August 5, 2020

A rejoinder to Boima S. Kamara’s “Liberia: Fiscal Year Uniqueness and Other Complexities”

An Article uprooting the display of Boimah’s misconceptions of Liberia’s Fiscal Year Uniqueness and Other Complexities

Authored by: Samora P. Z. Wolokolie, Ph.D., CFE, CA, CPA, FCFIP, FIPA, FCFA.

Deputy Minister for Fiscal Affairs / MFDP, RL

Over the course of the past two weeks or so, we have witnessed the former Minister of Finance, Mr. Boima Kamara’s attempt at contributing to, and participating in the fiscal and economic occurrences in mama Liberia. Mr. Kamara, as a Liberian, and even more as a former Minister of Finance and Development Planning, has every right to critique and contribute his intellectual quota to the growth and development of this great country of ours. We recognize and respect that!

However, while Mr. Kamara is entitled to his inalienable right to freedom of speech, he is not entitled to his own sets of facts. His opinions are his entitlement, and in the realm of democracy, they must be respected. But the FACTS are not his, and he is NOT entitled to skew or misrepresent the FACTS. For each time he attempts to do so, we would erect the appropriate intellectual barricade to not only challenge those wrong assertions, but to loudly and roundly call him out and provide what truly the facts are.

But before going to the surgical dissection of Mr. Kamara’s technically flawed assertions, let me make it clear that we at the Ministry of Finance and Development Planning are subsumed with the daily intricacies of managing the nation’s fiscal activities. However, we cannot sit idly by while the true intent and purpose of the work we do are misconstrued, misrepresented, and misunderstood. We owe it to our people, the nation, and to ourselves to provide clarity when someone, no matter who they are, attempts to be economic with the FACTS.

Now, having laid the premise, kindly follow me as I provide the FACTS relative to the assertions made by the immediate past Minister of Finance, Mr. Boima Kamara. My responses (The FACTS) are provided as inserts below Mr.

Kamara’s assertions. See below:

Fiscal Year Uniqueness (Boimah S. Kamara writes)

Liberia is the only country within the 15-member ECOWAS bloc in West Africa with a 4-quarter-fiscal year starting July 1 of a given year and ending June 30 of the following year, while the rest of the member countries’ fiscal years are on the basis of a calendar year, January to December. The choice of this type of fiscal year in Liberia is mainly because a large proportion of Government’s revenue is collected during the dry season1 and the preference to have 3rd and 4th quarters revenues to be the strongest of the year. I am of the view that choosing to be a member of the ECOWAS bloc obliges us to realign our fiscal year with the rest of the sub-regional countries. By doing so, comparison of macroeconomic convergence criteria with the other ECOWAS member states becomes easier and makes reporting of development assistance from the donor community less cumbersome for MFDP since almost all the donors operate on a calendar basis.

Fiscal Year Uniqueness (Samora P. Z. Wolokolie Responds)

As per the Amendment and Restatement of the Public Financial Management Act of 2009 under Section 65, Paragraph 2 “There shall be a special budget enacted by the Legislature for a six-month period to facilitate the change in the fiscal year.” Thus there is no doubt a consensus that transitioning to the current fiscal (financial) year to a calendar year would result in reporting, economic and fiscal benefits. In addition, the amended PFM Act mandates several other important public financial management reforms including the reorganization of the Office of the Comptroller and Accountant General, changes in the responsibilities and authorities of line ministries and agencies in managing public monies, and an expanded scope of the Debt Management Committee.

In order to affect these new legal requirements, in FY 2021 the MFDP will prepare PFM Regulations to replace the current PFM Regulations which are out of date with current and best practices and misaligned with the amended PFM Act. As part of this process, the required activities to transition the fiscal year to a calendar year will be identified and carried out.

Budget Surplus or Budget Deficit? (Boimah S. Kamara writes)

In the context of a general definition, a government budget is an itemized accounting of the payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments). A budget deficit occurs when a government spends more money than it takes in, while the reverse holds true for a budget surplus. Section 16 of Liberia’s Amended Public Financial Management (PFM) Act of 2009 on “Budget Surplus or Deficit” found on page 16 states “The National Budget shall show any proposed budget surplus or deficit, being the difference between the total revenues excluding new borrowings and total expenditures.

