Did We Understand What The IMF Boss Meant By “Financial Discipline”?

Did We Understand What The IMF Boss Meant By “Financial Discipline”?

By Philip N. Wesseh (PNW)

As I always said, communication is not just the collocation of words, but the meaning, intent and purpose of that piece of communication. This is why it is said that “when a piece of communication is not understood or graspable, then, communication has not really taken place.” That is, the receiver must understand the communication from the sender to act in accordance with that communication.

Conversely, if the receiver does not comprehend that communication, the sender’s intent or purpose for communicating has failed. This goes to say that if the communication is intended for change in behavior, that person will never change, only because the person did not comprehend the intended purpose of that piece of communication. This comes in when it comes to the issue of “Behavior Change Communication (BCC).

Last week, this country played host to the Managing Director of the International Monetary Fund, (IMF), Ms Christine Lagarde, who after a meeting with President Sirleaf and other officials of government, including Finance and Development Planning (MFDP) Minister Amara Konneh, stressed the importance of “Financial Discipline,” for rapid economic growth in Liberia.

Addressing a joint news conference with President Ellen Johnson-Sirleaf last Thursday at the Ministry of Foreign Affairs, Ms. Lagarde said Liberia has gone through its worst difficult periods in recent times but reminded the leadership of the country that the nation can once again rise above these obstacles and prosper if the government can maintain a sound reliable financial data and, ensure that public finance is managed in the most disciplined way.

Madam Lagarde reiterated the IMF’s continuous support and assistance to Liberia and urged the Johnson-Sirleaf-led administration to deliver on good financial discipline and sound economic management, something she said will put the country back on track after the Ebola menace.

Ms. Lagarde, who acknowledged the difficulties Liberia is going through, said, “I know that the environment is not easy, no export, your economy is down but you must stand the course in improving the economy.”

She then recounted IMF’s assistance to Liberia and assured that, that world body will continue to stand by Liberia to improve its economy and the reconstruction of Liberia. Ms. Lagarde further assured that the IMF will support Liberia mainly in the areas of power (electricity), peace, security and infrastructural development.

Indeed, the IMF boss has come and gone, what matters now is for us as a government and people to take cue from the issue of financial discipline for economic growth and development. Do we really understand what she meant by financial discipline? The phrase can be likened to “Fiscal Discipline,”

In fact, the phrase is self-explanatory that no one needs a rocket scientist, as we always say, to interpret it. “Financial,” as use, refers to anything concerning money, while “discipline,” which synonymous to “self-control,” refers to “a rule or system of rules governing conduct or activity.”

From the meaning of these words, financial and discipline, one can logically deduce or out of intuition realize that financial discipline means the judicious or wise utilization of financial resources (money) that will move the country from backwaters to prosperity. Additionally, it means using the financial resource of the country for the benefit of the people, and not a few, so as to improve their welfare and wellbeing, to improve the general living standard of the people.

In other words, “Financial Discipline” requires the government to prioritize those basic needs of the people and country. But to do this, a system must be put into place to guide the conduct and behavior of those who take or make financial decisions for the country. It also means using financial resources for their intended purpose for the benefit of the people and not just a few, as being alleged with the Japanese funds.

I say this to bring to focus the recent embarrassment facing the country concerning the funds intended for Japanese projects in this country. Although the President has ordered an audit into this alleged misappropriation or mismanagement of some of the funds by people in charge, it has brought a complete embarrassment to this country because it has the propensity to bring about donor-fatigue. This is an antithesis of financial discipline, as some of the funds have allegedly gone into private pockets, which they were not intended for.

Moreover, financial discipline means avoiding creating unnecessary positions, as had been the case of the National Oil Company of Liberia (NOCAL), something that contributed to the financial crisis of that entity, leading to dismissal. “Financial discipline” is against wastefulness of resources that usually lead to the demise of public institutions.

Today, the concern is whether or not in the face of financial problem, NOCAL would re-emerge from its present financial lethargy. The woes at NOCAL can also be attributed to financial indiscipline. I was shocked to learn about the many vice presidents, when one person could occupy one of those two vice presidents’ jobs.

Economically, financial discipline is analogous to seeking output for maximum benefits for the greater society. This means minimizing input to maximize output. In short, to say it the layman way, using the little one has to get a result that will surpass the little that one used.

Also, financial discipline refers to “accountability” and “transparency,” which requires giving account of financial resources whether it was generated from local resources or from donors. This means explaining how a particular fund was expended.

To conclude, let me say that financial discipline means taking the right decision in the utilization of funds for the benefit of the people and the country; it means in whatever financial decision is taken, the interest of the population, and not just a few, should reign supreme.

Furthermore, “Financial Discipline” means using funds intended for a particular purpose should be used only for that purpose and that it means taking appropriate actions against those who mismanaged or misapplied such financial resources for selfish reasons or self-aggrandizement, to serve as deterrence to others.

To make long matter short, the message of the IMF boss is that we should properly and wisely use financial resources mainly for the benefit of the people and country, and at the same time ensure transparency and accountability. And in the same vein, those who squandered funds intended for public use should be penalized graft and skullduggery.

Until we as a people and country realize that financial discipline is sine quo non-economic growth and development and also as tool to engender foreign aid, I Rest My Case.