Liberia: 'Wage Harmonization, Not Wage Cut'

MFDP Senior Management Team and Delegations of IMF at the close of the Joint Press Conference in Monrovia.

Minister Tweah says, assures IMF of credible budget

At the end of discussions with the delegation from the International Monetary Fund (IMF) on possible financial support to Liberia under the Extended Credit Facility, Finance and Development Planning Minister Samuel D. Tweah, Jr. took the opportunity to respond to allegations of a pending "salary cut" among civil servants, as part of the Weah Administration's efforts to manage the government's wage bill.

"This is a revolutionary exercise. What we are doing is wage harmonization, not wage cut. This is about paying people across government with same position with the same salary," Minister Tweah told the IMF delegation on Monday June 24, 2019.

It can be recalled that, during early months of the first administration of former President Ellen Johnson Sirleaf (2006), she encountered a government overburdened with civil servants. Amid heavy criticism over plans to reduce the headcount on government payroll, President Sirleaf said she was "not downsizing, but right-sizing the civil service". Much of her strategy involved clearing away redundancies of personnel and functions at various institutions of government.

In the months following the seating of the administration of President George M. Weah in 2018, concerns were raised in the public about mass employments across government, at the behest of the ruling Coalition for Democratic Change (CDC), and the resultant impact on the national budget of a country that was declared "broke" by the new President, George M. Weah.

The government's wage bill in the 2018-2019 fiscal year was US$330 million; but with the harmonization, the new wage-bill for 2019-2020 is expected to shrink to approximately US$297 million, saving the government about US$33 million.

However, Minister Tweah assured the IMF delegation, led by Mika Saito, that the Government of Liberia is committed to 'credible budget' execution during fiscal year 2019/2020.

The Liberian Finance Minister informed the IMF that the administration of President George Manneh Weah is committed to fighting fraud and abuse of resources, adding that the government has agreed to establish a 'Corruption Court.'

He told the mission of government's commitment in terms of meeting benchmarks that will ensure its readiness for business. One of these benchmarks, the Minister noted, is making significant efforts to pay domestic vendors in the amount of US$35 million.

Tweah added that government has put in place strong revenue measures, which will ensure US$22 million in new revenue, during the new budget year.

According to him, Liberia's macroeconomic stability could only be achieved when the fiscal and monetary institutions of government work together.

The IMF mission, through Mika Saito, Deputy Division Chief, Western II Division African Department, said during the visit, they observed that series of external shocks including key commodity prices, the lingering effects of Ebola, and the rapid depreciation of the exchange rate that followed the economic situation facing Liberia has proved challenging.

The mission stated that Macroeconomic stabilization, particularly a lowering of inflation, should be an immediate priority; while public sector is essential to supporting the reform agenda.

The mission discussion also included a package of growth-enhancing structural reforms to strengthen public financial management and improve the business climate.

The mission noted the importance of rebuilding foreign exchange reserves to improve resilience to external shocks, which is one of the key objectives of fund supported programs, while also highlighting the importance of allowing the exchange rate to remain flexible and improving the transparency of CBL's foreign exchange operations.

However, the mission pointed out that securing enough resources to fund efficient government expenditure will require both additional revenue measures and reforms to reallocate expenditure, while reduction in the size of the public sector wage bill is necessary.

Growth, the mission observed, has slowed, while inflation has accelerated and stands at 23 percent.

The mission also held discussions with President Dr. George Manneh Weah, Speaker of the House of Representatives Dr. Bhofal Chambers, and President Pro Tempore of the Senate Albert Chie, as well as Central Bank Governor Nathaniel R. Patray and Commerce Minister Wilson K. Tarpeh.

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