Liberia: Legislature Approves $120 Million Budget

No passage of a fiscal budget by the National Legislature throughout Liberia's 159 years of existence has come any closer in comparison to the proverbial passing of an elephant through the eye of the needle than Fiscal Budget 2006/2007.

The budget was bogged down over technical arguments in the House of Representatives for some 40 days before it passed on to the Senate and came back for concurrence.

All that took more than two months, leaving the government without operational funds for more than 50 days in violation of the Constitution and aspects of the Finance Laws of Liberia.

Now, the Legislature has approved the Fiscal Budget 2006/2007, giving the Sirleaf Administration for the first time, a tool of its own to do what it says it will do.

But this did not come on a silver platter; it came at what seemed a price: the administration will now squeeze budget support out of LPRC and NPA (Initially, it thought this was impossible.)

The Analyst Staff Writer has been through a "Joint Report" submitted yesterday by the Joint Legislative Conference Committee that was subsequently endorsed by both houses of parliament.

In separate plenary sessions yesterday, both houses of the National Legislature endorsed the report of the "Joint-Legislature Conference Committee", indicating the unanimous passage of the budget for Fiscal Year 2006/2007.

Total Appropriations

This means that the National Legislature has finally put at the disposal of the Executive Mansion for the next 12 months, more than seven billion Liberian dollars.

The actual amount or base revenue the government is expected to apply during the period is L$7,013,201,022 with added contingency revenue of L$522,000,000 to be applied in case of emergency or extraordinary needs.

The US-dollar equivalence of these amounts based on the rate of L$58 to US $1.00 as arranged with the Central Bank of Liberia, (CBL) is an estimated US $120,917,259.00 in base revenue.

With this amount, the administration is expected to service government's unwieldy, often shifting, wage bill, pay allowances (both fringe and travel), purchase goods and services and utility vehicles, and settle rentals and other operational liabilities.

The amount is also expected to be used to construct public buildings, bridges, and highways and repair existing ones, purchase logistics for the security forces, and service Liberia's colossal domestic and foreign debts in order to make "creditworthy" by the standards of the World Bank and other international lenders.

Other liabilities: the government is expected to use the money to take care of the Foreign Service that some say is in dire need (in some countries) of everything from office space to commission quarters and supplies, settle inherited salary arrears, adjust the newly approved increment in salaries, and restore water and electricity to the capital.

Municipal transport in Monrovia is in tatters, to say nothing about the dire need for repair and expansion of streets, and part of the money is expected to also be used to take care of these.

In a new administrative twist, the government proposed to decentralize development initiatives by distributing US$2.5 million to 15 local government administrations for development purposes. There are the perennial problems of health and education that stand in the line of government priorities and added to government's strategic poverty reduction initiatives announced recently.

Analysts say, administration financial managers have a lot of adjustments and meticulous applications to make in order to give proportionate attention to what is needed to fully address the postwar needs of the Liberian people and friends of Liberia.

Revenue Sources

The bulk of the total amount appropriated for application in the fiscal year is expected to come from the tax revenue that the government will generate from trade and commerce, working Liberians, and sale of services.

If the President approved the new revenue sources added by the National Legislature, this year's budget support will come from such untraditional sources as two major government parastatals.

The National Port Authority (NPA) and the Liberia Petroleum Refining Corporation (LPRC), in that order, are designated to contribute half and quarter million United States dollars respectively to support the budget.

The two major public corporations were left out of the budget support process, according to arguments advanced by the Sirleaf Administration, because they had been subjected to years of poor management, corruption, and operational deficits.

They were however added to the support process, according to yesterday's Joint Legislative Conference Committee reports, because the Senate concurred with the House of Representatives over new evidence reportedly submitted by the current management of the corporations in question that they were capable of registering net profit.

"The projected income statement of the LPRC for year ending December 31, 2006 indicates that the corporation expects US $3,049,567 as net profit before adjustment and US $1,919,567 as net profit after adjustment," the joint report said without bothering to say anything about the reconstruction needs of the corporation, which reduced in status from crude oil refinery to a petroleum products depot.

The report on the other hand, disclosed that NPA has affirmed, in its Action Plan For Revival 2006, a 'healthy profit of US $1.5 million'. In the view of the Legislature, the affirmation of a US $1.5 million profit was sufficient ground for its inclusion in the budget support process.

Analysts say it is difficult to see why, but legislative insiders said it was a troubling compromise that had to be made in order to lay to rest the suspicion amongst some legislators that the exclusion of the corporations in the draft budget was intended to provide pocket money for some higher-ups in the Executive Branch of government.

The third state funds generator, the Robert International Airport, (RIA), was left in the cubicle, according to the report, because management statement indicated that it would generate no profit at the end of the operational year ending December 2006.

The report says US $300,000 from the contributions of LPRC and NPA will go towards the improvement of the health systems of the 15 counties under the supervision of the Ministry of Health and Social Welfare, $300,000 for the purchase of fire trucks, equipment, and accessories under the supervision of the Ministry of Justice, and additional subsidies: schools, including Islamic schools under the supervision of the Ministry of Education.

Other beneficiary under the scheme is the National Elections Commission (NEC) which is scheduled to receive US $120,000.00. NEC is yet to conduct municipal and chieftaincy elections as required by law to complete the constitution of the government of Liberia, prompting analysts to wonder whether the US $120,000.00 allocation has any meaning to the running of the commission.

Major Transfers and County Funds

The joint report said effective as of July 1, 2006, which is the commencement of the Fiscal Year 2006/2007, the minimum salary for civil servants is set at US $30 from the current estimated $20.00 to $26.00.

"In support of this decision, the US $7m provided for civil servants salary adjustment is increased to US $9m. To achieve this, US$2m is transferred from the US $6m proposed for Domestic Arrears thus reducing that appropriation to US $4m," the joint report said.

Based on the transfer also, the adjustment is reassigned and reclassified as "domestic arrears".

What this means in real financial disbursement terms cannot be pinned down readily, observers said, but the report notes: "Certain budget lines in the Senate and House were adjusted and synchronized to bring some limited improvements in the working environment of the Legislature and to the income of the central administration sections and the direct staff of the two Houses."

Some say the "limited improvements in the working environment of the Legislature and to the income of the central administration sections and the direct staff of the two Houses" represented actual financial overburden and strains on the nation's revenue resources in the tunes of several million United States dollars.

In another major budget novelty, upon the signature of the President of Liberia, the legislative caucuses of each of the 15 counties of Liberia will be involved with and participate in consultations at the county and district levels relating to the formulation of programs for the utilization of the county development funds.

It may be recalled that President Sirleaf proposed the allocation of US $2.5 million for county development programs.

Initially, the program was intended to be a purely Executive process involving county development teams headed by county superintendents. The involvement of the legislators at county and district levels in the process, observers say, spells confusion in which the lack of order and responsibility will compromise accountability.

Whether or not this observation is justified cannot be said, but what worries analysts is the problem the Executive Mansion is likely to have with the inclusion of NPA and LPRC in the budget support process.

According to them, the bases for including the two entities in the budget support process are shaky and may therefore translate into embarrassing budget application difficulties and even budget deficit.

"This prospect," they said, "is not healthy for us and if President Sirleaf makes any compromise, she must ensure that it does not result in deficit." Whether the UP "Iron Lady" will throw in the towel for the sake of harmony amongst the branches of government is the question many are asking.

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