Despite a one month delay in submitting the 2021/2022 draft budget to the National Legislative Assembly, the draft budget was officially submitted by the executive on Thursday, November 18, 2021. In his communication, President Weah said stated about the total revenue envelope of 785,587,340 USD, external resources total 145 million USD. Of the total budget, the recurrent component of expenditure is US $ 643,207,340, while the total cost of the public sector investment project is estimated at US $ 142,380,000.
The importance of reasonable and prudent budget allocations cannot be overstated, as the budget itself is an expression of public policy. It is the main instrument of economic policy which indicates the priority of a government and is also a tool for correcting anomalies and inequalities within society. Public expenditure is the expenditure that the government incurs for the maintenance of government and society in general. In general, public expenditure in Liberia can be classified into two parts, namely capital expenditure and recurrent expenditure. Recurrent expenses are the expenses of government ministries, departments and agencies (MDAs) for salaries, debts, pensions and overheads, etc. Capital spending usually means more investment by the government in creating infrastructure such as roads, bridges, railroads. lines, dams, airports, seaports, hospitals, schools, colleges, agriculture and
other assets crucial for rapid economic growth and development.
An effective budget system is essential for economic growth and the development of sustainable fiscal policies. On the other hand, a poorly designed budget where attention to detail is neglected and numbers just changed from existing models can only exacerbate social and economic problems in a country. The effect of poor budget choices where recurrent spending is the hallmark of the budget will inevitably be felt primarily by ordinary citizens who are at the mercy of dysfunctional government policies and facilities. According to a World Bank study, there is a proven correlation between declining economic growth and low investment in Africa. In an Africa Pulse report released in October 2021, the World Bank said that sub-Saharan Africa, including Liberia, had not made enough public capital investments and, as such, was not able to meet infrastructure needs. The World Bank’s Africa Pulse 2021 report highlights that reducing countries’ debt burdens and unnecessary spending will free up resources for public investment, in areas such as education, health and infrastructure. The Africa Pulse 2017 report found that closing the infrastructure gap for affected countries could increase their gross domestic product (GDP) per capita by 2.6% per year.
Despite these reports, persistent annual increases in recurrent spending, which is a continuum from previous administrations in Liberia, have become a permanent feature of the past four years. Specifically, the last budget (fiscal year 2017/2018) under President Ellen Johnson Sirleaf’s government included 499.2 million recurrent spending (94.8%), out of a total plan of $ 526.5 million, followed by the President George Weah’s first budget (2017/2018 budget recast) to $ 563.5 million with $ 489.3 million in recurring spending, while in 2018 it increased to $ 511.3 million US on a total budget of US $ 570.1 million, followed by President Weah’s second recast budget for 2019/2020 to US $ 518.0 million with US $ 445.82 million (86%) in spending recurring.
In 2021, Liberia allocated $ 511.4 million (89.7%) of its $ 570 million budget for recurrent spending. This left 10.3% of the total budget -58.1 million US dollars- for capital expenditure. In the same year, a special budget was approved for July to December 2021 in the amount of US $ 301.5 million of which US $ 272.1 million for current expenditure and US $ 29.3 million for capital expenditure. .
In the proposed budget for 2021/2022, Liberia is once again driving this busy road with its proposed budget of $ 785.5 million. As usual, recurring expenses received a significant percentage of $ 570.1 million (89%), leaving capital expenses at $ 58.7 million (10.3%). The recurrent expenditure in the proposed 2021/2022 budget is higher than the 2020/2021 budget. It is a known fact that most of the recurrent expenditure in Liberia’s budget is used to finance the more mundane activities. Buying new cars, furniture and office equipment for lawmakers, gas coupons, travel, per diems, huge salaries and incentives for government officials, renting a presidential private jet or, at worst, a series of endless renovations of the Executive Manor. This continued increase in Liberia’s recurrent spending cannot be indicative of a system that takes action to eliminate waste, inefficiencies and build sustainable public infrastructure and economic growth.
