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Understanding the Budgeting Process in Liberia

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By S. Karweaye

Liberia: The nation’s attention has once again been captured by controversy over the budget formulation and implementation after an interview conducted by President Weah in Kakata, Margibi County on August 16, 2021. During the interview, a journalist asked the President about the Liberia National Fire Service complaining about the agency’s low budgetary allotment. The President responded by saying ” “I am from the Executive; I don’t create a budget.”

In the past several years, we have analyzed national budgets; their context, content, effectiveness, and relevance to critical development challenges. We came across wasteful spending, wrongful priorities, and the absence of clear-cut developmental visions and plans for the nation’s whole. While the Government has a statement of intentions for 2018-2023 encapsulated in 157 pages “The Pro-Poor Agenda for Prosperity and Development (PAPD) ” and a dodgy Medium Term Expenditure Framework (MTEF), most of the counties did not even attempt that, and certainly had no articulated visions, plans and medium-term programs to anchor their annual budgets.

Development theory and experience support the proposition that budgets need to be predicated on long-term visions, economic strategies, and plans to be effective instruments of societal progress. Unfortunately, this is not the case for Liberia. Either the government budgets are not anchored on coherent visions and plans or where there are development plans, the budgets are at variance with the visions. Worse still, besides policy incoherence and perhaps in consequence of implementation discontinuities. Audit reports from the General Auditing Commission (GAC) on County Development Fund (CDF) and the Social Development Fund (SDF) indicate Liberia has been plagued by the phenomenon of abandoned projects. Similarly, the National Oil Company of Liberia is alleged to have wasted over US$32million and the institution became virtually insolvent, with the departure of the former heads Robert Sirleaf, Randolph McClain, and other top officials leaving with hefty severance pay. Former President Sirleaf is on record to have publicly said she took responsibility and no one was brought to book. The 2019 GAC report on the US$25 million used to mop-up excess Liberian dollars on the market shows many discrepancies between what the Central Bank reported and what the investigators found. These and other examples point to a fundamental malaise – our failure to articulate a national vision, coherent economic strategy, national development plans, and annual budgets to translate these into concrete outcomes and progress.

The importance of focusing on the national visioning and development planning process and their link to the budget cannot be over-emphasized. Unfortunately, this is not always the case in Liberia. In the last fifty years, a handful of countries have transformed their countries from low to middle and high-income through careful visioning, sound development planning, and focused implementation under competent leadership. China has not only grown at more than 10% per annum on average for 30 years but lifted more than 400 million people out of poverty since the leadership began implementing economic reforms in 1978. 

The President’s statement of “I am from the Executive; I don’t create budget has generated lots of debates on social media with some saying his statement was correct while others are saying his statement was wrong. For the sake of the ongoing debate, we will first describe the Liberian government budgeting process. How are budget priorities determined and who does? How are budgets prepared, reviewed, and implemented? What does sound budgeting mean for our political economy and progress as a nation? What can we learn from the past when things worked slightly better? And what country experiences are available for Liberia as lessons for the future? We intend to spend the next couple of articles explaining budgeting and addressing some of these questions. We hope that our citizens will be better enlightened about the subject and demand accountability from those in power. 

The first step in our budget preparation is the President issuing directives to the Minister of Finance and development planning and proposing a budget in line with his government vision for Liberia (The PAPD). This is followed by producing a Medium-Term Fiscal Framework (MTFF), mandated in the Public Financial Management Law of 2009. The MTFF shows projected expenditure and revenue plans for a few years in advance. Next in the budget preparation process are stakeholders’ consultations. This entails consulting with the international financial institutions, donors, and legislative leadership on the broad budget direction, size, and proportions. Then Ministry, Department, and Agencies (MDAs) expenditure ceilings are set; that is each MDA is given an envelope – a maximum amount available for its recurrent and capital expenditure needs for the following year. The medium-term sector strategies for MDAs are then prepared by the Department of Budget within the Ministry of Finance and Development Planning, which translates into Medium Term Expenditure Framework (MTEF) for presentation. After all the above is done, the Minister of Finance then issues a budget call circular which is like a framework for the MDAs to prepare their budget proposals, but within their ‘envelopes’. 

When the MDA budgets have been verified to comply with the requirements, the draft is forwarded to the President for his approval. The President then forwards it to the Two Houses of the National Legislature. The budget is a ‘money bill’ which is required by our constitution to be passed by the Two Houses, but the House with its 73 members and more representative of the Liberia population, has the upper hand in event of disagreements with the Senate. Our constitution gives the Senate a greater say in presidential appointments but confers inherent superiority to the House concerning the appropriation of public funds. 

Like every bill, the Budget – referred to as Appropriation Bill or Supplementary Appropriation Bill – goes through a First (or Introductory) Reading and debate in plenary sessions. It is then referred to the Appropriation and other sector committees for more detailed review and scrutiny to move the Bill to the Second Reading. At this point, the various MDAs are invited to justify and defend their draft budgets in a way similar to “public hearings”. For instance, the Minister of Information and his staff defend the budget of his ministry and its parastatals before the legislative committees on Information or Media and so on. And it is at this point, MDAs ‘lobby’ legislative committee to increase their allocations, re-introduce projects that may have been screened out or rejected by the Executive Branch, and promises of financial “quid pro quo” for budget distortions negotiated and agreed. The respective projects and numbers which constitute the revised budget are now referred back to the two houses for debate and passage in plenary sessions. It is unlikely that the two houses will come up with the same list of projects and numbers which make up the budget for presentation to the president for approval. If some degree of harmonization is necessary; the two houses usually appoint a committee to undertake this with equal membership from each. In the unlikely event that the Committee fails to agree, the two houses go into a joint house to vote on the budget – a process that ensures that the House version of the Money Bill is passed for approval. As soon as the budget has been harmonized, the finalized Appropriation Bill is sent to the President for his approval. In the event, the President fails to approve, the Bill lapses unless passed by a two-thirds majority of the legislature thereby no longer requiring presidential approval. Once enacted the budget becomes a national law that cannot be changed or modified in any way without recourse to the legislature.

In conclusion, the Constitution of Liberia places the power of the purse with the national legislative branch. Article 34 states: “no monies shall be drawn from the treasury except in consequence of appropriations made by legislative enactment and upon a warrant of the President. . .” The legislature passes legislation, including decisions about taxes and spending (although the President must agree for it to become law). The President, who heads the government’s executive branch, is required to submit an annual budget, but that is merely a statement of proposed priorities. The national legislature may or may not consider some of those proposals. The President can veto spending bills or tax legislation (although the legislature can override the veto). The President implements the budget decision.https://thenewdawnliberia.com/liberia-special-budget-to-increase-by-over-us40m/

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