Liberia: Draft Budget Falls Short on Growth-Driving Sectors, Agriculture and Tourism Neglected in 2024 National Envelope

MONROVIA – The draft of the National Budget, which will initiate the agenda of President Joseph Boakai’s administration, is currently before the Legislature for scrutiny, adjudication, and approval. The proposed budget of US$692.41 million is slightly lower than what the previous administration had presented to the Legislature. However, that budget was sent back to the Executive when President Boakai assumed leadership to allow him the opportunity to realign it with the priorities of his government.

By Lennart Dodoo

The draft Budget attributes the Budget’s decline to a projected 61.4 percent decrease in external resources. Domestic revenue is expected to reach US$649.98 million, with tax revenue comprising US$531.48 million and non-tax revenue US$110.78 million. External resources are forecasted at US$42.43 million.

In terms of tax revenue composition, major contributors include taxes on income and profit at US$247.98 million, accounting for 45.9 percent of total tax revenue; taxes on international trade at US$191.83 million, representing 35.6 percent; goods and services tax at US$85.02 million, contributing 15.8 percent; and real property and other taxes at US$14.36 million, making up 5.79 percent. On the other hand, non-tax revenue is estimated at US$110.78 million, with property income tax leading at US$85.35 million, constituting a significant 77.0 percent of non-tax revenue.

The total expenditure envelope is divided into two main categories: recurrent expenditure which is US$640.52 million accounts for 92.5 percent of total expenditure while spending on Public Sector Investment Programs (PSIP) is US$51.89 million accounting for 7.5 percent of total expenditure. Below is a graphical comparative analysis of recurrent and PSIP expenditures for FY2023 and FY2024.

Financial experts believe this demonstrates a substantial disparity between recurrent expenditure and Public Sector Investment Programs (PSIP). Recurrent expenditure, constituting 92.5 percent of total expenditure, indicating a predominant focus on day-to-day operational costs such as salaries, utilities, and maintenance. Conversely, PSIP receives a mere 7.5 percent share, reflecting a comparatively limited emphasis on capital projects and long-term investments critical for economic expansion.

The Senate Committee Chair on Public Accounts and Audit also critiqued this in a Faceboook post. He stated:

“Recurrent spending to keep the government running is US$640.5 million, representing 92.5 percent of the budget. This means our government is too fat. We need to put it on a diet. The key recurrent spending drivers are wages and salaries (42.9 percent), debt servicing (18.6 percent), grants (about 14.7 percent) for the provision of basic social services in the health and education sectors, and goods and services (13.0 percent).

Public investment in growth-enhancing sectors or programs is just US$51.9 million, representing only 7.5 percent of the budget.”

A Liberian economist who asked for anonymity also opined: “The disproportionate allocation between recurrent expenditure and PSIP poses several challenges to sustainable economic growth. Firstly, inadequate investments in infrastructure impede productivity and competitiveness, hindering the expansion of industries and limiting job creation opportunities. Secondly, a lack of emphasis on PSIP undermines the capacity of the public sector to deliver essential services efficiently, thereby impeding social welfare and inclusive development. Moreover, insufficient investments in key sectors such as education and healthcare perpetuate socio-economic inequalities, exacerbating poverty and reducing human capital formation.”

Further scrutinizing the draft Budget, Senator Konneh disclosed that it fails to address the Agriculture and Tourism components of the President Boakai’s ARREST Agenda.

“Agriculture (A) and Tourism (T), two growth-enhancing sectors, are left to fall between the cracks (both on-budget and off-budget) in the ARREST Agenda,” he stated.

FrontPageAfrica’s careful review of the Budget found that there is absolutely no allocation for tourism, despite tourism being a major pillar of the Boakai-led developmetn agenda.

Tourism boosts the revenue of the economy, creates thousands of jobs, develops the infrastructures of a country, and plants a sense of cultural exchange between foreigners and citizens.

Konneh stated: “At a glance, sectors mirroring the Rule of Law, Roads, Education, and Health and Sanitation (RRES), are somewhat prioritized but the allocations to these sectors are mostly driven by wages and salaries and not necessarily investment spending. For instance, about 93 percent of the proposed budget for the Ministry of Education is for wages and salaries, leaving ONLY 7 percent for consumption spending and improving education infrastructure and instruction.

“The budget should stimulate economic growth so more Liberians feel its impact through employment and better living conditions. At only 7.5 percent or $51.9 million, the draft budget has very little room for investment spending to stimulate robust economic growth and accelerate development. Agriculture (A) and Tourism (T), two growth-enhancing sectors, are left to fall between the cracks (both on-budget and off-budget) in the ARREST Agenda.”

Sen. Konneh ephasized the urgent need to prioritize investment spending in the National Budget to stimulate economic growth. He outlined three key strategies to achieve this goal during budget negotiations.

Firstly, the importance of increasing domestic revenue through enhanced tax collection and fiscal transparency. He proposed measures such as reviewing tax waivers, strengthening oversight of public corporations, and mandating financial disclosure by state-owned enterprises (SOEs). Konneh highlighted the alarmingly low contribution of SOEs to the budget, calling for a transparent framework to boost their contributions.

Secondly, reallocating savings from recurrent expenditures to bolster investment spending. By tightening expenditure controls to optimize budget allocations towards growth-enhancing programs.

Thirdly, strategic borrowing to finance development projects while cautioning against excessive debt accumulation. He stressed the need to restructure the country’s debt portfolio to create fiscal space for responsible borrowing.

In addition to these fiscal measures, Sen. Konneh emphasized broader reforms aimed at laying a foundation for sustained economic expansion. These include maintaining fiscal stability, enhancing regional integration, strengthening institutions, addressing the electricity crisis, and prioritizing investment in education and key sectors like agriculture and tourism.

The Gbarpolu County Senator underscored the importance of enforcing rules impartially to combat corruption and ensure equitable development. He expressed confidence that by addressing systemic challenges and fostering a conducive environment for investment, Liberia can achieve self-sustaining growth and prosperity.

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