The National Budget should stipulate the purpose to which the budget surplus will be applied, and, in the case of budget deficit the means of financing it and shall be subject to legislative approval.” In other words, as per the PFM Law, the formula for budget surplus/deficit is: BUDGET SURPLUS/DEFICT = TOTAL REVENUE – NEW BORROWINGS – TOTAL EXPENDITURE. When the difference is positive, we have a budget surplus; when the difference is negative, we have a budget deficit which may require financing. What does this suggest about the calculation of the “budget surplus” for the past fiscal year (FY2019/20) and the new fiscal year (FY2020/21)? It means, for example, the US50.0 million loan disbursed by the IMF on June 5, 2020 (see https://www.imf.org/en/Countries/LBR) to help Liberia address the COVID-19 pandemic and other expenditure pressures during the just ended fiscal year FY2019/20 should be considered as a new borrowing. According to the PFM law, it should be excluded from total revenues for the period ended for the purpose of determining the budget surplus or budget deficit. The Draft FY2020/21 shows that the total resources generated in the last fiscal year (FY2019/20) was US$525,522,0002. It also shows that the estimated total expenditure for the last fiscal year (FY2019/20) was US$513,043,5633. Applying the formula above, we end up with the following: US$525,522,000 – US$50,000,000 – US$513,043,563 = -US37,521,563 Since the difference is in negative, it means that the last fiscal period may have registered a budget deficit of US$37,521,563 assuming that the US$50 million borrowed from the IMF was the only new borrowing undertaken by the Government during the last fiscal period. If data proves that there were more new borrowings, then the deficit figure is more likely to be higher than US$37,521,563. The illustration is intended to help inform the budget hearing deliberations. One can see how a generalized statement of cash carry forward tends to trivialize the hard thinking that goes into deriving revenue projections. The PFM Law also requires a calculation of the anticipated budget surplus/deficit for the new fiscal year (FY2020/21), ceteris paribus. The total resource envelope estimated for FY2020/21 is US$535,452,000 which equates to the estimated total expenditure. As can be seen in the Revenue Fiscal Table on page xxxv of the draft budget, the Government intends to borrow a total of US$103,000,000 (US$65 million from World Bank IDA and US$38 million from the IMF). Now let us calculate the expected Budget Surplus/Deficit for the new fiscal year = (Total Revenues – New Borrowings – Total Expenditure = US$535,452,000-103,000 -535,452,000 = – US$103,000,000. In other words, the Government has tabled a draft budget for FY 2020/21 that shows an expected budget deficit of US$103,000,000, which it intends to finance fully by borrowing from the World Bank and the IMF.

Budget Surplus or Deficit (Samora P. Z. Wolokolie Responds).

While it is true that the PFM Act clearly states that the Budget Surplus/Deficit should be defined as Total Revenue Less New Borrowings Less Total Expenditure, to use this definition without context is simplistic. First, this definition of budget surplus it does not preclude the GOL from ending the fiscal year with a cash surplus which can then be carried forward to next fiscal year. In fact, fiscal prudence would often lead the government to plan for carry forward funding as revenue collections and expenditure requirements are not often aligned even across fiscal years. In addition, as the borrowings to be used by the GOL to fill its fiscal gap is provided by the World Bank IDA and IMF rather than through the use of debt instruments, the economic cost to Liberia is minimal if the funds are properly directed toward productive activities.

IMF and World Bank Funds are interest free for 7 to 10 years starting from the date of disbursement. In addition, the loans are what are called “soft loans”, loans with interest rates below prevailing market rates and provide generous timelines on repayment. These loans provide the GOL with an excellent opportunity to build the capital assets of Liberia which will produce significant economic benefits while generating future revenues that will easily pay for the cost of these types of loans. Any businessperson given these terms would jump at the chance to engage in these borrowings. The GOL should do the same by agreeing to these loans and spending the funds in the most effective manner which may sometimes necessitate transferring funds between fiscal years.

Second, the formula by itself does not provide any indication of good fiscal management as there are legitimate reasons to borrow money depending on the economic and fiscal needs of the country. As it hardly bears mentioning, the COVID-19 pandemic has had and continues to have an extreme impact on the GOL fiscal position in both fiscal years 1920 and 2021.

