Liberia: Lawmakers Possibly Ignored the Fine prints of Pres. Weah’s Stimulus Package
Monrovia – Days before lawmakers signed President George Weah’s stimulus package for the State of Emergency, several Senators voiced frustration that there were simply not enough details to make a sound decision.
One of the key documents lawmakers say they were denied viewing was the agreement between the Government of Liberia and the World Food Programme regarding the distribution of food to various communities across the country.
The issue is crucial in the wake of concerns regarding the debate over the rationale of paying an international aid organization, the World Food Programme US$9 million dollars just to distribute food.
The WFP in a statement Thursday said the total budget of the COVID-19 Household Food Support Programme (COHFSP) is US$30 million, comprising the cost of the food basket (rice, beans and vegetable oil) as well as costs of storing, transporting and delivering the assistance to vulnerable households targeted through this programme.
Said the WFP: “These account for US$25 million directly from the Government of Liberia and US$5 million from the World Bank. WFP understands that the Government has transferred the amount to WFP’s account as per the signed Memorandum of Understanding between the Central Bank of Liberia (CBL) and the Ministry of Finance and Development Planning (MFDP). The value of the food is estimated at an approximate total cost of US$20.4 million, pending the final award of all contracts to suppliers. The portion of the budget that constitutes the costs of storing, transporting, and delivering the assistance (or operational costs) is estimated at US$7.8 million. These costs include in-country transport cost, costs for cooperating partners supporting the programme, food safety and quality control, casual labour services, household enumeration/registration, among others. LISGIS’ enumeration exercise will cover over 500,000 households at less than US$ 3.4 per household. “
What is unclear is how much of that money the WFP is in control of and how much is being managed by the GoL.
Loan or Grant? Some Lawmakers Unsure
According to the WFP, the COHFSP is an important safety net for people affected by COVID-19 in Liberia. “This programme is providing a month’s supply of food (50 kg of rice, 10 kg of beans and 1 gallon of vegetable oil per household) for around 2.5 million most vulnerable people across all of Liberia. Transportation and distribution will cost approximately US$3.60 per person and are covered under the WFP budget.”
The WFP says around 6 percent of the budget goes towards meeting essential minimum costs for WFP to deliver its lifesaving assistance – this is standard across all the countries where WFP works and is in line with international standards of aid delivery. “These include allocations toward the support costs of the Liberia Country Office directly linked to the execution of the programme (e.g. applicable rental costs, back office staff costs etc) and allocations toward the support costs of WFP Headquarters/Regional Bureau in their oversight and support function, called Indirect Support Costs (ISC). Together, these can be referred to as the administrative costs.”
Earlier this week, Representative Samuel Enders(District No. 6, Montserrado), raised eyebrows early this week when he expressed uncertainty that he and other lawmakers may not have been aware when they signed off on the US$25 million allocation toward the feeding program, without actually knowing whether it was a loan or a grant.
Said Rep. Enders: “It is also misleading and very troubling to read that the US$25 million is a loan. I cannot remember signing a loan agreement for such. We need to know how much loan was taken and who authorized the loan during the COVID-19 period with specific reference to the recast.”
Besides the agreement between the GoL and the WFP, much of the stimulus package relied on a set of conditions and policy measures, the International Monetary Fund(IMF) laid out prior to agreeing to an approval in Principle for the IMF Rapid Credit Facility (RCF)-supported program.
Prerequisite for the IMF Loan
Last week, the Executive Board of the International Monetary Fund (IMF), approved a little under half of that amount, giving the greenlight to the disbursement of US$50 million; 1.7 percent of the country’s GDP, to be drawn under the Rapid Credit Facility (RCF).
“The Rapid Credit Facility (RCF) provides rapid concessional financial assistance with limited conditionality to low-income countries (LICs) facing an urgent balance of payments need. The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis. The RCF places emphasis on the country’s poverty reduction and growth objectives.”
The GoL had initially sought a total of US$87 million of budget support.
