Is Liberia's 2012/13 Draft National Budget full of Gimmicks?

In the course of defending the 2012/13 Draft National Budget on a local talk show in Monrovia, June 25, 2012, the Deputy Minister for Revenues, Dr. James Kollie argues that the draft budget is aim at improving the infrastructural component of our country to include the reconstruction of roads and bridges, as well as the provision of electricity through the reconstruction of the hydro. Dr. Kollie even went further by stating that the current Draft Budget for the fiscal year 2012/13 is highly reflective of the interests of the Liberian people, adding that it is not a bad budget as perceived by some critics. He also stated that the budget will help to reduce unemployment for the job seeking population as it explores job creation for the unemployed. Dr. Kollie believes the draft budget aims are improving the infrastructural component of our country and this is the sacrifice the government is asking Liberians to make for the overall interest of the country. In short, the 2012/13 Budget proposal comes with the themes of People center & Improving the Infrastructural Component of Liberia. The Government has declared its intention to cut down waste and focus resources on those priorities that would alleviate the sufferings of Liberia, enhance infrastructure, macroeconomic stability and improve fiscal governance. However, a good part of the allocations do not support the logic of cutting down waste but takes provisioning for wasteful expenditure to new heights. While Mrs. Madam Sirleaf’s government is calling on Liberians to sacrifice for a better future, the government itself is not willing to curb its own extravagance and waste, as components in the 2012/13 budget proposal currently awaiting the approval of the National Legislature have shown. The detail of the proposed budget of US $649,723,473.80 million (LD$48,014,564,710.13) t for 2012/13 is reek of waste. Most importantly, the 2012/13 draft concentrates spending on administrative capital (wasteful spending on government ministries and agencies) instead of developmental capital that directly impacts on the people living in abject poverty (pro poor policies). For this reason, over the ensuing weeks, this article will undertake a detailed sectorial analysis of the 2012/13 budget proposal submitted by the President to the National Legislature. My objective is to raise awareness and start the discussion on the provisions contained in the budget and suggest areas to reduce waste, question spending priorities and cut out what appears dysfunctional. It is my hope that the National Legislature will in the end make the budget work for the people of Liberia. Today, I will look at the revenues profile for 2012 and issues arising there-from, and then throw a searchlight on the much-headlined expenditure for the Public Administration sector. Details of the budget are available online https://docs.google.com/a/mopea.gov.lr/viewer?a=v&pid=sites&srcid=bW9wZWEuZ292LmxyfG10ZWYtYnVkZ2V0fGd4OjI4MTg2YTVlNjVjMjA2M2U&pli=1. According to the 2012/13 Draft Budget, the Liberian government expects to generate about US$ 542,329 million in revenues, consisting of about US$ 117 million on individual taxes & profit, US $3 million on unallocated income & profit, US $ 64million on corporate entities, US $72 million on good and services, US $164 million on international trade and US$45 million grant from our international partners for budgetary support. The 2012/13 budget also has a capital budget proposal of US$68 million (5.4 percent of GDP) slightly above that of the FY2011 out-turn. Starting with projected revenue of about US $542,329 million, the budget envisages a total spend of U.S$ 649,723,473.80 Million (LD$48,014,564,710.13), meaning that we intend to spend US$ 104 million more than we expect to earn in the FYI 2012/13. It seem the budget contains a deficit of 1.4% of GDP (The nominal GDP has been estimated by the World Bank to be about USD $1.32 billion in 2012), so where is the extra cash coming from? The Government of Liberia (GOL) hopes to finance the deficit by borrowing some US$ 80 million. Who are we borrowing from? These are items that need to be detailed for us as citizens to know, and for the National Legislature to decide upon. What are the implications of these pieces of information? How does the plan to borrow an additional US$ 80 million sit with the Sirleaf’s administration’s desire to reduce our borrowing and stop wasteful spending? What does the projected medium term expenditure framework reveal about our revenue and spending patterns? Are these consistent with the desire of our people to see a smaller, less expensive and more efficient government? I am asking Liberians to bear these in mind as they reflect on the numbers presented herein. Looking closely at the spending proposals, we will spend US$175m Million on the Public Administration sector, US$34.4million on Municipal government, US$20.4 Million Transparency & Accountability, US$71million Security & Rule of law, US$69.8million on Health, US$16.1 million Social Development Services, US$76.8million Education, US$63.7million Energy & Environment, US$20million Agriculture, US$82.7million, Infrastructure and Basic Service, and US$37.2 Industry & Commerce. In the draft budget, the provision for the salaries and allowances of government ministries and agency has risen by about US$ 177 Million from the 2011/12 levels to US $185Million. This increase cannot be due to the usual annual salary increment. There is something more and it contradicts the goal of reducing the cost of governance. The National Legislature should scrutinize this more closely! Other items of expenditure that need closer review are the overheads – the US $45.3 Million for Energy Development Fund, US$58 million for General and Special Allowance, US$ 30.3Million on Budgetary Policy and Execution at the Ministry of Finance, US $ 25 Million for Gas Slips and lubricants for vehicle & generators, US$20 