Liberia’s 2023 Budget of Misplaced Priorities
By S. Karweaye
Liberians heaved a sigh of relief in December 2022 when the deputy minister for budget and development planning, Tanneh Geraldine Brunson finally submitted the 2023 budget to the national legislature, after a two-month delay in its submission by the Executive, a violation of the Public Financial Management (PFM) Law, which calls for the submission of the budget at least two months before its passage.
In the course of the budget analyses, we would see if like previous budgets, this budget does anything to put Liberia’s battered economy on the path of growth or sustained development. What provisions does it offer the millions of unemployed Liberians with no hope of a better future? What are its provisions for rescuing the 64% of Liberians currently living below the poverty line, of whom 1.3 million live in extreme poverty?
Less than one out of every four dollars budgeted in 2023 would be invested in education, healthcare, roads, and electricity. Whichever way one looks at these figures, they confirm surely that this budget is likely to be a failure on arrival. For instance, with all the rhetoric that the cost of governance is reducing, one would expect figures that are closer to 25% as is the internationally accepted standard for recurrent expenditure, but no, the recurrent budget is about 80.21% (US$623.95 million) more than quadruple the capital expenditure provisions.
Let us look at the performance of the previous budgets for an idea of the possible results of the 2023 budget, considering that the economic team is unchanged and contrary to expectations, the time of commencement of execution of the 2022 budget would most likely replicate that of the previous budgets. By the midyear executive report of the 2020 year, the finance ministry report pegged implementation at 44%. Since the 2020 budget, mid-year performance the Weah administration has failed in reporting budget performance.
Looking at the above picture, it is clear that unless something drastic is done by the government, the 2023 budget implementation will remain at similar levels to that of previous budget performance and the nation’s infrastructure deficit will continue to widen. There is a need to put in place checks and balances to ensure that Ministries, Departments, and Agencies (MDAs) provide services with capital funds that have been budgeted and released to them.
The health sector across Liberia reveals an area of national life that is in dire need of rescue through new policies, regulations, and strengthened institutions. Across the country, treatable diseases like malaria and cholera are still killers, and infant and maternal mortality rates are amongst the worst in the world. The Liberian government has greater responsibility for healthcare than any other tier, being in charge of primary and secondary healthcare. We had hoped that our government budget would be more effective and higher in both quantity and quality. Sadly, that is not the reality of the 2023 proposed budget. The World Health Organisation (WHO) recommends that 15% of national budgets be allocated to healthcare. In the 2023 proposed budget, 9.71% (US$75.52 million ) is budgeted for the health sector; about the entire sum is devoted to recurrent expenditure.
According to the WHO, malaria is endemic in Liberia with a prevalence rate of up to 60% in some regions, and it has been a major cause of death in children under 5 years of age. Our current doctor-to-patient ratio is 1 to 20,000 people and this miserable capital allocation at the tertiary level is not sufficient to adequately address the challenges facing this sector. How does a forward-thinking government justify allocating 9.71% of its budget to the health sector? With the widespread dysfunctions in governance that we are experiencing as a country, the under-budgeting for the sector is worsened by the fact that actual releases are usually far less than the amounts allocated. Additionally, effective utilization of the little that gets released is hindered by the corruption and incompetence that exist in public sector agencies.
Given the contribution of education to development, the United Nations (UN) recommends that countries allocate 26 percent of their resources to education. In the 2023 proposed budget, Liberia won’t meet this budgetary target. The Liberian government allocates only 12.43 percent (US$96.71 million) of its budget to the education sector, which is lower than comparable African countries such as Kenya (26%), Ethiopia (24%), Sierra Leone (22%), Namibia (20%). Problem is, like health, the major chunk of its allocations are misdirected; US$51.1 million is allocated to compensation of employees while US$9.2 million is for goods and services.
Agriculture ought to be the business of the government, but the intervention in the sector has been confused, with mixed results at best. Agriculture is apportioned US$5.42 million (0.70%)in the 2023 budget. This allocation is not adequate for targeted intervention in a sector, especially with food insecurity in Liberia. The decision to allocate US$5.42 on the compensation of employees and repairing maintenance of the warehouse, etc instead of improved seedlings, agrochemicals, fertilizers, extension services, and farm-to-market infrastructure, is indicative of the spend-without-results symptomatic of virtually all Weahian programs since 2017.