Domestic revenues did not meet expectations due to unprecedented reductions in international trade flows and in local economic activity due to business and movement restrictions imposed by the GOL to protect the health and well-being of our Liberian citizens. At the same, the GOL had no choice in increasing expenditures in order to address the COVID-19 pandemic. This included spending $25 million in food aid to our most vulnerable populations, $2 million to support market women and petty traders, approximately over $ 6 million to support the Ministry of Health and Social Welfare and National Public Health Institute to manage the health impacts of COVID-19 and additional funds for security and administration.

For the fiscal year 19/20 the GOL presented a budget to the National Legislature, and the National Legislature approved a balanced budget where revenue equal expenditure (US$526 Million – Original budget). Later during the year as a result of the negative economic consequences of the worldwide COVID-19 pandemic, the GOL in consultation with its development partners most notably the IMF prepared and approved what is generally described as a recast budget with revised revenue and expenditure estimates of US$518 million, again a balanced budget where revenue covers expenditure.

At the end of the budget year, June 30, 2020, all indications point to the fact that actual revenue will exceed the recast amount of $518 million and as a result of prudent fiscal management we now expect cash surplus to be verified once FY 1920 reconciliations and payments are finalized during the 90-day period following the end of the fiscal year as per the PFM Act.

Had revenue fallen short of expenditures, we would have been hearing about under performance/shortfall. Now, we have the reverse, and so the assertion about the over performance/surplus.

What is intriguing and strange is that people who have used the same logic to mock the past and present governments for “budget shortfall” are today refusing to use the same method to appreciate and commend the current Government for “budget surplus”.

Additionally, a budget surplus is not an indication that there are no challenges. Rather, a surplus means that revenues exceeded expenditures during the fiscal year, but recognizing that additional expenditure would have been politically convenient and led to short-term economic gains, fiscal discipline is the longer term and better policy option. It is a sign of sound fiscal management whereby government spending is linked to the availability of resources.

Finally, one needs to wonder as to what motivation this Government would have to lie about a surplus when in fact in the end the surplus would have to be shown to the IMF under the conditions of the Extended Credit Facility signed in 2019, other development partners and the National Legislature? If there is a surplus or deficit, we as a Government, as part of best practice, re under obligation to report same. Just as we reported the “revenue shortfall” in FY 18/19, we are equally committed to reporting the “revenue surplus” in FY 19/20. In the next few weeks or so, we shall make public the total and actual size of the over performance.

Cash Carry Forward and Prior-Year Revenues Collected at Start of a New Fiscal Year (Boimah S. Kamara writes)

The projected revenue of US$535 million in the draft 2020/2021 Budget includes a “Cash Carry

Forward” in the amount of US$10 million. Having a cash balance in the Consolidated Fund (the Government account at the Central Bank of Liberia) at the end of the fiscal year, June 30, is normal. In fact, it is extremely unlikely that the Consolidated Fund would report a zero balance at the end of the fiscal year. Often, the end of year cash balance is encumbered, meaning that there are expenditure commitments before the end of the year which will have to be serviced from the cash balance in the Consolidated Fund. So, cash carry forward on account of point closure does not necessarily equate to a budget surplus.

There has been some confusion about how to treat revenues budgeted in previous fiscal year but collected few days into the new fiscal year. During my stay at the Ministry of Finance between May 10, 2016 and January 22, 2018, the issue of how to treat government revenues collected after the fiscal year expires was contentious between MFDP and the Liberia Revenue Authority (LRA). We at MFDP then, argued that revenues associated with a particular fiscal year even though collected immediately few days in early July of the new fiscal year do have expenditure claims and MUST NOT be counted as a budget surplus. On the other hand, the folks at LRA were of the view that it is cash brought forward and should be counted as revenue collected within the new fiscal year.

Our reliance and action then on the matter was guided by the principle of prudent and credible fiscal management bearing in mind the responsibilities given to the Minister as contained under Section 11 Count 1 of the PFM Act. The decision reached in concert with the President was to consider cash-carry-forward revenues already tied to unsettled commitments as approved in the budget as ENCUMBERED and NOT FREE CASH. Thus, it was instructed that escrow accounts in both Liberian and US dollars be opened at the CBL for the cash carry forward to settle outstanding expenditure commitments from the previous fiscal year. This was the accounting treatments at end FY2015/16 and FY2016/17.

