Liberia: FY 2019/2020 National Budget Risks Failing If Salary Harmonization Is Disrupted
MONROVIA – Liberia risk losing the losing up to US$61 million of budget support from the World Bank, the European Union and the African Development Bank (AfDB) should the ongoing salary harmonization implementation be disrupted.
Under the advice of the International Monetary Fund (IMF), the government embarked on a wage bill harmonization mechanism to remove the disparities within the salaries structure. With considerable efforts on the parts of the Civil Service Agency (CSA), the Ministry of Finance and other institutions, a definitive formula was developed.
The wage harmonization program entails fitting all government workers into a pay grade with seven steps. The grade covers all skillsets in Government as developed by the Civil Service Agency. The harmonization program abolished the basic and general allowance salary structures of the previous years, giving all government workers one pay. Where workers were previously paid with wide discrepancies, all workers under the harmonized bill will now be paid more equitably, with people of the same qualification and experience making about the same amount or in the same range.
Sources say some 14,000 Government workers, among them police, army and immigration folks, are getting a pay increase under the harmonization scheme. Some 27,000 workers will see no change in their compensation.
However, the House of Representatives on Thursday, August 22 decided to invite Finance and Development Planning Minister, Mr. Samuel Tweah, with the aim of holding in contempt if he is unable to justify why he is rolling out the harmonization strategy without seeking the approval of the legislature or waiting for the passage of the FY2019/2020 National Budget.
The FY2019/20 budget amounts to a total of US$532,906,966, which is a 7 percent or US$37.2 million reduction over the FY2018/19 Budget. This is the first time the MFDP submitted a proposed budget with a total less than the total of the previous year’s budget. The new wage bill for 2019/2020 will now be US$297 million.
Several members of the House of Representatives including Reps. Clarence Massaquo i (Lofa Co. Dist. #3), Francis S. Dopoh, II (River Gee Co. Dist. #3), Vincent S. Willie (Grand Bassa Co. Dist. #4), Thomas Goshua, II (Grand Bassa Co. Dist. #5) and Hanson S. Kiazolu (Montserrado Co. Dist. #17), in two separate communications, called on the plenary to halt the Ministry of Finance & Development Planning (MFDP) planned salary harmonization with immediate effect.
According to the lawmakers, they have received series of complaints and tangible evidence from civil servants within their constituents that the MFDP is deducting ‘significant’ portion of their salaries as part of the salary harmonization process.
Tweah Had Reliance
FrontPageafrica gathered that the Finance Minister decision to go ahead with payment of civil servants’ salary arrears stemmed from Section 17 of the Public Finance Management Act (PFM).
The PFM law says in Section 17.1 that “In the case where the Legislature is unable to approve the National Budget before the start of the fiscal year, the Minister is authorized to collect revenues and approve expenditures, in line with the proposed budget, up to one twelfth (1/12) of the Budget of the previous fiscal year. Expenditure of said (1/12) by the Minister shall be included in the subsequent financial outturn.”
Accordingly, with the backing of the law, Min. Tweah did not need the approval of the Legislature to have expended the US$47 million which represents 1/12 of the Budget of FY2018/2019.
The Lawmakers’ Fear
Under the harmonization program, lawmakers are expected to make an ultimate sacrifice by agreeing to a massive salary slash from a whopping US$15,000 to a maximum of US$6,000 as part of recommendations from the International Monetary Fund (IMF) to reduce the country’s wage bill amid a crippled economy.
Lawmakers, FrontPageAfrica has gathered, are uncertain about the cut and have not been able to come to terms with government on the salary slice.
For this reason, majority are opposed to the early implementation of the harmonization exercise.
However, according to a source at the Ministry of Finance, “Any attempt to disrupt harmonization risks US$61million of programmed budget support and the International Monetary Fund is aware of that. The Fund is clear that payment of salary on the broken wage system in July means Liberia does not enter a program. This means the US$532 million budget fails immediately, since the US$61 million from the world bank, the EU, the AfDB and other partners does not come”.
One financial expert who asked for anonymity told FrontPageAfrica that the lawmakers could refuse to slash their salary but they must also be prepared to forgo the US$61 million that is expected from the international community.