-As 2024 Draft Budget shows slight increase in allocations for few other institutions
By Jerromie S. Walters
The 2024 draft National budget of the Republic of Liberia shows significant decreases in allocations for several government entities, such as the Ministry of Health and Ministry of State. Conversely, a few institutions have witnessed slight increases in their budget allotments.
Comparing the 2023 budget to the 2024 draft budget, there are notable changes in allocations. For instance, in the previous year, the Ministry of Health received 43,383,397, whereas it has been allocated 41,950,905 in the upcoming budget. Similarly, the Ministry of Education received 37,561,604 in 2023, and in the 2024 draft budget, the allocation is 37,959,399.
The Justice Ministry received 29,651,426 in the 2023 budget and is now allocated 30,170,860 in the 2024 draft budget. Meanwhile, the Ministry of Gender Children, and Social Protection received 1,747,448 in 2023, with a slight increase to 1,774,172 in the 2024 draft budget.
Also, the Ministry of State has been reduced from $20 million to $9 million. Office of the President, reduced from $4.4 million to $2.2 million, Vice President, reduced from $4 million to $2 million, Legislature, reduced from $67 million to $38 million, the Pro Temp’s Budget, reduced from $4 million to $1.2 million, the Speaker’s Budget, reduced from $2.2 million to $1.6 million, and the Deputy Speaker’s Budget has also been reduced from $1 million to a little over $515k.
Other increments in the draft budget also affect the University of Liberia (UL), from $30 million to $32 million.
In the 2024 draft National budget, the Public Administration sector is allocated US$279.19 million which is 40.3 percent of the total Draft National Budget. Key drivers of this sector’s allocation are compensation of employees, servicing of domestic and foreign debts, renovation of public buildings, honoring of other legal obligations, etc.
Municipal Government sector has a total allocation of US$26.79 million or 3.9 percent of the overall budget. Key components include compensation of employees, SDF, CDF, Cheesemanburg Landfill, and Urban Sanitation Project, as well as the transformation of solid waste management.
The allocation for the Transparency and Accountability Sector is US$21.24 million, constituting 3.1 percent of the total envelope. Major components of the sector’s budget are the compensation
of employees, the conduct of by-elections, and other programs. Like the Transparency and Accountability Sector, the allocation for the Security and Rule of Law Sector is Us$96.16 million, representing 13.9 percent of total expenditure. Key expenditure components under this sector are compensation of employees, food, fuel and lubricants, drugs and medical supplies for prisons and barracks, intelligence services, and security operations.
The Health Sector’s allocation is US$75.50 million, representing 10.9 percent. Compensation of employees, food, fuel, lubricants, drugs, and medical consumables, as well as vaccines and vaccination supplies, Regional Diagnostic Centers and transfers to public and private health facilities are major objects of recurrent expenditure.
Social Development Services Sector: The amount of US$12.23 million allocated for this sector reflects 1.8 percent of the total expenditure. The key expenditures prioritized are compensation of employees, the fight against KUSH and Sexual and Gender-Based Violence (SGBV), support for the At-Risk Youth Rehabilitation program, etc.
The Education Sector’s total allocation is US$105.96 million, representing 15.3 percent of the total expenditure. Major expenditure components in this sector include compensation of employees, repairs, and maintenance of public schools, Government transfers to universities, and the implementation of free and compulsory primary education, as well as a tuition-free policy for tertiary education, with the aspiration of eliminating registration fees and all forms of the financial burden imposed on parents in the long term, payments for examination fees, renovation of public university facilities, scholarship payment for local and international studies, and support to engineering college, etc.
Moreover, allocation in the Energy and Environment Sector is US$18.26 million, representing 2.6 percent of the total expenditure. Major expenditures in this sector include compensation of employees, and ensuring stable electricity during the dry season through the CLSG project under the West Africa Power Pool program.
Allocation for this sector is US$5.63 million, representing 0.8 percent of the total expenditure. Key expenditure components include compensation of employees and capital spending. repairs, and maintenance of warehouses in anticipation of increased harvests from investments in previous fiscal years. Infrastructure and Basic Services Sector: The total allocation in the Infrastructure sector is US$44.70 million,
representing 6.5 percent of the total expenditure. The biggest drivers in this sector are the compensation of employees, the National Road Fund, the South Eastern Corridor Roads Asset Management Project (SECRAMP), Pliability Road Intervention, Meteorological Equipment, etc.
