4 June 2014

Liberia: Budget Resubmitted

President Ellen Johnson-Sirleaf has for the second time submitted the 2014/15 draft national budget with different figure.

The first draft budget submitted to the House of Representatives on May 21, 2014, carries US$557 million, while the latest (June 3, 2014) submission by the President totals US$529 million.

The new austerity budget cuts wastes in government and channels more funds to infrastructure development as set out in the Agenda for Transformation.

The 2014/15 draft National Budget is inconsistent with the Section 11.1 of the Public Financial Management Act of 2009.

President Sirleaf, through the Ministry of Finance submitted the draft FY2014/15 budget, which is the last cycle of spending under austere conditions in the three year Medium Term Expenditure Framework (MTEF) introduced in 2012.

The budget focuses on investing in key areas, including energy, roads, ports, security, technology, health, education, etc., that have the potential for massive social and economic returns to transform the Liberian economy.

Reading the draft national budget in the plenary of the House of Representatives, the total revenue, including tax, non-tax and budget support grants, amounts to US$529 million, four percent higher than the updated projection of US$486 million for total revenues for this fiscal year, but 12 percent below the 2013/14 budget.

According to the transmittal letter to the House, dated May 16, 2014, the 2014/15 projection has been made as realistic as possible, to reduce the likelihood of having to repeat disruptive mid-year expenditure cuts.

"We have reintroduced contingent revenue lines in order to help manage revenue that is considered uncertain. For example, we are classifying US$24 million in dividends from State Owned Enterprise (SOEs) and US$28 million in borrowing as contingent revenue," the letter reads.

It said out of the US$506 million in core revenue, the government expects to receive US$413 million in tax revenue, US$66 million in non-tax revenue and US$27 million in grants, respectively.

"This draft Budget calls for a period of national sacrifice - a sacrifice that calls for better efficiency in the allocation of available resources - as government combines aggressive revenue generations with careful debt management and scaled up spending on security, energy and road network," said President Ellen Johnson-Sirleaf in her budget statement.

The letter explains that core tax revenue is expected to grow steadily, compared to the fiscal year, by nearly 11 percent, driven by expansion in taxes on income and profits and on international trade.

It also indicates that royalties and rents from concessions, especially iron ore, are expected to rise, despite there being no one off payments projected for this year. However, core non-tax revenue is falling overall, due to the reclassification of a portion of the dividends from SOEs as contingent.

The President said government's borrowing is expected to reach US$175 million, and that of this amount, US$147 million will be disbursements of project financing agreements ratified by the Liberian Legislature, intended for specific projects.

Meanwhile, Montserrado County Representative, Adolph Lawrence, made a motion that the draft budget be sent to the committee on Ways, Means and Finance and the committee on Public Accounts for thorough perusal to advise plenary subsequently.

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