According to the IMF, with debt relief approved in April 13, the money would will help meet Liberia’s urgent balance of payment needs, mostly stemming from fiscal needs necessary to respond to the pandemic.
Part of the reason the IMF agreed to approve the loan stemmed from the COVID-19 pandemic, coming at a time when economic activity was already declining.
In order for the credit facility to be approved, the IMF requested that a number of measures by the Liberian Legislature was key.
The IMF requested that Legislators formally approve—some in principle and some formally— several measures as prior actions for the RCF arrangement.
The IMF document demanded the following:
Following such approval, and (i) upon signing of the RCF-supported program Letter of Intent by the Minister of Finance and Development Planning and by the Governor of the Central Bank of Liberia; and (ii) upon signing by the Minister of Finance and Development Planning and by the Governor of the Central Bank of Liberia of a Memorandum of Understanding governing the on-lending of all disbursements under the RCF for use as budget support by the Government of Liberia, it is anticipated that IMF budget support to Liberia equivalent to US$87 million will be made available before the end of May 2020.
For this to happen, the IMF noted that measures would need approval by the legislature.
Firstly, that upon disbursement of the US$87 million of funds under the Credit Facility arrangement, US$35 million will be immediately transferred to the account of the World Food Program for execution of the food support program agreed by the Steering Committee for COVID-19 Food Support Program.
Secondly, the IMF demanded that the excise tax on fuel of 30 cents per gallon to be made effective immediately. “This measure is programmed to yield $28 million ($3 million before end-FY2020; $25 million in FY2021). Due to the declining world price of oil, this tax is not expected to result in an increase in the pump price of fuel,” the IMF said.
Thirdly, the IMF noted that in order to improve fiscal control and monitoring. all advance-reporting agencies are to revert to using the government’s Integrated Financial Management Information System (IFMIS) for all purchases. The IMF also ordered a freeze on cash advances.
Additionally, the IMF demanded that the fiscal program for the remainder of FY2020 and for FY2021 be governed by the agreement reached with the Minister of Finance and summarized.
The IMF demanded that the Legislature agree to approve a budget for FY2021 consistent with this fiscal program, and including the following specific measures:
The IMF also gave its blessing to the government’s health and security for COVID-19 related expenditure: $2.3 million, electricity and water support program already approved under the resolution: $2 million, payroll deficit and operational losses of Robert International Airport (RIA): $1.5 million, market women support program: $2 million and the banking sector USD liquidity stimulus in the form of the repurchase of qualifying GOL bonds: $15million.
The IMF also gave its approval that the food distribution program be implemented by the World Food Programme (WFP) following WFP operational methodology, with GOL filling a non-executive oversite role.
The IMF agreed that some of the money approved would aid • # 3 – to cover essential spending directly related to COVID-19. Hazard pay of health workers and security personnel are already approved under the resolution and will be covered off-budget by donor funds. This budget allocation includes what is not covered by international organizations.
“The Budget is Law. “For a Resolution to have the binding force of Law, BOTH Houses must concur to make it a JOINT Resolution. The House did not do a Resolution; the House sent us an ENGROSSED BILL for concurrence. By procedure, when we concur, it becomes an ENROLLED Bill enacted into Law. In essence, no one Chamber can pass a Resolution without concurrence of the other. It has never happened since the founding of Liberia.”– Senator Abraham Darius Dillon(Liberty Party, Montserrado County)
Details Omitted from Resolution, Senators Say
Additionally, the IMF agreed to sign off on $US2 million to cover only one month, targeting those with electricity bills less than $20 dollars per month, and recipients will receive this support in the form of scratch cards.
Operational losses incurred to RIA and Liberia Aviation Authority (LAA) during the lockdown were also taken into account.
The IMF also signed off on the Market Women and Small Informal Petty Traders Bank Loans Program approved in the resolution of the Legislature is to be modified to be a cash transfer program due to difficulty in verifying loan documents. The program is to be implemented by the USAID, which is already providing cash transfers for extremely vulnerable micro and small businesses, market traders, market women, and small farmers adversely impacted by the COVID-19. (The co-financing by USAID is expected to leverage the value of the program substantially.)
