Sierra Leone: Govt Spending More Than It's Collecting From Domestic Revenue

The public Financial Management Consortium has stated in their recent report that the Government of Sierra Leone is now spending more than what it's collecting from the domestic revenue monthly, thus adopting other measures to finance the gap through means such as selling of treasury bearer bonds.

The consortium, which comprises four civil societies including Budget Advocacy Network, Centre for Accountability and Rule of Law, Restless Development and Christian Aid called on the government to ensure that it's decreases the big difference between operating expenses and domestic revenue, but noted social sector spending should not be affected as citizens need those services now than before.

It states that government's initial measures to slow the speed of COVID-19 combined with the global economic impact, have negatively impacted economic growth, raised the prices of basic commodities and undermined revenue collection.

Speaking last Thursday 22 October during the launch of the report at the Africa Young Voices Media Empire in Freetown, Senior Programme Officer at Budget Advocate Network, Abdulraman M. Sesay, says the need for increased expenditure to support the health and economic response has eroded the government's fiscal position and has resulted in the downwards revision of the 2020 domestic revenue target from Le6.47 trillion to Le5.39 trillion.

He said their report analyses aim at finding out how, in monetary terms, the COVID-19 is impacting on domestic revenue to GDP targets for 2020 and 2023.

He further stated that it is against that backdrop, the Budget Advocacy Network is tracking the monthly domestic revenue and that their publication looks at 7 months of domestic revenue collection in 2020 and comparing same for 2019, including 4 months of COVID-19 -which is April to July 2020 -and 3 months of none COVID-19 -which is January to March 2020.

He said the data used for their tracking is the published monthly statement of the Consolidated Fund, which includes actually revenues and expenditures done by the Accountant General's Department published at the website of the Ministry of Finance.

He said the GDP used for 2020 is Le41.028 trillion while the daily revenue collection of 2019 was calculated by dividing the total monthly revenue by the total working days including weekends and public holidays, stating that when President Julius Maada Bio assumed power, he promised that his New Direction led government's focus will be to increase the domestic revenue GDP ratio from about 10% to 20%.

He said President Julius Maada Bio during the opening of the 5th Parliament of the 5th Republic of Sierra Leone, disclosed that the country's domestic revenue makes up only 11.5 percent of GDP, and that it is one of the largest in the world.

He said the president promised to make sure the country makes a positive move up from the current percentage, stating that the Minister of Finance Jacob Jusu Saffa on radio also stated that COVID-19 may not affect the 2020 budget implementation.

He said their report shows that the National Revenue Authority (NRA) collected more revenue in the first 7 months of 2019 than they did in 2020 for the same period by Le106.4 billion, which indicates that the COVID-19 has an effect on the domestic revenue mobilization.

He said for the month of June, 2020, NRA collected over Le500 billion, which is higher than the same period in 2019, adding that for the months of April and May, 2020 NRA collected below Le400 billion- which is lower than same period in 2019.

He said due to the COVID-19 pandemic, the Government of Sierra Leone reduced its domestic revenue target by Le1.1 trillion for the fiscal year 2020-from Le6.47 trillion to Le5.39 trillion, saying that 3.1 trillion has been collected so far from January to July, 2020- which constitutes 57% of the revised target and implies that on average NRA has been able to collect Le438.9 billion on a monthly basis.

He said the monthly collection based on the revised target is Le449.91 billion, stating that if at least Le10 billion is added by NRA on the current average, they might hit their revised target for 2020.

He said historically, the NRA collects more revenue in quarter 2 and 4,while the latter carries the highest weight of the annual budget, adding should that same pattern continues it would further increase the chances of NRA hitting the 2020 resived revenue target.

He said there was more revenue collected from all streams in January, 2020 than January 2019, stating that the domestic revenue flow increased by Le31.3 billion in February,2020, as against February 2019, which shows that domestic revenue generation dropped by 14%.

He said in March, 2020, compared to March, 2019, NRA was able to collect more revenue from the Goods and Services Tax, Fisheries and other departments in March, 2020, stating that in the month of February, 2020, NRA collected more revenue in Income Tax, Mineral Resources and Road Users Charges Tax than February 2019.

He further stated that in in April, 2019, there was more domestic revenue collected than in April, 2020, and that Income Tax, Fisheries and Road Users Charges were the domestic revenue streams in which more revenues were collected in April, 2020 than April, 2019.

He said on average, the daily domestic revenue collection for seven months of 2019 is Le20.6 billion, while for 2020 is 21.3 billion, stating that the revised domestic revenue target for 2020 is Le5.39 trillion representing 13.0% of GDP.

He said government spends all the domestic revenue collection on wages, salaries, employee benefits, none-salary, non-interest recurrent expenditure, grants to educational institutions, transfers to local councils, transfer to Road fund and others.

He said the total sector expenditure outweighs total domestic revenue for all the months under review for 2020, stating that the total expenditure from January to July 2020 is Le4.18 trillion while the total domestic revenue for the same months is Le3.1 trillion-which means the sector expenditure is more than domestic revenue by Le1.1trillion.

He said there are chances of NRA coming back on track with domestic revenue mobilization, depending on the pace of recovery of the global economy from the COVID-19 pandemic and associated effect, and that despite the interpretation NRA is still able to collect substantial domestic revenue.

Also speaking, Assistant Director of Monitoring, Research and Planning, Dr. Sheku Kamara at the National Revenue Authority (NRA), said the 2020 financial year started fine before the outbreak of COVID-19, but they however, came up with initiatives to ensure that they collect domestic tax for the smooth running of the government.

He said some of the initiatives includes increasing the working time at the Customs Department, the introduction of ITAS and blocking linkages through tax waver policies, adding that with the reforms they have put in place, he was optimistic that the NRA is going to hit its 2020 target.

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