This year will mark the second appearance of the George Weah led administration at the Spring Meetings which is taking place in Washington DC. The Minister of Finance and a host of other officials of government including technicians are attending these meetings. Their focus, as usual, will be to seek support for the implementation of the government national development agenda the PAPD. Issues such as investment in private sector, domestic revenue mobilization, digital economy and social safety net, which are in line of the PAPD will be put on the table for discussions.
The government first opportunity came when it signed a US$3 million grant agreement with the World Bank. The money will go toward the Youth Opportunity Program. The Ministry of Gender and Social Protection is finalizing arrangement with the World Bank for support through cash transfer to vulnerable women in four poverty distressed counties. It was also reported that prior to the Spring Meetings, discussion with the World Bank was underway to seek additional funding for education, public financial management and water and sewer.
The World Bank had already earmarked USD$106 for three key sectors including education (50m), water and sewer (30m), and Public Financial Management (26m). On the basis of conditionalities, the country will have to develop a logical framework and a rationalized time bound matrix for the utilization of this money.
According to information, support to water and sewer will focus on providing new pipes for the Pipeline water plant. Support to the education sector will see the construction of additional schools in 24 districts. It will also include the construction of teachers’ quarters and science labs. On the public financial management side, more support will go to setting up of an E-tax policy and system, e-procurement, capacity development amongst others.
Rigid as it is, it appears that the government will be signing on to the IMF program. Once successful, the country could benefit from additional funds including budgetary support. To achieve this, the government will have to take strong measures towards macroeconomic reforms to include transparency in monetary and fiscal policies, reforming the over-bloated wage bill, governance, business climate as well improving an enabling environment for agribusiness.
There are indications that government’s projected revenue for fiscal year 2019/2020 will fall short of expenditure hence the need for serious austerity measures. More attention needs to be focused on the rationalization of both salaries and allowances within the public sector. There is not a coordinated approach in the payment of allowances in various ministries and agencies. Reforming the wage bill could be the first best approach for a government that inherited lots of debts from the previous government.
SOEs transparency and oversight could be another measure placed on the table by the IMF and WB. The government does not have a strong framework on how SOEs can contribute to the country’s budget processes. The international financial reporting standards require all SOEs to publish their financial statements on a periodic basis.
While the government has made progress in resolving some of the binding constraints to the business climate, there is still a need for more reforms. Access to credit, resolving insolvency and enforcing contracts remain a challenge. The government has already banned import permits declaration, while at the same time making efforts to improve trading across borders.
Conforming to the IMF program requires a rigorous self-assessment of the country’s macroeconomic policies as well as the politic will to implement these measures. While this process can be burdensome for developing countries, it can also offer opportunities for sustained economic growth and development, especially for a country that needs more support for infrastructure development and agriculture.