Two other demands put on the table by the IMF was tabled off for later.
The IMF requested that 100 percent of all revenues accruing to the Liberian Maritime Authority (LMA) and the Liberian Telecommunications Authority (LTA) from all sources are to be collected by, and flow directly to, the Liberian Revenue Authority. “Operating expenditures of these enterprises from July 1, 2020 onward are to be sourced from the central government budget.”
The IMF, in a bid to improve fiscal transparency, requested that the Ministry of Finance and Development Planning begin publishing weekly reconciled and comprehensive fiscal data on its website.
For some members of both houses of the national legislature, being armed with the right information could have aided their quest to weigh in on the matter from an informed perspective. Others hardly read the documents and only signed off on it.
“They submitted the stimulus on Sunday and we passed it on Monday. They only took out the portion relating to the Liberia Telecommunications Authority(LTA) and the Bureau of Maritime Affairs(BMA) were tabled for further hearings,” said a member of the lower house who preferred anonymity for this report.
What the Senate Standing Rule Says
According to Rule 38 of the House Standing Rule regarding Bills & Resolutions, “Every bill and resolution shall receive three reading previous to its passage, which reading shall be on three different legislative days, unless the Senate by two-thirds vote suspends this Rule. The Presiding Officer shall give at each reading whether it be for the first, second or third; provided that the first , second, and third readings may be by title only in the instance where the bill or resolution is too voluminous and the bill or resolution have already been circulated prior to its first reading.”
Section 3 states: “No bill or resolution shall be committed or amended until it shall have been twice read, after which it may be referred to a committee. Bills and resolutions introduced on leave, and bills and resolutions from the House of Representatives shall be read once or may be twice on the same day, if not objected, for reference, but shall not be considered on that day nor debated, except for reference unless by two-thirds vote.”
In Section 4, the rule states: “Every bill and resolution reported from a Committee, not having previously been read, shall be read once and twice if not objected to on the same day and place on the calendar in the order in which thesamemaybereported. Everyandjointresolutionintroduced on leave, and every bill and resolution from the House of Representatives which shall receive a first and second reading without been referred to a committee, shall, if there is no objection to further proceeding thereon, be placed on the calendar.”
Section 5 states: “The Secretary of the Senate shall examine all bills, amendments, and resolutions before they go out of the possession of the Senate, and shall examine all bills and resolutions which shall have passed both houses, to see that the same are correctly enrolled, and when signed by the Speaker of the House and the President of the Senate shall forthwith refer same if it originated in the Senate Committee on Executive to present same to the President of the Republic of Liberia for approval. The Chairman on Executive shall report the fact and date of such presentation to the Senate.”
According to Section 6, “all bills and resolutions shall lie over one day for consideration unless by two-thirds vote, the Senate shall otherwise direct.
According to Senator Karnga-Lawrence(Liberty Party, Grand Bassa), the Senate has to get a vote first in order to pass the budget and if there has to be a resolution, it should be a joint resolution.” In this case, the Senator says, there was not. “It came from the lower house for concurrence. We set up a conference committee if we disagree until we can agree.
Senator Karnga-Lawrence explained that there were no supporting documents accompanying the resolution. “We did not even receive the package; We were only given resolution to sign. This is all we got; and we went to the meeting to receive the actual details of the budget only the resolution was passed around to sign. But we did request all that. I was clear from the beginning that we did not know if these amounts are loans or grants because we have not seeing the details so how do we sign a resolution?”
For Senator Abraham Darius Dillon(Liberty Party, Montserrado), the Budget is Law. “For a Resolution to have the binding force of Law, BOTH House must concur to make it a JOINT Resolution. The House did not do a Resolution; the House sent us an ENGROSSED BILL for concurrence. By procedure, when we concur, it becomes an ENROLLED Bill enacted into Law. In essence, no one Chamber can pass a Resolution without concurrence of the other. It has never happened since the founding of Liberia.”