During the presentation of the appropriation bill, the Minister of Finance and Development Planning, Samuel Tweah, said that the 2021/2022 budget was scripted to address education and health issues; while also helping to protect women and mothers from complications in childbirth, medication issues and other administrative issues in hospitals, teachers and primary spending in education, however, the jarring tones in policy documents have highlighted the lack of synchronization of recurrent and investment spending. spending in budget plans to tackle development. The major problem with Liberia’s budget over the years is the undue interest of those charged with preparing the document and owning its contents for the benefit of the Liberian people. Rather than seeing themselves as stewards, they believe they are the primary and ultimate beneficiaries of the budgeting process. For example, the justification for the annual budget of the national legislature, which had been set at US $ 555 million over the past 15 years, without any reduction. Yet the proposed budget for 2021/2022 increases the legislature’s budget from US $ 44.6 million in 2020/2021 to US $ 54.5 million and an additional US $ 3.5 million for what this is called legislative commitment and public accessibility. In 2020/2021, an additional budget of US $ 3.6 million was awarded to the legislature for its legislative engagement and public accessibility in which each sitting legislator won US $ 30,000.
But are capital expenditures implemented? Much of the spending through the country’s budgets goes to the service of the settlement – the MDAs, and ultimately very little is spent in a way that benefits the common man. An assessment of the performance of the 2020/2021 budget has so far shown various reasons for the failure of budget execution, while its impact has remained unimpressive. The Medium Term Expenditure Budget Framework (MTEF) and policy goals over the years have shown that the nation has not abandoned the old practice of projecting heavy and light capital and the subsequent poor budget implementation. over the past year. The tendency is that recurrent spending is reduced entirely while capital spending bears the brunt of all kinds of delays, bottlenecks, inefficiencies and outright economic sabotage.
There have been several figures on the performance of the budget execution of the Liberian government. The MDA figures are at odds with what comes from the Ministry of Finance. But what is clear in all of this is that the implementation of the investment budget has not been satisfactory. This is a recurring trend in budget performance over the years. While recurring expenses often reach close to 100 percent, the story of capital spending is quite different. The numbers speak for themselves. The mid-year performance report for fiscal year 2020/2021 revealed that US $ 18 million had been disbursed for the infrastructure sector. In 2020/2021, US $ 371.3 million was released for employee compensation, use of goods and services. Yet the critical problem of infrastructure deficit can only be solved by increasing the performance of the investment budget and strengthening domestic revenue mobilization to generate savings for roads, bridges, railways, dams. , airports, seaport hospitals, schools, colleges, agriculture, etc. by borrowing and spending it heavily on recurring expenses.
Our recurring expenses are scandalous! It may seem convenient now because the government does not want to incur the wrath of the civil service or elected politicians as the 2023 elections approach, but the country is suffering. Liberia’s inability to prioritize its needs and allocate resources accordingly over the years has ultimately granted us the unenviable rank of one of the tenth poorest countries in the world according to the 2021 World Development Indicators of the World Bank (WDI).
In conclusion, the 2021/2022 draft budget is a journey into self-delusion and the spread of lies. This is symptomatic of a rent economy whose long-term growth is not sustainable. The ratio of recurring expenses to capital expenses shows that our current leadership has the will to change the status quo. There must be the political will to restructure this equation if, as a nation, we are aware of the need to ensure a bright and prosperous future for our citizens, especially our teeming youth, the majority of whom are now in the market. work. Economic growth and development are mainly enhanced by investing in roads, bridges, railways, dams, airports, seaport hospitals, schools, colleges, agriculture, encouragement of foreign investment and premises, low-cost housing, environmental restoration and strengthening of the agricultural sector. If public spending is used to finance investments in roads, bridges, railways, dams, airports, seaport hospitals, schools, colleges, agriculture and other assets crucial for a rapid economic growth and development, these investments will have direct social and beneficial effects. economic effects on the country. In addition, it will offer new opportunities and expand the capacities of the masses while ensuring sustainable economic growth.