Liberia: One Country Two Budgets – Splinter Groups Review Financial Instrument Separately

Economies in West Africa are projected to perform poorly during the latter part of 2016 going into 2017 and Africa's biggest economy, Nigeria has already slummed into recession, raising fears that other economies in the region might perform far worse than expected.

Liberia has gone two months without an approved budget for the year 2016/2017 and the crisis is predicted to get worse as two different group of lawmakers are separately reviewing the same financial instrument which could likely see the country going deep into the year without implementing major projects and programs

For Liberia, two main shocks- the effects of the deadly Ebola virus and the global decline in the prices of Liberia's two primary export commodities, rubber and iron ore are taking a toll on the country's economy.

According to the Central Bank of Liberia, Liberia's economic growth rate was a measly 0.3 percent in 2014 and 0.7 percent in 2015.

Adding to the country's economic woes is the political bickering based upon parochial interests at the Legislature, which is likely to push the country into further financial crisis.

According to economist Samuel P. Jackson, if not for the flow of personal inward remittances, which was $658 million US dollars in 2015 to Liberians from the Diaspora, the economy would crash by now.

"Personal inward remittances are the new social protection for developing nations. They provide a floor that prevents some developing countries such as Liberia from sinking into deep depression even from bad economic policies.

Annual personal inward remittances to Africa surpass the amount of official development assistance. It protects bad economic policies of governments. Liberians should thank their families and friends abroad for providing their livelihoods while government officials bicker," Mr. Jackson exclaimed.

The Legislature has not been able to deliberate and pass into law the draft budget for 2016/2017 due to fight over leadership change, forcing the country to operate for the last two months on one-twelfth (1/12) of the budget for 2015/2016.

Liberia's Public Finance Management Act of 2009 provides for the country to only use one-twelfth (1/12) of its past budget when the budget for the current fiscal period is yet to be approved by the National Legislature.

Part III, Budget Preparation and approval Section 17 Temporary Financing of the Budget and adoption of the budget by default states "In the case where the Legislature is unable to approve the National Budget before the start of the fiscal year, the Minister is authorized to collect revenues and approve expenditures, in line with the proposed budget, up to one twelfth (1/12) of the Budget of the previous fiscal year. Expenditure of said (1/12) by the Minister shall be included in the subsequent financial out-turn".

Projects stalled

The budget operates over a 12-month period July 1 to June 30 and with two months already gone in the current fiscal year. The government has only ten months left to implement programs and projects for which funding are allotted in the current budget.

In the case where the government is operating only up to one twelfth (1/12) of the last budget, major programs and projects are not implemented with the government focusing mainly on payments of salaries for employees and other minor expenditures.

Government is unable to pay vendors and as the major player in the economy, this is resulting into economic stagnation.

President Ellen Johnson expressed frustration over delay in the passage of the budget which is also causing delay in implementation of several projects as time is against her administration with less than two years left to make good on numerous promises.

"I wish to bring to the attention of your Honorable body that programs under our agenda for Transformation, including several long standing draft legislations critical to our development have been stalled by the activities of the Legislature over the last few weeks.

This has also led to little progress on the 2016/2017 Annual Budget", President Sirleaf stated in a letter to deputy Speaker Hans Barchue who is heading the anti-Tyler lawmakers or the 'majority bloc'.

In an apparent effort to have the lawmakers review the budget, President Sirleaf, acting on a certificate of extension issued a proclamation extending the stay of the lawmakers at the Capitol for another one month but it now seems that effort might not solve the problem with the lawmakers still divided on which group to review the budget.

One budget separate reviews

The impasse at the House of Representatives at the 53rd Legislature has taken a new twist as the sparring bodies Anti-Tyler and Pro-Tyler blocs have taken separate and contrary decisions on the draft national budget 2016/2017 currently languishing before the Legislature.

In the session conducted by lawmakers claiming to be majority bloc, they agreed to suspend their rules and constitute themselves into a committee to conduct hearing into the budget.

The motion, raised by Dr. Edward Forh (CDC-District #16 Montserrado County), called for the current committee on ways, means and finance of the House to be dissolved.

The decision was endorsed by that plenary. Lawmaker Forh's motion was prompted by the failure of the majority bloc to get at least one lawmaker from 3 of the 15 counties including Grand Gedeh, Grand Cape Mount and Bomi, which makes any review of the budget unconstitutional.

Article 38 of the constitution provides for the committees on revenues and appropriations to consist of one member from each county.

Article 38 states - "Each House shall adopt its own rules of procedure, enforce order and with the concurrence of two-thirds of the entire membership, may expel a member for cause.

