Liberia: Minister Tweah Provides Clarity On Inflation, Wage Bill and Salaries' Harmonization

Samuel D. Tweah, Jr., Minister of Finance and Development (MFDP) on Monday, November 4, 2019, provided clarity on the enormous wage bill inherited from the previous administration, the current status of the country's wage bill and the ongoing salaries' harmonization scheme.

Speaking on State Radio, ELBC, he mentioned that the government was working towards ensuring macroeconomic stability by reducing the fiscal deficit which largely contributes to inflationary pressure. The minister added that macroeconomic stability will send good signals for investments.

Minister Tweah asserted that when the government spends beyond its means, it contributes to inflation. He disclosed that the current inflationary situation began in April 2017 when the market received large inflows of Liberian dollar banknotes.

Tweah disclosed that under the previous monetary policy framework, the inflationary pressure could not adequately be addressed. He said under that policy framework government had to borrow from the Central Bank of Liberia's Reserve in order to attempt to stabilize the inflation.

"We cannot do that any longer, so we have moved to a monetary policy framework that uses interest rate," said Minister Tweah. He clarified that borrowing from the Reserve was possible five years ago because the Reserve was much higher then.

Additionally, the minister indicated that from a fiscal perspective, it was prudent to pass a credible budget, acknowledging the outstanding effort and support of the National Legislature.

The minister added that the government can only spend what it has. In this direction, he explained that under such a credible budget expenditure should be closed to revenue.

Minister Tweah disclosed that the country's wage bill grew from US$100 million in 2009 to US$289 million in 2017 and up to about US$300 million by the following year. However, Minister Tweah clarified that that rise in the wage bill in FY18/19 was also attributable to the US$12 million, for which the government assumed an obligation to pay additional health workers that were added to the payroll when partners ended the Health Pool Fund.

He said as part of prior actions recommended by the IMF, the government is working towards wage reform to achieve a credible budget.

The Minister said that the FY19/20 budget was submitted at US$ 297 million for wage bill amounting to about 9.7% of GDP, something he said is higher than our regional neighbors (Sierra Leone and Ghana).

Minister Tweah said the wage bill climbed back to US$314 million, prompting the Legislature to pass a revolutionary Wage Harmonization and Standardization Act to effect a 6% reduction in salaries of workers in higher pay category; he, however, clarified that the number is now being worked out at 8.4% to push the wage bill down.

Meanwhile, Minister Tweah used his appearance on ELBC Radio to salute the over 74,000 public sector workers who made the sacrifices for government to save for investments in health, agriculture, roads, education, etc., from cuts in their salaries. He added that the harmonization exercise also brought additional salaries for workers in the lower, very low rung of the pay ladder.

Minister Tweah thanked the over 74,000 public sector workers for helping the government to impact the lives of over four million Liberians who have absolutely no link to government's salaries payments but would obviously be beneficiaries of investment in critical sectors like health care, education, agriculture, roads, etc.

'Gov't Wage Harmonization Restores Equity'

Minister Tweah also provided further clarity on the government's wage harmonization exercise. He informed Liberians that the harmonization has provided more income for over 14,000 government employees.

Tweah said the exercise was geared towards what he termed as "taking from those who were making more" to increase others' salaries. He added that the harmonization has also restored "equity" in the pay system, meaning that a driver who was earning US$ 500 before and another making US$ 250, were now on par by making the same money.

The Finance Minister explained that nobody who makes US$150 was affected by the government's harmonization exercise, adding that the government is proud to close the gap on salary disparity.

"I see the harmonization as people making sacrifice for the betterment of the country," he said.

He said he believes agriculture is the sector which the government intends to use for the transformation of the economy.

He further disclosed that US$1,700,000 has been put into agriculture, with that amount expected to increase to US$ 4 million by 2020 budgetary year.

Speaking on new employees in government, Minister Tweah said: "It will be unfair to say that President Weah shouldn't hire new people in government."

Minister Tweah disclosed that President Weah's government has hired over 4,000 new employees in government.

Accordingly, he said the government is now working on the pension scheme, which is expected to cover over 10,000 persons. He commended the National Legislature for the passage of the Wage Standardization Act, which will in effect reduce the wage bill from US$ 314 million to US$ 297 million or thereabouts.

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