13 January 2014

Liberia: Finance Ministry Slams Lawmaker Over Critique of Economy

Monrovia — The attention of the authorities of the Ministry of Finance (MoF) has been drawn to statements from Honorable Edwin Snowe of District # 6 on national radio and newspapers, claiming that past authorities at the Revenue Department of the Ministry of Finance had raised more money than the current team.

These statements are unfounded, baseless and untrue and clearly demonstrate a fundamental lack of understanding and appreciation of the national budget, its formulation process and intricacies.

The authorities of MoF would like to inform the general public that available records show quite to the contrary, that revenue has instead increased every year since President Ellen Johnson Sirleaf became President for Fiscal Year (FY) 2006/2007 to present (FY2013/14). Here are the facts:

FY06/07 - $148.9 million; FY07/08 - $207.7 million; FY08/9 - 234.9 million; FY09/10 - 288.0 million; FY10/11 - 387.9 million; FY11/12 - 477.2 million; and FY12/13 - $554.2 million.

Therefore, for anyone to make the kinds of statements made by the honorable lawmaker without first doing some fact checking, demonstrates a clear design to bring the MoF and its officials into public disrepute.

The authorities note that on perfunctory review, any reasonable person would have known these numbers before making such embarrassing statements in regards to government's efforts to raise much needed revenue to rebuild our country. We encourage all Liberians to pay keen attention to these numbers and not be swayed by uninformed comments by politicians or their surrogates.

The Ministry notes further, that contrary to misguided and erroneous statements about revenue generation by some politicians, it is expenditure that has been increasing every year, therefore placing serious pressure on the national budget. The current expenditure demand from all public agencies is US$2 billion on a revenue envelop of $582.9 million.

The Ministry would like to further inform the public that nowhere in the world is revenue performance measured by expenditure pressure and citizens should expect their public officials, especially those they elect, to understand that.

Our budget is very open and the "Open Budget Initiative" is intended to keep the Liberian people informed about how much money their government is collecting and spending on their behalf.

On the issue of what Mr. Snowe termed as "the alarming financial situation in the country, especially the increase in the exchange rate between the United States and Liberian dollars," the authorities wish to inform the Liberian people that the Liberian dollar depreciated by 15 percent against the U.S. dollar during 2013, after having remained broadly stable since 2010.

This depreciation isn't unlike that experienced in other countries. In the case of Liberia, three factors have played a role: 1) the Government's effort to de-dollarize the Liberian economy, which resulted in a large net injection of Liberian dollars (LDs) in the economy; 2) the expansionary fiscal stance of the government, leading to a wider current account deficit, driven in large part by increase in public investment programs to rebuild economic infrastructure.

The current account deficit is driven not only by capital goods imports, but also by an increase in food and other consumption items; and 3) efforts to rebuild reserves.

Reserves remained virtually unchanged between December 2012 and June 2013, and the reserves accumulation target under the International Monetary Fund's Extended Credit Facility (ECF)-supported program with the Government of Liberia was missed by US$14 million.

Concerted efforts by the Ministry of Finance and the Central Bank of Liberia have increased reserves by US$24 million between September and December 2013, owing in part to the sale of additional US Dollars to CBL by MoF and lower amounts offered at the weekly CBL foreign exchange auction (declining from US$2.25 million to US$750,000 per week on average since end-August).

The Ministry of Finance and the Central Bank are concerned about the exchange rate situation and are working very hard on policy options to stabilize it.

The authorities urge all public officials across the government to work together in 2014 to rebuild Liberia by playing less politics and doing more to contribute to the reconstruction and development of Liberia.

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