In view of what appears to be ambiguity in the treatment of cash carry forward, I am proposing an amendment to Section 16 of the PFM Act to address how cash carry forward should be treated. Additionally, for clarity and to advance the cause of transparency, I recommend the following:

  1. that MFDP disclose to the Legislature the various balances in all accounts (Liberian and US dollars) of the Consolidated Fund as at June 30, 2020;
  2. ii) that MFDP disclose the total amount of outstanding commitments as at June 30, 2020, as it is the netting off of this figure from the June 30 cash balance which gives the unencumbered cash balance that may qualify for inclusion in the revenue estimate as budget surplus; and
  3. that the Legislature critically review the list of outstanding commitments as at June 30, 2020, with the view to satisfying itself that critical expenditure items including expenditures for health, education, and agriculture budgeted in the last fiscal year but did not get paid before the end of the fiscal year are indeed included on the list of outstanding commitments; meaning, they did not lapse 4 or have been budgeted or reprogrammed in the Draft FY 2020/21 Budget. If this is not done, many critical expenditure items will be left in limbo only to cause unnecessary imbalances in the budget process later during the year with the MFDP facing competing expenditure pressure.

Cash Carry Forward and Prior-Year Revenues Collected at Start of a New Fiscal Year (Samora P. Z. Wolokolie Responds).

As per Section 34 of the PFM Act, “After ninety (90) days following the end of the preceding fiscal year, all accounts established for the execution of the budget of the preceding fiscal year shall be closed and balances therein transferred to the new accounts established for the new fiscal year.” This amount in essence is the amount to be carried forward from one fiscal year and is available as financial resource.

Problematically, the amount to be included in the National Budget must be estimated 3 to 4 months prior to September 30, the day on which funds are transferred to the new consolidated bank accounts and old consolidated bank accounts are closed. There are many ways to manage this process, but the key activity is to accurately identify all commitments remaining on June 30, plan to pay for those disbursements during the 90-day window and if any unsettled commitments remain then move those obligations to debt as per Section 42 of the PFM Act.

These payments should then be made as soon as possible using the supplemental budget process. If done properly this will mitigate the problem of which fiscal year to recognize a revenue (e.g. should a revenue obligation incurred June 2020, but paid in July 2020 be recognized in fiscal year 1920 of fiscal year 2021) and the need to reconcile cash basis reported revenue against accrual basis reported revenue.

Although revenues are linked to expenditures as part of the National Budget planning and formulation process, this link is somewhat artificial. Once a revenue is received it is posted as a fungible cash asset and the distinction of when this amount was accrued is from an accounting perspective irrelevant as it the amount is posted as an asset on the GOL balance sheet. The same is true of any liability accrued as part of any given fiscal year’s appropriation. Once the liability is on the balance sheet it remains there until paid.

Domestic Revenue & External Loans (Boimah S. Kamara writes)

Under “Macroeconomic Outlook and Context” in the preface to the draft FY 2020/21 Budget, the Government states that “the Liberian economy faces emerging and existing challenges that undermine delivery on the Pro-Poor Agenda for Prosperity and Development (PAPD), ensuring effective macroeconomic management, debt stability, and smooth recovery from shocks.” Other challenges identified by the Government include “constricted revenue base, poor private sector development, limited public service delivery, and the adverse impact of COVID-19”. Considering these challenges, the Government states “real GDP growth over the course of 2020 is projected to contract by 2.5%.” The economic performance or strength of a country is proxied mainly by the growth of its gross domestic product (GDP), which is reflected directly through the growth in domestic revenue (tax and non-tax revenue).

