projects.

“It is time to focus on what the people need: decent work, a living wage, access to basic services, more democracy and an accountable government,” he stated.

For the FY2017/2018, the National Legislature approved a budget of US$563.5 to facilitate Government’s operations and undertake needed public sector investments.

Following the approval of FY2017/2018 National budget by the Legislature, the persistence of macroeconomic shocks arising from the fall in the prices in the nation’s major exports has seriously impacted revenue generation.

The approved revenue envelop for FY2017/2018 US$563.5M, representing a 6.1 percent reduction to approved amount of US$600.2M for FY 2016/2017. 

Of the approved 2017/2018 resource envelope, tax revenue accounts for US$401.4 (71.2 percent); no-tax revenue accounts for US$ 100.4m (17.8 percent); grants, US$54.9m (9.7 percent); on budget borrowing, US$5.0M (0.9 percent); and carry forward accounts for US$1.8m (0.3 percent).

According to the President, by January 31, 2018, the total revenue collected was US$231.6m (about 41.1 percent of the projected revenue), which includes US$226.8m from domestic revenue and US$4.8m from grants, resulting in uncollected revenue of US$332.0m.

The revised resource envelope now stands at US$536.2m with major expenditure categories performance for FY2017/2018 (July 1, 2017 to January 31 2018) compromised: compensation of employees projected at US$305.9, out of which US$231.8 has been allotted, leaving a balance in appropriation of US$74.1m.

Use of goods and services projected at US$128.7M out of which US$80.9M was allotted, leaving US$47.9M as balance in appropriation. Grants were projected at US$68.0M, out of which US$31.4M was allotted leaving US$24.9M as balance in appropriation.

The President in his communication to the Legislature also disclosed that there is a total of US$208.7 million of balance in appropriation as at January 31, 2018.