Million for the National legislature, US$ 10 Million for the so-called National Capacity Building Fund, US$7.5 Million on Community Development Fund, US$4 Million for Entrepreneur Business fund, US$ 3.5 for Agriculture Produce Buy Back fund, US $ 9 Million for Repairs and Maintenance of Vehicles and Generators, U.S$ 7.5 million on the so-called County Development Funds, US $ 6.5 Million for Celebration of State visit, US$5 Million for Reconciliation, US$2.1million Office building rental lease, US$3million residency property rental property lease, US$5Million for Reconciliation (can reconciliation be bought and what happen to TRC report?), US $4 Million for the so-called Young Entrepreneurs Business Fund, US $2.8 million for foreign travel and additional US $3 million for daily subsistence allowance, US$ 3.4 Million Intelligence Services, US $2.5 Million for the construction of the bridge to nowhere (the Du river Bridge), US$2.5 on skill training and development via TVET (whatever that mean), US $2million for domestic travel daily subsistence allowance, US$3 Million for stationery, magazines & newspapers, US$ 3 Million for telecommunication, Internet, Postage, US$ 1.4 Million Other Specialized Material and Services, US$ 1 Million Societe General de ’Surveillance (whatever that mean!), US$ 604,000 Media relation and intelligence promotion, US$533,750 National Security Expansion(whatever that mean!), US$ 312,503 Advertising and public relation, US$ 312,504 Personal Insurance, US$424,473.00 Security Operation, US$200,000 National Reconstruction and Monument. Within the budget of the Office of the President, US $ 2.7 million is earmarked to keep the President happy which include US $240,000.00 for catering and feeding the President, US$367,999 for compensation, US $51,800 for the rent of the residential property of the President, US $475,000 to hand out as welfare packages, US$ $400,000 for Strategic support of the President 10 outreach projects (whatever that mean!), US $ 225, 000 to compensate the so-called “President Young Professional”. There are other items I will highlight in each sector but these broad areas are indicative for the time being of the need for close scrutiny by the citizens and the National Legislature. I will briefly look at the provisions for the Public Administration Sector beginning with the Ministry of Finance Ministry (MOF). Budgetary allocation for the Public Administration sector is US$ 158 Million. The equivalent tally for 2011 was US$ 75.8 million about US$82.2 Million higher. The MOF proposes to spend about US$81.2Million. A cursory look at the MOF capital project is even more revealing because there is 0 for Capital and over US$ 30.3Million will be spent on budgetary policy and execution (the equivalent tally for 2011/12 was US$ 2.2million, about US$ 28million higher), US$ 8.6 on revenue management, US$4 Million on expenditure & debt management, US$34 Million on General Claims and US$ 5Million on Administration and Management. The Ministry of Finance also proposes to spend USS$9.5 Million on employee compensation, US$28 Million on goods and services, US$12 Million on grant and subsidies, US$ 32.2 Million on GOL and Donor projects, U.S 7 Million on the Department of Revenue, US$ 1.2 Million on the technical and professional support to the Ministry of Planning and Ministry of Finance Merger, $1.7 Million on budget office at Finance, US$450,000 on County Budget office while the rest is cover in gas slip, local and international travel; stationery, magazines, newspapers; maintenance of vehicles, furniture; generators; refreshments, meals, computer software, general and special allowance, entertainments, etc. Are the amounts spent on the MOF is really managing, directing and coordinating the financial affairs of our country, or are they making a few ministers and their appendages so stupendously rich, thereby exacerbating the income disparities, inequalities and injustice amongst us which in turn have contributed to the insecurity in our land? What should interest citizens and our National Legislature members is that similar provisions were made in the 2011/12 Budget for all these items at the Ministry of Finance, so what have we spent so far and when will the budgeting cycle end and the "ongoing projects" completed? Are we getting value for money? There is an incredible request for gas slip, allowances, local and international travel; stationery, magazines, newspapers; maintenance of vehicles, furniture; generators at the MOF. Previous budgets also show this massive demand. The legislature should take steps to confirm the available vehicles, generators, software’s and office equipment’s, etc. at the MOF by asking the officials to bring an inventory. They should use this to determine the reasonableness of these demands. Or, do they throw them away every year to buy new ones? It appears these demands are meant to ensure “job for the boys” through a contract. This unnecessarily shoots up the cost of governance – not through recurrent expenditure but by concentrating spending on administrative capital instead of developmental capital that directly impacts on the people. The central question to ask is how do these bloated and unnecessary expenditures contribute to fiscal consolidation and macroeconomic stability, improved fiscal governance, create jobs or make resources available for infrastructure upgrade? Unless we target our resources to real needs, increase transparency and accountability at the Ministry of Finance spending, and eliminate duplications and copy-cat procurements in our budget, we will continue to lose the value of these investments. When the spending is supposed to be for the Ministry of Finance, it might simply end up in the pockets of officials and contractors. The Ministry of Finance must not be seen as an easy, money- making machine. This is what it appears to citizens these days. We can do better. Our leaders must do better. There is no better time to act than right now!!