House of Representatives OK 2016/2017 Budget With Additional US$46M
Monrovia – Liberia has a recent history of successive budget shortfalls where relevant agencies of government have not been able to generate the needed revenue in line with the amount approved by the National Legislature.
Despite harsh economic outlook characterized by drastic fall in the prices of essential commodities on the world market adversely affecting Liberia, the House of Representatives has approved a budget with additional US$46M putting revenue collectors in the position to collect US$600M, which if realized will be the highest revenue generation by the Sirleaf led administration in a single year
During the fiscal year 2015/2016, the Executive Branch of Government submitted a budget of US$604,040M but the National Legislature approved US$622,743,420 and before the end of the fiscal period the government experienced a budget shortfall where the Ministry of Finance announced austerity measures to resolve the deficit.
During the 2014/2015 budget year the outbreak of the deadly Ebola virus impacted revenue generation and that budget year was one of the worse where donors had to help fill the huge gaps.
Before Ebola, the government projected a budget of US$557M to be collected in 2014/2015 but by the time Ebola struck, the financial records were in disarray as the government used the situation to go out looking for support.
For over nine years the government has been experiencing budget shortfalls resulting to recast budgets and with the prices of major commodities down on the world market the government is projecting that it will be able to collect US$600M.
The Executive branch through the Ministry of Finance and Development Planning submitted a proposed budget of US$555.9M but the House of Representatives has now increased the amount to US$600 million.
Contradictions in economic situation
Increase in the national budget comes after President Ellen Johnson Sirleaf and other officials of the ruling Unity Party warned that the country will experience a bad economic situation in 2016 going toward the 2017 election.
Delivering her 11th Annual message on the State of the Republic on January 25, President Sirleaf expressed that the Liberian economic is under severe stress and warned Liberians of difficult times.
“Consequently, real GDP growth declined further to 0.3 percent in 2015 compared to the original forecast of 6.8 percent,” she noted, stressing that the foundation of economic diversification already set in place by her administration could not, in the short run, absorb these unforeseen shocks.
Despite the President warning about eight months ago, the House of Representatives has now set the budget at US$600M.
Announcing the approval of the 2016/2017 budget by the House of Representatives, Representative Prince Moye chairman on Ways, Means and Finance committee announced that the body sourced additional $46 million funding increasing the amount from US$550,992,598.00 to 600,203,674.00.
The Plenary of the House of Representatives unanimously endorsed a report from its Specialized Technical committee to pass the Fiscal Year 2016/17 National Budget.
According to the body, the decision was taken based on recommendations contained in a report to the Honorable Body.
On May 14, 2016, The Executive submitted the sum of five hundred fifty million, nine hundred ninety-two thousand, five hundred ninety-eight (550,992,598.00) United States Dollars in for Legislative approval but the fiscal instrument has been languishing before the lawmakers for nearly three months due to wrangling over leadership.
After weeks of indoor and public scrutiny of both the revenue and expenditure components of the Draft National Budget by the Specialized Technical Committee along with the relevant line Ministries and Agencies, over forty six million (46,000,000.00) was identified as additional and unencumbered revenue, the House of Representatives declared.
This amount according to the Technical Committee was undercut by the removal of One Million Nine Hundred Two Thousand United States Dollars (1,902,000.00) from the draft budget on account of uncertainty surrounding adjusted tax revenue
These adjustments therefore according to the Committee ensured a net effect in terms of additional and unencumbered revenue of over 44 Million United States Dollars (44,211,076.00)in both core and contingent revenue, thus bringing the total adjusted revenue for Fiscal Year 2016/17 to Six Hundred Million, Two Hundred Three Thousand, Six Hundred Seventy-Four United States Dollars (600,203,674.00), which if the body said if converted into Liberian dollars would amount to Fifty Seven Billion, Three Hundred Nineteen Million, Four Hundred Fifty Thousand, Eight Hundred Fifty Thousand, Six Hundred Sixty-Seven Liberian Dollars (57,319,450,867.00) at the exchange rate of L$ 95.5 to US$1.00.
Reject increment in taxes on Alcoholic beverages
In the final report to plenary the committee recommended that excise taxes on alcoholic beverages, water, soft drinks: amendments to section 1120 and section 1140 and excise taxes on mobile telephone usage be rejected.
The committee also recommended that section 1165 be rejected because the first count contravenes the WTO agreement that Liberia just subscribed to; while the second count will increase the cost of economic challenges.
The committee report stated: “Honorable Deputy Speaker/Presiding officer, and distinguished colleagues, with the rejection of the two amendments, and the insertion of the amendment to the 1708 of the Revenue Code of Liberia act 2000, and goods tax is 10% of the section 1004 taxable amount, except that if the supply is an export of goods the rate of the tax is 0%.”
The committee also claimed that excise tax at the rate of 80% of the amount determined under subsection shall be levied on tobacco and on any product containing tobacco including cigarettes, cigars, snuff, chewing tobacco and similar products whether imported or manufactured in Liberia.
“Honorable Presiding, and distinguished colleagues, if these measures are considered, more than 21 million United States Dollars will be raised to support the FYY2016/17 draft National Budget; while the rejection of the two amendments will cost more than 9.1 million United States dollars,” the committee said.
Representative Moye told Journalists that as usual the health sector got the huge portion of the budget but failed to state the exact amount.
“The consolidation has to be made bulk of the money it went to health sectors. On the look of things if you see the draft budget you will see that health and Education are budget that take bulk chunk of the budget,” Representative Moye said.
No holistic civil servants benefit
Responding to question about increment in civil servants salaries he said, salary increment was not done holistically for all civil servants but increment was done in specific areas.
“We took over a task and we didn’t want to discount the work they did but to validate some of those issues,” Representative Moye said.
He also told reporters that there was no increment made in the budget of the legislature but claimed that the budget for the office of the speaker was retained.
“We cannot not appropriate at the detriment of the Liberian people we did all the restoration in the speaker budget that position is for the national legislature regardless of his recusal we had to restore his budget while we go through the stalemate” the lawmaker said.
History in Making
When the $600 million is realized by the government, it will be the first time the Sirleaf led administration is realizing such huge goal in revenue generation.
With the prices of busy commodities on the decline and Liberia unable to generate sufficient income from iron ore, rubber and other commodities generating revenue of US$600 million will be a huge task for the government to achieve.
During previous budget years when prices of these commodities were high, the government yet could not generate such amount of revenue within a fiscal year.