Home Economy Sen. Konneh ‘Snapshots’ 2024 Proposed Budget… Says “Until We Fix the Electricity Problem, Liberia’s Economy Will NOT Expand”

Sen. Konneh ‘Snapshots’ 2024 Proposed Budget… Says “Until We Fix the Electricity Problem, Liberia’s Economy Will NOT Expand”

by News Manager

MONROVIA: Former Minister of Finance and Development Planning, now Gborpolu County Senator, Amara Mohammed Konneh says the Joseph Boakai Administration has submitted to the Legislature a proposed budget of US$692.4 million for 2024.

According to Senator Konneh, the proposed budget is 10.3 percent lower than the erstwhile George Weah administration’s revised budget in 2023. The Senator gave a quick breakdown as follow:

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,” he indicated.

As the Gbarpolu County Senator’s ‘snapshots’ the first proposed National Budget of the Liberia’s new administration of President Boakai, 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).

Senator Konneh said public investment in growth-enhancing sectors or programs is just US$51.9 million, representing only 7.5 percent of the budget.

He asked: “Is the budget aligned with President Boakai’s ARREST Agenda?”

In response to the question, Senator Konneh disclosed that “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.”

Konneh: “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.”

He maintains that the budget should stimulate economic growth, so more Liberians feel its impact through employment and better living conditions.

According to the former Finance and Development Planning Minister, at only 7.5 percent or $51.9 million, the draft budget has and it is 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.

“I and my colleagues in the Legislature must now focus on how to increase the investment spending component of the budget to drive growth. There are three possible ways to do that:

To generate more domestic revenue by exploring options to increase domestic resource mobilization for investment. Revenue is the ‘Superintendent’ of development. We should look at several revenue options, including i) reviewing tax waivers or exemptions; ii) strengthening executive and legislative oversight over public corporations; and iii) mandating public corporations and state-owned enterprises to publish annual financial statements (revenue, expenditures, and debt). This will not only enhance fiscal transparency but also help us fairly assess the contribution of public corporations to the budget, Senator Konneh asserted on his Facebook Page over the weekend.

He alarmed that this should concern all Liberians that 20 years after our war, SOEs are expected to contribute only US$10 million (or 1.4 percent of the budget). In the past six years, SOEs’ contributions have been very insignificant, hence, the need to elevate conversations around a framework or mechanism to boost SOEs’ contributions in 2024 and beyond in a transparent way (by some agreed-upon formula). This requires political will, stringent corporate oversight, and concrete reforms.

Additionally, the Legislature needs to prioritize the passage of the VAT law so the LRA can put in place an implementation framework to broaden the consumption tax base and improve domestic revenue mobilization. Finally, tax administration needs to be enhanced, especially for trade taxes. Intakes from trade taxes should reflect the volume and value of imports during the year, the Senator averred.

  1. On the expenditure side, strengthen expenditure controls in ways that reduce recurrent expenditures (which often constrain institutional performance) and reallocate savings to boost investment spending.
  2. Borrow to invest in growth-enhancing programs; Liberia has very limited borrowing space. Let’s use it wisely. The Legislature should also consider restructuring our debt portfolio, particularly our domestic debts, to allow us to make regular payments to local commercial banks and address the legacy debt the country owes the CBL from President Samuel K. Doe’s era to free up space for us to borrow, of course sensibly, to finance our development,” he added.

During the budget negotiation, Senator Konneh indicated that he will argue that “we focus less on mundane issues and more on big-picture issues that help to enhance the budget to lay a strong foundation for sustained economic expansion by focusing mainly on five reforms:

  1. Maintaining sustainable government finances, keeping inflation under control, and ensuring that the Liberian dollar is broadly stable.
  2. Enhancing Liberia’s ability to integrate with the Mano River Union economy – a market size of approximately 50 million people and a combined GDP of about $80 Billion – through trade and investments. This means fixing the roads and borders that connect Liberia with its neighbors to make businesses easier in this big market. This is where agriculture and tourism in the ARREST Agenda become relevant for investment.
  3. Judiciously focusing on the institutions that enforce contracts, property rights, and fighting corruption in Liberia. This is the magnet for attracting foreign direct investment. This is where REAL change is needed the most.
  4. Fixing the LEC and electricity problem by paying government bills, fixing corporate governance, and making additional investments. Until we fix the electricity problem, our economy will NOT expand to create opportunities for Liberians. There is nothing in the proposed budget to suggest that.
  5. Earmarking all additional revenues to education for improving instruction through teacher training, health for drugs, and the growth-enhancing sectors and programs, i.e., agriculture, tourism, and energy.

Senator Konneh stated that he believes, “once we establish the rules for a fair game and ensure their enforcement without favors to our families, friends, and the cartels that corrupt public officials, and fix the electricity crisis, we will begin to see self-generating growth that will increase revenue for the development of our country.

Easier said than done, but this is the approach my colleagues and I should consider for the first budget for a new government. Let’s be BOLD, Senator Konneh urged members of the National Legislature.

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