22 January 2014

Liberia: Finance Minister Briefs Lawmakers On State of Liberia's Economy

Liberia's Finance Minister, Amara Konneh, has assured the nation that the state of the economy is intact, in spite of challenges associated with revenue shortfall and exchange rate surge.

He made the remarks when he appeared before the plenary of the House of Representatives on Tuesday, January 21st at the Capitol Building. Minister Konneh assured the country his agency was doing it could to ensure that budget performance remains on track.

He said the Ministry of Finance will shortly launch an aggressive domestic resource mobilization campaign to boost revenue collection across the country. He further assured the public that the fundamentals of the Liberian economy remain stable and strong to support vigorous collection of revenue.

The Treasury Chief informed Plenary that the economy was not in trouble as has been speculated by pundits and that the Ministry of Finance was committed to a vigorous campaign to accelerate revenue generation for the execution of the Government's development agenda, The Agenda for Transformation (AfT).

He used the occasion to provide updates on the execution of the fiscal year 2013/2014 National budget. He acknowledged that the late passage of the national budget has had some implication for its implementation and on the macro-economy.

Minister Konneh explained that though the draft national budget was submitted to the legislature on time, it was not until the last week of legislative session that the draft FY13/14 was passed and the signed budget did not reach the President until mid-October 2013.

On the overall performance of revenue collection, Minister Konneh said out of $296.5m estimated to have been collected as of January 18, 2014; the Ministry has collected US$278.8m to date. This leaves a shortfall of US$17.1m as at January 17, 2013.

Minister Konneh assured the public that while there is no need to panic, the Ministry of Finance will do everything to ensure that resources, to the extent collectables are collected. According to him, the collection up to date was not a small undertaking, but that it was made possible by hard decisions and many sacrifices made by officials of the Ministry.

On budget execution, Minister Konneh informed the Legislature that there is a risk or delay in revenue of about US$47m. He warned that further delays are expected due to the non-payment of the European Union budget support tranche of US$14m as one of the education sector triggers was not met.

He said the budget is under pressure due to the revenue delays and the additional demands on the budget of over $18m.

Minister Konneh further warned that cuts are expected in all sectors, mainly in the use of goods and services budget classification, with the exception of security, education and health.

Meanwhile, the Finance Minister is urging that as his ministry strives to build a more robust economy, with inclusive growth that will build social cohesion and that stakeholder in the private sector and public sectors must be fully engaged in the process of economic development. "That to me is the challenge we face and we must face it together," Minister Konneh declared.

After being bombarded by lawmakers with questions on the state of the Liberian economy, Minister Konneh concluded by assuring lawmakers and the country that Liberia's economic growth was sustained in 2013, led by iron ore exports, construction, and a strong performance in the service sector. He also said that this outlook, however, remains vulnerable to commodity price fluctuations, particularly for iron ore and rubber, Foreign Direct Investment (FDI), and donor assistance, including the partial withdrawal of the substantial United Nations Mission in Liberia force (UNMIL) that affects inward remittances.

The drawdown of UNMIL now requires the government to divert expenditure to the security sector, and will reduce consumption of local services. Disputes regarding concession agreements, particularly in the forestry, palm oil, and oil sectors, also constitute substantial risks.

Faster job creation will be necessary to ensure stability. Consumer price inflation was 8.5 percent in 2013 compared to 6.9 percent in 2012, reflecting lower international food and fuel prices.

In response, House Speaker Alex Tyler thanked Minister Konneh and his team for the briefing, and described the presentation as "very brilliant."

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