CREDIBILITY ISSUE ARISES AT CENTRAL BANK OF LIBERIA
LAST WEEK, the Central Bank of Liberia was forced to take down from its website its own 2018 annual report which depicts the biggest budget shortfall ever in Liberia’s history. In the report, taken down less than 24 hours after it was posted, the CBL recorded that preliminary statistics showed that Government’s fiscal operations during the year recorded a fiscal deficit of US$225.5 million (7.0 percent of GDP). This huge deficit, first of its kind in post-war Liberia, according to the CBL was as a result of fall in total revenue and grants receipts during the year 2018.
THE BANK DID not stop there. This week, Governor Nathaniel Patray issued a statement in which he suggests that the numbers reported in the bank’s own report which was taken down from its website, was not reflective of the realities in Liberia today.
SAID THE GOVERNOR: “The attention of the Central Bank of Liberia has been drawn to public reaction to the data in the Fiscal Developments Section (Section 3.7 on Pages 37-41) of the CBL’s 2018 Annual Report (January 1-December 31, 2018) published on January 25, 2019. The CBL notes that the numbers reported in the fiscal section of the report are not reflective of the fiscal positions of current and previous fiscal periods. Consequently, the CBL has therefore removed the fiscal section in its report. It must be noted that all fiscal data are reported in fiscal outturns and fiscal reports published on the website of the Ministry of Finance and Development Planning (MFDP).
THE RATHER VAGUE statement from the bank fails at trying to convince the average Liberian – or an outside observer, that the original numbers reported do not reflect what is happening in Liberia today.
PRICES OF BASIC commodities are at an all-time high, the exchange rate is moving up again and many government ministries and agencies are barely making it.
THOSE LANGUISHING AT THE BOTTOM of the economic ladder are struggling, the government is spending outside the budget and using monies from more important sectors like health and education to focus on its road construction agenda.
ANNUAL REPORTS are just what they are and the original post which the bank was forced to take down after massive public reactions, told the story that is actually unfolding in Liberia today.
IRONICALLY, THE CBL now wants Liberia and the world to believe different – and doing a very poor job at trying.
THE REPORT IS CLEAR: “The deficit was a result of fall in total revenue and grants receipts during the year. Compared with 2017, the size of the deficit in net fiscal operations widened from 6.1 percent of GDP. However, the overall balance of fiscal operations during the year amounted to a surplus of 5.4 percent of GDP, but lower than the surplus of 9.4 percent of GDP recorded in 2017. The surplus in overall fiscal balance vis-à-vis the deficit in net fiscal operations reflects the level of payments of interest on loans during the year,” the CBL stated.
ACCORDING TO THE REPORT, government revenue including grants declined by 12.7 percent in 2018. Total government revenue in 2018 amounted to US$402.2 million which is 12.5 percent of the GDP. “The fall in revenue (including grants) during the year was occasioned by shortfall in both tax revenue and non-tax revenue. Tax revenue fell by 14.9 percent due to declines in taxes on international trade, sales taxes on goods and services, and taxes on income and profits,” the report stated.
THIS IS REFLECTIVE of a World Bank report last October which reported that the country’s economy isn’t doing any better, that fiscal deficit continues to widen as recent World Bank report puts it at 5.2% of the GDP in FY 2018 compared to 4.8% of the GDP in the previous fiscal year. This, the report noted, is a result of a significant shortfall in revenues and higher than anticipated non-discretionary expenditures, according to the report.
NON-DISCRETIONARY spending is spending that is required by a budget, contract, or other commitment. Core non-discriminatory expenditure and interest revenues constitute about 75% of domestic revenues.
THE WEAH-LED government must be careful how it attempts to play on the minds of Liberians and how it seeks to glorify or amplify what is actually unfolding in Liberia today.
IT IS BETTER to be frank and honest with the Liberian people, than try to paint a picture that does not reflect what is actually taking place.
ALL THIS IS KEY for any government defined on transparency and accountability, and one serious about telling its citizens how things are and how government is working to fix the lapses.
THE WEAH-LED government risk serious troubles ahead, if the picture it is now portraying begins to fizzle and the people begin to experience the realities for themselves – as many are already doing. STANDING IN A SEA of denials may offer a temporary relief built on false impressions that does little to instill confidence in a dwindling economy but more to creating a sea of distrusts and lack of faith in the financial institution key to ensuring a sound financial system and maintaining efficient and safe mechanisms for the country’s economic survival and financial sustainability.