“The total estimated resource envelope for the FY2024 Draft National Budget is US$692.41 million. This implies a 10.3 percent decrease when compared to the FY2023 Approved National Budget of US$771.70 million. This decrease is mainly attributed to a 61.4 percent projected decline in external resources.” ….” Liberia’s economy expanded to 4.8 percent in 2022 despite widespread global contractions from the war on Ukraine, high global inflation, and subdued demand in advanced economies. The expansion was largely driven by mining, agriculture, services, and manufacturing. When compared to growth estimates in 2021, growth declined modestly by 0.2 percentage points in 2022. Growth is expected to decline to 4.6 percent in 2023, reflecting increased global uncertainties and commodity price shock, before reaching an average of 6.0 percent over the medium term (2024-26) as the country benefits from investments in mining and structural reforms in sectors such as energy, trade, transportation, and financial services.”
By: Samuel P. Jackson, Sustainable Development Consultant MSc, LSE
Quoting directly from the Draft 2024 Budget of the Boakai Administration
Liberians voted for change by 26,000 persons. Not a resounding mandate, but a mandate, nevertheless. They walked during the rain in feces clogged streets to show their support to Boakai and were rewarded with the presidency. They voted for improved security, an enabling environment to spur entrepreneurial development for domestic capital formation or an attraction of foreign direct investments in sustainable sectors. They want adequate healthcare, quality education and the required energy in increased electricity access to improve their standard of living. Liberians voted for an aggressive enforcement of our drug laws to combat narcotrafficking and resources to rehabilitate drug affected youth from the nation’s streets. The budget presented by the Boakai administration does not even begin to lay the foundation to address these fundamental challenges.
A budget should indicate the priorities of the nation, focusing on the most pressing needs of the people. It does so by waging a war on waste, fraud and abuse in the budget. The budget does not. It only sets forth the same fundamental flawed premise of previous governments. A bloated bureaucracy where more than 93 percent of expenditure goes for running the government: a public sector wage bill of 297 million representing 44 percent of expenditure and only 51.89 million dollars in public sector investment programs. Surprisingly, the expenditure for agriculture for an agriculturist president went up only one million dollars and just 750,000 in investments in the sector.
This is not a growth inducing budget but minimalist, one geared to maintaining the status quo. The propagandists of the administration know within their hearts and minds that this budget is disappointing. 7.8 percent in fiscal space, representing a fiscal cliff. Any domestic or exogenous factor that impacts economic growth will totally obliterate fiscal space. The budget is not bullet proof. It is vulnerable to global, regional, and domestic risks.
It does not begin to catalyze economic growth and development by securing the physical environment and improving service deliveries to the Liberian people. Paltry efforts on beginning the process to improve electricity access. Instead, the LEC is requesting for additional megawattage to 51 from La Cote d’Ivoire. Under this arrangement we will see increases in our current account deficit and provide monies to fund energy investments and create jobs in that country’s electricity sector.
No significant spending (only 500k) on social welfare to rehabilitate drug affected youths. No serious emphasis on social protection for those living in extreme poverty and food insecurity. I do not expect this budget to solve all of our problems with the limitations in revenue collection but at least we could begin the structural realigning of our priorities to the sustainable development goals. I expected funding to do baseline studies that have not been done in some cases more than a decade: Sustainable Development Goals Report, Labor Force Survey, Core Welfare Indicator Questionnaire, CEDAW, National Population and Housing Census. I also expected an evaluation of the status of food security and what resources would be required to accomplish that.
Instead, the budget begins by making excuses for the past administration. It recognizes growth of 4.6 percent in 2023, 4.8 percent in 2022. The preface does not reflect the social and fiscal cliff that led Mr. Boakai to say the country is in distress. Any objective reader would surmise that the Boakai administration is building on the “supposed failed policies” of the Weah Administration. It shifted expenditure to education and health but in salaries and goods and services that led to the bottom-line being 7.8 percent in fiscal space. It did not increase investments in the sectors.
I expected the budget to be aggressive in revenue generation, with emphasis on effective tax administration, closing loopholes, substantially reducing tax waivers and incentives, and going after low hanging fruits such as real estate taxes. Only 5 percent of properties pay realty taxes with 90 percent of lease agreements avoiding taxation. The budget recognizes the domestic resource mobilization efforts of the Weah Administration that led to increases in revenues. It projects revenues of 692.41 million in the current budget year, with almost 3/12 spent. The budget shows 640.52 million in recurrent expenditure with only 51.89 million in investments. Paltry. Revenues are expected to increase to not much more than seven hundred million dollars over the next three years, when the current finance minister once boasted of the ability to increase revenues to one billion dollars.
Clearly the budget does not begin to address the fundamental challenges the country faces: physical security, food security, education, social welfare, and attraction of sustainable capital formation activities in creating jobs, increasing income, and improving socioeconomic outcomes. It is a hallelujah hope budget. Only time will tell who is telling the truth. And so it goes.