Each House shall establish its own committees and sub-committees; provided, however, that the committees on revenues and appropriations shall consist of one member from each County. All rules adopted by the Legislature shall conform to the requirements of due process of law laid down in this Constitution".

Pro-Tyler take another decision

In the other session presided over by Speaker Alex Tyler, a communication from Representative Moses Kollie, chairman on the Ways, Means and Finance Committee of the House of Representatives was read, asking for an extension of one month to conclude hearing on the budget and that communication was endorsed by plenary.

Representative Kollie announced to the media that as chairman on the Ways, Means and Finance Committee and in consultation with other committee members of the senate, they will resume budget hearing on the country's 2016/2017 fiscal budget.

According to Representative Kollie, they have already concluded hearing on the revenue component of the Budget and were about to start on the expenditure component before officials of the Executive were instructed by President Ellen Johnson Sirleaf to play a neutral role in the ongoing crisis at the House of Representatives, something that has stalled the process.

Section 54 of the House's standing rules gives the chair and co-chair of statutory committees to serve for 3 years and could be removed for abandonment of function by 2/3 of the members of the House of Representatives.

The Draft National Budget for 2016/2017 of US$555.9 million comprises US$495.5 million for Core Domestic Revenue; US$30.2 million as Grant; and US$30.1 million as Contingent Domestic Revenue.

Prior to the President submitting the budget, the Cabinet, approved the Draft National Budget of over US$600-million, representing Domestic Revenue of more than US$400-million, Grants/Budget Support of more than US$66-million, borrowing of over US$58-million, and a surplus from last year's budget of over US$13-million.

The Cabinet also agreed on key areas of expenditure to include debt repayment amounting to US$32.5-million, payment of salaries across the Government of US$252.1-million and, Social Development Fund and other pass through US$23.2-million

Key areas of expenditure also include, Health Sector Strengthening US$73.0-million, Education Sector Support US$79.4-million and, Security and Rule of Law US$90.1-million, including US$15-million for UNMIL Transition, as First Claims on the resource envelop.

Others include the Government of Liberia's (GoL) contribution (Counterpart Funding) to ongoing donor financed public investment projects through loans and grants amounts to US$24.5-million, and GoL Grants and Transfers to various institutions and entities that contribute to Liberia's socio-economic reconstruction US$85.7-million.

In support of major Public Sector Investments, intended to advance Liberia's post-Ebola recovery, growth, and development, the Cabinet agreed to fund road construction and maintenance at the cost of US$44.3-million, including US$17.3-million as GoL contribution to donor funded projects.

The Cabinet also agreed to fund renovation of public buildings at the cost of US$9-million, expansion of electricity at US$2.4-million, district development projects throughout the country (through the National Legislature) at US$10.9-million, and water and sanitation US$2.3-million.

Beach and waterways cleaning at US$1-million, human capacity-building US$2-million, private sector development US$1.5-million, National Low Cost Housing project (US$1.5 million, and LWSC Water Project US$1.0-million were other key areas the Cabinet also agreed on in the current budget.

Other key areas considered in the draft budget by the Cabinet include renovation works at BWI US$1-million, renovation works at Tubman University (US$1-million, and a host of other key interventions critical for the delivery of social services and economic transformation.

Road, electricity projects delayed

Projects such as funding for road construction and maintenance at the cost of US$44.3-million, fund for renovation of public buildings of US$9-million, expansion of electricity at US$2.4-million, district development projects throughout the country (through the National Legislature) at US$10.9-million, and water and sanitation US$2.3-million all will be stalled as the budget year continues to elapse.

The Revenue Code of Liberia provides that any amount of money not expended during the course of the budget year has to be carry forward by June 30, the end of the budget year.

Section 2217 of the Revenue Code of Liberia Act of 2000 as amended in 2011 on disposition of un-obligated balances states that "unless an appropriation is specifically designated as a multiple year appropriation, the unobligated balances of each appropriation authorized in any supplemental appropriations acts shall revert to inappropriate surplus at the end of the fiscal year for which such appropriation is authorized and shall not thereafter be available for obligation or expenditure except by subsequent legislative enactments.

The balances of appropriation obligated but not disburse prior to the end of the fiscal year shall be carried over and added to appropriations for the next succeeding year and shall be available for any other purpose".

As per this provision, any amount not used during the budget year will be carried forward to the 2017/2018 budget year.

On Wednesday Nigeria slipped into recession with the latest growth figures showing the economy contracted 2.06% between April and June.

Source: FrontPageAfrica.