14 May 2014

Liberia's Finance Minister Predicts U.S.$74 Million Budget Shortfall

Monrovia — Liberia has, over the course of the current fiscal 2013-2014 budget year, experienced shortfalls in projected revenue collection with the Ministry of Finance as of the beginning of quarter three announcing a budgetary shortfall of around US$47 million.

The pronounced shortfall affected the operations of Government with the streamlining of expenditure by line ministries and agencies, followed by delay in the implementation of some projects, salaries and incentives of some entities, including the National Legislature also delayed sending fear that the Government might fail to achieve significant portion of expected deliverables as the fiscal period elapses in about a month.

June 30 is the required cut off point, ending the 12 months budget year, which commences July 1 each year and with such limited timeframe left in the budget year to elapse, Finance minister Amara Konneh has disclosed that the Government risks a shortfall of around US$74 million.

Appearing before the House of Representatives at the 53rd National Legislature, Tuesday, Minister Konneh disclosed that the government of Liberia risks experiencing a whopping US$74 million budget shortfall based on the inability of some public corporations and others to pay revenue projected in the budget.

Said Konneh: "We are risking United States dollars US$74.5 million this year, let get to the sources the oil company social contribution to counties US$1.9 million has not come to us, but we are working with them to pay this money but the year is not over yet. The exchange rate is also affecting the government. "

"Today it is five million we are projecting seven million. LPRC contribution to the budget of $3 million out of $4 million has not been paid, NPA contribution to the budget, we still have two hundred and fifty thousand United States dollars to be collected."

According to Konneh the risk of experiencing a shortfall of over 74 Million is also because the social fund of US$1.5 million from the National Oil Company of Liberia (NOCAL) is yet to be provided to the Finance Ministry and the increase in the exchange rate between the United States and Liberian dollars.

He said the Finance Ministry is projecting US$7 million shortfall from the exchange rate, the Liberia Petroleum Refinery Company contribution to the budget in the tune of USD$ 3 million has not been paid out of the four million and three hundred and fifty United states dollars that is to be paid by the National port Authority is yet to be paid.

Minister Konneh also said the European Union budget support grant in the tune of US$6.2 Million United States dollars, another US$ 3.8 million dollar expected from fines imposed on fishing vessels by the Legislature and US$ 3.8 million expected from the sale of Liber Cell license are yet to be brought forward to the Finance Ministry.

"From the Forestry sector because of the challenges we are risking US$6.7 million and the forestry sector as you see in the report submitted to you has picked up because we have been working as one government by bringing together those in the sector, especially those companies by asking them to fix the roads to the port of Greenville and Buchanan that is some of the proactive measures we have taken."

"We still have difficulties in the port but that is not the fault of the port, but the lack of equipment because ships are coming for logged but are returning empty that has impacted on the revenue we collect from the shipment," he added.

Liberia remains vulnerable to fluctuations

Minister Konneh also stated that the economic outlook of Liberia remains vulnerable to fluctuation in commodity prices, particularly for Liberia's key exports rubber and iron ore and china increasing demand for both commodities, noting that Liberia's Economy this year is projected to grow at 5.9% from 8.7%.

"There has been a sharp decline in the global prices of our two major export commodities, rubber and iron ore since 2012 which has negatively impacted domestic revenue generation and these trend distinguished members of the House of Representatives is expected to go on for the next five years," he added.

He called on members of the legislature to focus on the country agricultural sector and recommended that US$ 10 million be allocated in the Country's National budget for the agriculture sector, which according to him will make up for the deficit the rubber sector is creating.

The 2013/2014 budget was projected at US$582,931,413 million about LD$43,830,612,943.47 at the conversion rate of L$75.19 to US$1 and the predicted shortfall of US$74 million indicates that the budget has fallen further off the mark than the pronounced US$ 47 million.

In March, the Liberian Government through the Ministry of Finance announced a budget shortfall of US$47 million, warning line ministries and agencies to take the necessary measures in preparation for the shortfall in revenue with Finance Minister Konneh saying, he takes responsibility for the shortfall in the 2013/2014 as head of the institution responsible for crafting the budget.

"I am the Minister of finance, I am responsible; yes, it's nobody; I am today the Minister of Finance of the Republic of Liberia in charge of implementing our fiscal policy. Whether the numbers change in the legislature in the draft budget that was submitted to the legislature, I am the custodian of the national budget and I am responsible," says Konneh.

Violations in Budget implementation

The 2013/2014 budget has seen the pitfalls and violations of the Public Financial Management Law of Liberia which calls for submission of the midyear performance report by the Minister of Finance and also passing into law a supplementary budget in case of difficulties encountered with budget implementation.

It is required by the Public Finance management Law of Liberia that the Minister of Finance submits a midyear budget performance report to the National Legislature.

Section 18, Supplementary Budgets and Mid-Year Review states: "The Minister shall submit to the Legislature a mid-fiscal year review of the implementation of the Budget in the middle of February each year, including an analysis of the revenue collections and expenditure performances in the first six months of the fiscal year, and, if necessary, a proposed supplementary budget for approval by the Legislature".

The PFM Law requires that during the fiscal year, the approved budget may be amended through supplementary budgets to be approved by the Legislature.

International organizations, including the Internal Monetary Fund have warned that major development projects will not be implemented due to unbudgeted projects undertaken by the Government. United States Ambassador to Liberia, Deborah Malac also cautioned the Liberian government to "desist from spending money it does not have."

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