The text (as prepared for delivery) of remarks by Harry A. Greaves, Jr., Economic Advisor To The Chairman Of The National Transitional Government Of Liberia, to the Leon H. Sullivan Foundation Forum On Liberia
Thank you for inviting me to say a few words on the topic "Transparency and Liberia's Economic Recovery".
The topic is not a trivial one, given our current economic circumstances, which Chairman Bryant laid out in broad strokes in his keynote address earlier this morning. With leadership from the IMF, World Bank, and US Treasury, we are trying to work out an arrears clearance plan on almost $3 billion of foreign debt that has been in arrears for more than 15 years, the years when Liberia was consumed by civil conflict. That plan is key to accessing additional resources to meet our development needs. And our partners, those working with us to push through this arrears clearance plan, have made it clear to us that demonstrating transparency in the management of our existing resources will strengthen our case with our creditors.
Last February we presented a two-year reconstruction plan and an appeal for humanitarian assistance to an array of bilateral and multilateral donors at a conference in New York co-sponsored by the United Nations, the US Government, and the World Bank. The response was overwhelmingly positive. More than 30 donors pledged more than $500 million dollars. Additional pledges have been received since the conference. But again, the message from the donor community, sometimes overt sometimes more subtle, is that delivery on those pledges is tied to visible evidence of transparency by the transitional government in fiscal management.
So, you see, transparency is not an option for us. It's a necessity. I will now outline some of the actions we have taken to make transparency a reality and explore with you some of the challenges we face.
One of the first actions we took shortly after coming to office in October last year was the publication of Executive Order No. 2, a measure agreed with the IMF while we were formulating our economic strategy as a government-in-waiting in Akosombo, Ghana. By centralizing the collection of government taxes in our ministry of finance and the deposit of those taxes in a single government account in the Central Bank of Liberia, we were able in very short order to get our arms around the government's revenue base and to staunch the flow of those funds into undocumented uses. By some estimates, about 50% of government revenues were being dissipated in this manner prior to Executive Order No. 2. A year later, Executive Order No. 2 seems to be holding up quite well.
Now let us take a look at what we have done on the expenditure side of the ledger. One of the agreements we reached with the IMF in Akosombo was that the government would operate on a cash budget for the first 100 days. In other words, we would spend only what we collected in taxes. We would not resort to deficit financing. We honored that commitment.
Since that first budget, we have prepared two other budgets: a mini budget for the succeeding five-month period, and a budget for the fiscal year ending June 30, 2005, which was recently approved by our legislature. Both of these budgets were cash budgets. No deficit spending, no deficit financing.
We have requested, and received, technical assistance from the US Treasury in the form of a budget advisor to assist us rebuild capacity in budget formulation and execution at our Bureau of the Budget. As any good financial manager can attest, good expenditure control starts with good budgets. If budget formulation is weak, then everything that flows thereafter goes downhill.
We have also requested technical assistance from the World Bank in the area of expenditure control at our finance ministry. Those negotiations are ongoing. In the meantime, we are implementing a series of expenditure control measures agreed to with the IMF during their mission to Liberia in May.
In his keynote address, Chairman Bryant alluded to the reforms we are undertaking in public procurement, generally, and in the specific case of petroleum product importation. We are working very closely with the World Bank on both initiatives. I cannot overemphasize the importance of these reforms to introducing greater transparency into the way government institutions spend public money. I hope that a year from now we will be able to report some wins in this area.
We also have underway audits by reputable international firms of 5 key public revenue-generating entities and the Central Bank of Liberia, our equivalent of your Federal Reserve. The intent is to discover where the holes are so we can plug them up.
Now I want to turn to the vexing issue of corruption, an issue that generates great passions and about which Liberians at home and abroad have been greatly exercised for time immemorial. Corruption is a real issue. It is not something that should be lightly dismissed because it goes not only to the heart of governance, but also because it has been an underlying current in much of our civil strife of the past quarter century. It is an issue those of us who are in public service grapple with every day.
The conventional wisdom is that Africans are innately corrupt, that they mouth adherence to the principles of transparency and good governance in order to get by, but that at bottom they are incorrigible, unsalvageable souls. I beg to differ.
I don't think that Americans are intrinsically any more honest than Africans. Just pick up any newspaper here and you will read gory stories of financial scandal, whether it's millions of dollars of workers' pensions falling victim to financial misconduct by corporate executives or some low level functionary caught with his hands in school board cookie jar. What distinguishes you is that you have instituted a set of deterrents and punishments to deal with corruption.
You have laws on your books to define what is inappropriate behavior. You have newspapers, watchdog groups and prosecutors who, when they unearth inappropriate behavior, insist that perpetrators be brought to justice irrespective of their standing in society or their connections. And you have courts that are willing to punish those found guilty of inappropriate behavior by incarcerating them and/or seeking restitution of ill-gotten gains. In other words, you have well-oiled effective deterrence mechanisms in place.
That's where we are deficient. We have a short sentence in Chapter XI, Article 95 our Constitution that prohibits public servants from accepting emoluments or inducements for providing a public service. That's it. To my knowledge, we don't have any laws defining conflict of interest or what a corrupt practice is and we don't have any laws specifying punishments for a whole range of corrupt practices. I understand that one of the issues on the agenda of our Governance Reform Commission is ethics in government. I hope they will come up with some appropriate legislation on the matter.
The other corollary issue has to do with prosecution and punishment. As a people, we seem to have developed a cultural aversion to belling the cat, calling names. A successful prosecution of a criminal offense has to start with the specifics of the crime alleged to have been committed and the identity of the person who is alleged to have committed the crime. To illustrate the point, Chairman Bryant once mentioned at a Cabinet meeting that he had received complaints about corrupt practices at a certain ministry, but that when he had asked for the identity of the perpetrators so he could take action, those lodging the complaints went mum. Clearly, he could not take action against an entire ministry, punishing the innocent along with the guilty.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
If you were to carry out a poll today and ask people on the street to name a public official who was prosecuted for engaging in corrupt practices, a lot of them would scratch their heads. It just doesn't happen. And you who want to bell the cat are considered odd.
There is another side of the corruption issue that I would like to touch on before wrapping up. It has to do with remuneration of public servants. Pay for those in public service is woefully inadequate. A Cabinet minister earns the equivalent of US$50 per month. Even when you add allowances of US$1,000 per month, that's still a gross inadequate for people who are entrusted with managing departmental budgets that run into considerable sums.
And that same pattern runs throughout the civil service. I was talking one day to an employee of our equivalent of your Secret Service and I asked her how much she earned. She told me L$800 per month, which is the equivalent of about US$12. I asked her how much she paid for transportation to get to and from work. She said L$60 per day. I did the sums and asked her how she managed on a salary of L$800 when her transportation costs alone amounted to L$1,200 per month. She looked at me, smiled and replied, "Advisor, that's why I am here asking you for a lift home. This job is a real sacrifice." I was quite moved.
If we want to deal effectively with corruption, we will have to deal with the question of compensation for public servants. And that brings up other issues to do with the size of government, which will launch us into a whole new debate.
I thank you..