When the economy expands, domestic revenue also expands. When the economy contracts, domestic revenue also contracts. Due to the endogenous and exogenous factors cited by the government, domestic revenue in Liberia has been on a declining path over the past few years. A review of the Revenue Fiscal Table in the Draft FY 2020/2021 Budget (page xxxiii) shows that the Government raised US$469 million in domestic revenue during FY2018/19. The table also shows that Domestic Revenue is estimated to drop by US$51 million (or 10.9%) to US$418 million for the FY 2019/20 Budget, which ended on June 30, 2020. For the FY2020/21 Budget, the Government projects that Domestic Revenue would drop from US$418 million to US$407 million, a drop of US$11 million or 2.63%. In a bid to cope with the declining domestic revenue performance, the Government resorted to external borrowing (a loan of US$50 million from the IMF) before the end of FY 2019/2020 and is expected to borrow an additional US$103 million (World Bank IDA Loan of US$65 million, IMF Loan of US$38 million) or 19.3% of the total budget of US$535 million (see the Revenue Fiscal Table in the Draft Budget). Are the loans or borrowings being efficiently used to guarantee optimum economic returns? Light manufacturing through targeted policies should be prioritized to enhance private sector investment for job creation. Labor-intensive light manufacturing is proving to lead economic transformation in many of the most successful developing countries. Liberia’s youthful population is a blessing in disguise which needs to be properly harnessed to strengthen the human capital base of our nation, a key ingredient (i.e., human capital formation) required for any nation to catch up with more prosperous emerging-market and developing economies. I recommend Ghana, Rwanda, among others as good examples of success story for Liberia to emulate. Another issue is that the Government has tagged US$112 million in external resources (World Bank Loan of US$65 million, IMF Loan of US$38 million and a possible European Union grant of US$9 million as “Contingent Revenue”, which means that the Government believes that the probability of raising such resources is not high.

The issue of serious concern here is that while the Government is designating US$112 million as “Contingent Revenue”, it has not taken a similar action on the expenditure side of the budget. In other words, the Government considers all the US$535 million appropriations on the expenditure side of the budget as ‘Core Expenditure”, meaning they all qualify for payment once the Government starts to raise revenue in the new fiscal year. The inherent risk in not ranking, ex ante, the expenditure items in the budget as “Core” and “Contingent”, as has been done on the revenue side of the budget, is that in the event where “Contingent Revenue” is not raised, either in total or in part, the Government would have already spent on expenditure items that are not of high priority from the “Core Revenues” raised during the beginning quarters of the fiscal year, thus disadvantaging high priority expenditure items during subsequent quarters of the fiscal year.

Contingent Revenue vs. Contingent Expenditure (Samora P. Z. Wolokolie Responds)

Although it is true that the 2021 Draft Budget has a significantly higher stated contingent revenue figure than contingent expenditure figure, this is almost unavoidable due to how external resources need to be categorized. Although, the $112 million dollars in contingent revenue from external resources is not 100% guaranteed, it is highly likely that the GOL will receive these funds. International donors do not unduly burden recipient countries with impossible “triggers”, but rather require reasonable actions to receive funds that any prudent government can meet. Indeed, domestic revenue projections are often more difficult to achieve especially if the business environment suffers due to exogenous shocks of which an economy like Liberia’s can be especially vulnerable. These can range from pandemics (Ebola, COVID-19), world-wide recessions or reductions in commodity prices (palm oil, rubber).

Contingencies in expenditure are fully controlled by the GOL and there are several tools available to the MFDP to manage expenditures, not the least of these include the use of supplemental and recast budgets. Budget execution tools include budget reallocation/transfers, cash and debt management, allotments and during severe cash crises the ability to limit financial budgets based on available cash.

Under Section C.2 Paragraph (8),

“The Minister (of Finance) shall ensure that there is, within the resources available, an efficient cash management system to equitably meet the budgetary spending requirements of all government agencies and other public bodies.”

We believe that it is more effective to use these budget execution and cash management tools in real-time during the course of the fiscal year to manage expenditures rather than to assign “Core” and “Contingent” expenditures 12 to 15 months prior to when spending decisions need to be made. We of course, recognize that any financial budgeting restrictions must be transparent and equitable.

Proposed Payment of Domestic Arrears (Boimah S. Kamara writes)

It is commendable that the MFDP has budgeted US$45.1 million (see page xxx of the FY 2020/21 Draft Budget) for the payment of domestic arrears. Payment of domestic arrears has the positive effect of helping to stimulate the economy, especially during this period of the COVID-19 pandemic. This appropriation could not have been timelier. My professional advice is that in order to ensure transparency, equity, and accountability in the payment process, the Debt Management Committee (DMC) of Government comprising the MFDP, the Ministry of Justice, and the Ministry of State (I am told the CBL has been removed) should draw up a robust Domestic Arrears Payment Plan/Strategy which spells out the criteria for inclusion on the domestic arrears payment list, the potential payees, as well as the proportion of the total claims each payee is expected to receive in this fiscal year. Also, it will be a welcomed idea for MFDP to commence as soon as possible, a forensic audit of the Debt Management System (DMS) and the Integrated Financial Management Information System (IFMIS) of the Government, a process which begun but could not be completed because the Sirleaf Administration ended. The General Auditing Commission (GAC), in concert with an international firm, conducted the first audit and recommended the need for a forensic audit/investigation of the systems. If this is done, it will be a monumental achievement for Minister Tweah and the WEAH Administration, and a clear demonstration of transparency and accountability.