Ironically, if you look at the Ministry of States for Presidential Affairs’ budget of US$15 million, you would see that all talk about transparency and accountability is just that, talk. There is a US$4.3 million provision for the office of the president, while US$819,600 is allocated to Public Procurement and Concession; US$2.3 million for Liberia Anti-Corruption Commission, 403,627 for Liberia Extractive Industry Transparency and only US$2.34 million is allocated to the Liberia Anti-Corruption Commission. Worse still, there is a paltry allocation of about US$718,120 to the National Disaster Management Agency of Liberia; it is not therefore surprising that the agency is incapable of responding timely to emergencies, and when they do so, often too little, too late.
One of the most debated issues about governance in Liberia is arguably the amount being spent to run the country’s bicameral legislature. Last year, we were served another national comedy when the national legislature appropriated the 2021 and 2022 national budgets of US$30,000 for each Senator and Representative in the name of the so-called Legislative Engagement Fund totaling US$3.6 million. Sadly, Liberia’s lawmakers have a reputation for rent-seeking behavior. They have been considered among the highest-paid parliamentarians in West Africa. According to the 2023 proposed national Legislature budget, a total sum of US$ 43 million was allocated to the national legislature. US$24 million was for salary costs for the House of Representatives, while US$14 million was set aside for the salary cost of the Senate. Substantial additional perks of the office come in the form of allowances to cover a range of costs including fuel and lubricants for vehicle vehicles (US$5 million), other compensation (US$2 million), constituency visit (US$980,121), and legislative committee hearings (US$3million). The number of funding received differs across ranks, with the Speaker (US $2 million), Deputy Speaker (US $1.2 million), and Senate Pro Tempore (US $2 million), receiving substantially more.
Over the years, the public infrastructure deficit in Liberia has become an issue of major concern, The gap includes a lack of good roads and a railway network that can drive economic activities, poor and in some instances, non-existent power generation, transmission and distribution systems, decaying public educational facilities, dilapidated government-owned hospitals (including tertiary healthcare facilities) and even airports amongst others. Generally, infrastructure is the foundation on which economic activities thrive, as poor infrastructure impacts economic growth. According to the World Bank. Liberia has a huge infrastructural deficit (roads, housing, electricity and ” a funding gap between US$250 million and 500 million per year, it will need a combination of increased finance, improved efficiency, and cost-reducing innovations to reach its infrastructure targets in a reasonable time. Without these, Liberians may have to wait for up to 40 years to achieve the targets.” Putting this into perspective, the government of Liberia would need to spend the entire 2023 budget of US$777.94 million, continuously over the next 40 years on capital expenditure to meet the target. The fact that less than US$71. 4 million was appropriated for capital expenditure reflecting the urgency to increase infrastructure spending.
Rather than being a budget of hope, Weah’s 2023 proposal is a budget of despair. It won’t significantly change the tempo of the economy. Nor will it reduce the country’s high unemployment, poverty, and inflation rates. In fact, it could worsen Liberia’s cycle of deficits and debts, without the possibility of fostering structural transformation, diversifying the economy, promoting sustainable economic growth, and reducing unemployment and poverty. The budget is consistent with previous Weah administration budgets. Most importantly, it doesn’t address structural deficiencies in the Liberia economy. These include the lack of diversification of sources of revenue. These have been responsible for the country’s cycle of high budget deficits and government debts.
The first and second quarters of 2023 will be dominated by elections and political transitions. This may have the effect of disrupting economic activities and fuelling uncertainties, especially among domestic and foreign investors. The economy may therefore fall short of the 5.3% growth rate assumed in the budget parameters, which would subsequently result in lower revenues and additional borrowings.
Liberia’s overall debt-to-GDP ratio of about 53.2% is sustainable for now. However, the new round of budgeted borrowing sends the wrong signal to domestic and foreign investors. Deficits and debts imply that taxes will be raised in the future to pay for debts, making investments less profitable. It may also prompt nervous investors to move their capital to more fiscally stable countries. There are also fears that unrestrained borrowing could tilt the country’s debt portfolio into the realm of unsustainability, which may then lead to defaults in debt repayments and a steep decline in new loans. Government obligations to contractors and other investors would be jeopardized.
However, what is clear from this analysis is that the Weah-led administration is not allocating funds to adequately address the key social challenges that confront its people. The President should be aware that this poor budgetary performance will turn out to be a major hurdle in his quest for possible re-election. Liberians will demand to know what he did with resources entrusted to him in the last six years before considering him for another term. The performance of the Weah-led government has been below average at best and contrary to the Weah pictures that flooded Monrovia over the years on billboards; we cannot describe the poor performance as one good term and therefore deserving another. I rest my case.