Consistent with the Section 11.1 of the Public Financial Management Act of 2009, the President of the Republic of Liberia yesterday submitted the draft FY13/14 National Budget to the 53rd National Legislature that reflects the second year spending in the three-year Medium Term Expenditure Framework (MTEF), introduced last year.
The Ministry of Finance, which is the fiscal authority of the Government of Liberia, after several months of consultations and hearings with all spending entities, has developed and presented a draft national budget that is intended to further the country’s transformation agenda.
FY13/14 draft budget highlights investments in key areas that are consistent with the Government’s development priorities focusing on Energy, Roads, Ports, and ICT. These areas hold the greatest potential for economic growth, expansion and development in our country.
Few things are different in this year’s budget compared to the FY12/13. The total projected revenue envelop is US$553 million as compared to US$672 million in FY2012/13.
This revised envelop does not include borrowing which was US$80 million in FY12/13; Contingent Revenue which was US$83 million in FY12/13; and cash brought forward which was US$3 million in FY12/13.
While the Ministry of Finance has identified more than US$40 million of Contingent Revenues and more than US$150 million in potential borrowing sources, the Ministry believes that the fiscal regime is well served if public expenditures are not planned on those sources until they are fully actualized. If these amounts were included, the total revenue envelop would be US$743 million, a 10.5% increase over FY12/13.
The authorities of the Ministry of Finance believe that excluding these components from the revenue envelop projects a more realistic picture and a solid revenue base upon which public expenditures can be planned and executed. The idea is that if and when contingent sources of revenue or borrowings are actualized, supplemental budget requests can be made to the National Legislature to finance specific national development projects.
A detailed analysis of the Core Revenue envelop (Tax, Non-tax, and Grant) shows double digit growth. The Core Revenue is expected to grow from US$484 million to $543 million between FY12/13 and FY13/14, a 12% increase (a detailed analysis has been attached).
On the other hand, public expenditures has taken into consideration the cost of running the government in terms of recurring expenditure which include among other things salaries, stationeries, foreign travels, transport equipment, fuel, etc.
Additionally, the Government ensured that critical investments in energy, ongoing road works, road maintenance, youth development, capacity building, security, reconciliation, and ICT were protected. Other sector projects that were begun during the FY12/13 budget year were equally protected to ensure that we did not create “sunk costs” or “white elephant” projects.
The Authorities of the Ministry of Finance further asserts that since our core revenue base cannot adequately finance our developmental needs because of the huge infrastructural deficit, it would be prudent for responsible agencies to conduct feasibility studies and designs on key infrastructure projects and then shop them around to potential lenders and partners.
This method of financing our infrastructural needs will ensure that the Government gets better quality infrastructure as well as accelerate our economic transformation agenda. The Ministry of Finance is working with all traditional multilateral donors on their country assistance strategies and non-traditional lenders on resource mobilization.
However, the Ministry cautions that Government needs to be careful to ensure that borrowings are for projects that have high economic and/or social returns so that tomorrow’s generation do not that have to undergo another form of HIPC.
In summary, a critical breakdown of the FY13/14 budget highlights key areas of investment, after recurring expenditure, to include but not limited to Salaries and Wages US$206.0 million, Goods & Services US$124.5 million, Energy US$ 15.3 million, Roads & Bridges US$ 23.7 million, ICT US$ 3.5 million and Youth Development US$ 5.0 million.
Other aspect of the budget is Capacity Building US$3.0 million, Health US$ 11.0 million, Education US$ 15.0 million, Security US$ 10.0 million, WASH US$ 3.2 million and Reconciliation US$ 2.0 million.