Proposed Payment of Domestic Arrears (Samora P. Z. Wolokolie Responds)

The full payment of domestic arrears is a high priority of the GOL as evidenced by the large amount of funds allocate for this purpose in the FY 2021 budget. Furthermore, the MFDP has begun the process of developing a Domestic Arrears Strategy and plans to begin its implementation in the 2nd quarter of the 2021 fiscal year. The Domestic Arrears Strategy will review all existing arrears and prepare payment schedules based on available cash resources, economic impact and vendor profiles.

System Audits of IFMIS and Debt Management System (DMS)

Although system audits cans be effective tools in improving the efficiency and effectiveness of financial management systems, we believe that system audits of two of our primary systems IFMIS and the DMS or its official name Commonwealth Secretariat – Debt Recording and Management System (CS-DRMS) is not necessary at this time. The general objectives of system audits are to improve controls and security with the added benefit of improving business processes. As both CS-DRMS and IFMIS are off-the-shelf, well-known platforms/software used in many countries, there is a strong track record of these systems being secure and configurable to meet the controls needs of their users. We believe annual reviews of the system controls and security and incremental configuration changes will be sufficient in managing the systems. In addition, we have just completed an IFMIS Strategy that provides recommendations on how to improve the systems. Forensic audits are examinations and evaluations of individual or organizational activities in order to derive evidence for legal reasons. Forensic audits for use to evaluate information systems are not appropriate.

TAKEAWAY (Boimah S. Kamara writes)

The time for all Liberians to put our nation first for our own good is now. We must confront and meet the foe with valor unpretending. The foe of our economic backwardness is the old economic model which relies mainly on exportation of raw materials, especially iron ore and rubber with no emphasis on economic diversification, which usually paves the way for industrialization of an economy. An outside the box thinking suggests that the Extended Credit Facility (ECF) Program with the IMF must go side-byside a robust coordinated and integrated framework that maps out where resources are to be spent for optimum results. The new economic model which should resonate with all Liberians, especially policy makers is the phrase “MADE IN LIBERIA: YES, WE CAN TOO” by giving the private sector center stage in policy decision-making as the engine for growth and development.

The time has come to move away from government being the largest employer to the private sector as the anchor for job creation. Government’s policy should intentionally support domestic value-addition with Liberian entrepreneurs leading the charge. In this regard, the Government should work with our developments partners to ensure that development assistance be aligned with our national development plan. A big thank you to our development partners for the continued support to our government and people. Tangible investments largely in agricultural value chain where smallholders of farms are supported will be a good start. This is the soft side from my perspective. The heavy lifting of Liberia’s structural transformation can only be guaranteed when most of the borrowings go towards addressing the binding constraints of high cost of electricity and limited paved roads, especially along the growth corridor; and strengthening the shallow financial system as proxied by low level of credit to private sector-to-gdp ratio of 14.0 percent and very high spread between savings and loan rates (on average); savings rate, 2.1 percent and lending rate, 12.4 percent (see the CBL 2019 Annual Report, pages 37 and 38). The absence of a capital market in Liberia is another problem of raising needed capital for development, something which requires more attention by the Government. We must know what we want, agree on what we want, and market it together. The Government’s well thought-out PAPD is the place to begin. President Weah, I humbly call on you to do your absolute best in uniting us as a nation. As head of the nation, please ensure that the rights of all Liberians are respected irrespective of tribe, creed, or political affiliation. Economic growth and prosperity can only take place in an environment that is stable.

Take away (Samora P. Z. Wolokolie Responds)

This nation of ours called Liberia was founded in 1847, not in 2017. The problems and challenges confronting us are enormous. Our resource envelope is finite.

We must confront the challenges as a united people. All previous governments, before the advent of the George Weah Led Government in 2017, regardless of their lapses, also contributed to the forward march of our beloved Liberia. While it is fair game to critique them for their shortcomings, we must recognize that they too contributed to what is today Liberia.

The issues we faced today are not a JJ Roberts issue, they are not a Tubman issue, they are not a Tolbert issue, they are not a Doe issue, neither are they a Taylor nor Ellen issue. They are certainly not a George Weah issue. THEY ARE A LIBERIA ISSUE!

This Government and hopefully all succeeding governments are expected to work tirelessly in resolving these issues so that the lives of ordinary Liberians can be better; so that the economic conditions of all and sundry can be better; so that our infrastructures can be built; so that our vulnerable population – the physically challenged, the aged, the orphans, those young ones who are below age – are all protected.

You can be assured that the Pro Poor Agenda for Prosperity and Development is certainly circumscribed to better the lives of all Liberians regardless of persuasion or stripe.

For this Government to succeed, it requires the collective and positive input of all Liberians. And so whether you are a former Minister or current Minister, all of us must work together in ways that are constructive to move our nation to higher heights. Criticisms, when imbued with the facts, are always encouraged and would be appreciated.

However, those criticisms that have no foundation in truth, and are on the basis of rushed and microwaved analysis, will be rebuffed, quarantined, sanitized, and corrected!

Budget Surplus: Not a Taboo, But an Outcome of Fiscal Discipline”

An article on the reality of budget surplus at MFDP for FY 19/20

Authored by: Dr. Samora P. Z. Wolokolie, Ph.D., CFE, CA, CPA, FCFIP, FIPA, FCFA.

Deputy Minister for Fiscal Affairs / MFDP, R.L.

For the fiscal year 19/20 the GOL presented a budget to the National Legislature, and the National Legislature approved a balanced budget where revenue equal expenditure (US$526 Million – Original budget). Later during the year as a result of the negative economic consequences of the worldwide COVID-19 pandemic, the GOL in consultation with its development partners most notably the IMF prepared and approved what is generally described as a recast budget with revised revenue and expenditure estimates of US$518 million, again a balanced budget where revenue covers expenditure.

At the end of the budget year, June 30, 2020, all indications point to the fact that actual revenue will exceed the recast amount of $518 million and as a result of prudent fiscal management we now expect cash surplus to be verified once FY 1920 reconciliations and payments are finalized during the 90-day period following the end of the fiscal year as per the PFM Act.

Had revenue fallen short of expenditures, we would have been hearing about underperformance/shortfall. Now, we have the reverse, and so the assertion about the over performance/surplus.

What is intriguing and strange is that people who have used the same logic to mock the past and present governments for “budget shortfall” are today refusing to use the same method to appreciate and commend the current Government for “budget surplus”.

Additionally, a budget surplus is not an indication that there are no challenges. Rather, a surplus means that revenues exceeded expenditures during the fiscal year, but recognizing that additional expenditure would have been politically convenient and led to short-term economic gains, fiscal discipline is the longer term and better policy option. It is a sign of sound fiscal management whereby government spending is linked to the availability of resources.

Finally, one needs to wonder as to what motivation this Government would have to lie about a surplus when in fact in the end the surplus would have to be shown to the IMF under the conditions of the Extended Credit Facility signed in 2019, other development partners and the National Legislature? If there is a surplus or deficit, we as a Government, as part of best practice, re under obligation to report same. Just as we reported the “revenue shortfall” in FY 18/19, we are equally committed to reporting the “revenue surplus” in FY 19/20.

In the next few weeks or so, we shall make public the total and actual size of the over performance.

I would love to thank the Honorable Minister of Finance and Development Planning, Hon. Samuel D. Tweah, Jr. for the leadership you continue to exhibit at the Ministry of Finance and Development Planning. Best wishes to the Department of Budget, Hon. Tanneh Brunson and her team for the excellent coordination! Kudos!!!

Many thanks and hearts off the Minister T. Ojuku Nyenpan, Assistant Minister for Revenue and Tax Policy Division of the Department of Fiscal Affairs for the analysis on the Revenue numbers; also to the Comptroller and Accountant General, R.L., Hon. Janga A. Kowo, and Hon. Jeremiah B. Sackie, Assistant Minister for Expenditure and all of your teams for your applied coordination in the budget execution process of the government of Liberia.

Finally, I say thumbs up to the harmonization team for their expertise and timeless effort made in assisting the management process of GOL wage bill in the best way possible.

We do not need to wait for them to praise us before we commend ourselves for our good work. Liberia will experience change under President Dr. George Manneh Weah. Hope is alive!!!

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