The amount of Us$6.66 million is allocated for Industry and Commerce Sector. This constitutes 1.0 percent of total expenditure. Key expenditure components include compensation of employees, operationalization of the Liberia Standards Laboratory Authority, and Vulnerable Small Business Support Programme.
Expenditure Analysis
The total estimated expenditure for the FY2024 Draft National Budget is US$692.41 million, which is consistent with the total revenue forecast for the period. This signifies a decrease of 10.3 percent when compared to the FY2023 approved expenditure of US$771.70 million. The total expenditure envelope is divided into two main categories: recurrent expenditure which is US$640.52 million accounts for 92.5 percent of total expenditure while spending on Public Sector Investment Programs (PSIP) is US$51.89 million accounting for 7.5 percent of total expenditure. Below is a graphical comparative analysis of recurrent and PSIP expenditures for FY2023 and FY2024
Recurrent Expenditure
The total recurrent expenditure of US$640.52 million is allocated as follows: a. Compensation of Employees: The total personnel expenditure is US$297.02 million, representing 46.6 percent of the recurrent expenditure and 43.0 percent of the total expenditure. The major components of Compensation include basic salaries for civil servants, military and paramilitary service, and elected, appointed officials, and elected officials’ staff.
Goods & Services: the Ministry of Finance SATs spending on goods and services is projected at US$90.19 million accounting for 14.1 percent of recurrent expenditure and 13.2 percent of total expenditure. Key expenditure items include training of more LNP and AFL officers, drugs, vaccines and medical supplies, educational materials, and supplies, food supplies for hospitals, prisons, and educational facilities, examination fees, bank charges, capacity building, rental and leases, and other operational expenses of the government.
“Subsidies: Projected spending for Subsidies is US$16.64 million, depicting 0.3 percent of total recurrent expenditure and 0.2 percent of the total expenditure. Priority subsidies are targeted at complementing the efforts of private sector institutions providing basic social services to the population in the Social Development, Education, and Health sectors as well as the Industry and Commerce sectors. d. Grants: Total grants are projected at US$101.69 million, representing 15.9 percent of total recurrent expenditure and 14.7 percent of total expenditure.”
It says Key Government transfers target public hospitals and health facilities across the country, payments to ECOWAS as trade tariff, contributions to international organizations as subscription fees, funding for tuition-free policy, the implementation of the Government’s policy to reclassify universities and community colleges as grants recipients, operationalize newly created government institutions, including the Standard Laboratory Authority, the Liberian National Commission on Arms, the Nimba University, the Grand Bassa University, the implementation of the ARREST agenda, the reintroduction and implementation of MTEF, incorporating the intervention of Climate Change Adaption, and Gender Responsive Planning and Budgeting (GRPB).
It continues: “Social Benefits: Projected spending for this category of expenditure is US$17.95 million, representing 2.8 percent of recurrent expenditure and 2.6 percent of total expenditure. Key expenditures include retirement benefits for former elected officials and judges, and pension funds for general civil servants, among others. f. Non-Financial Asset: Projected spending for Non-Financial Assets is US$3.00 million or 0.5 percent of total recurrent expenditure and 0.4 percent of total expenditure. Major components include vehicles, furniture and fixtures, civil works, maintenance of roads and bridges, ICT, etc.”
Macroeconomic Assumptions
The Ministry of Finance says Macroeconomic condition is expected to remain favorable with Real GDP growth averaging around 6.0 percent over the next 3 years (2024 – 2026). “Export is projected to rise due to anticipated increase in major commodities outturn and all major sectors of the economy. Import is expected to increase as economic activity booms; Government revenue is projected to increase given the expected rise in primary commodity exports; Government expenditure is projected to rise because of capital expenditure and the need for improved service delivery.”
Moreover, it is projected that Inflation is expected to moderate but remain in single digits; and the medium-term exchange rate is expected to remain stable. The total estimated resource envelope for the FY2024 Draft National Budget is US$692.41 million. This implies a 10.3 percent decrease when compared to the FY2023 Approved National Budget of US$771.70 million.
Liberia’s Finance Ministry says this decrease is mainly attributed to a 61.4 percent projected decline in external resources. The estimated resource envelope is forecasted from domestic and external. Also, Domestic revenue is projected at US$649.98 million, of which tax revenue accounts for US$531.48 million and non-tax revenue accounts for US$110.78 million; while external resources are projected at US$42.43 million.
Major constituents of tax revenue are taxes on income and profit, US$247.98 million constituting 45.9 percent of total tax revenue; taxes on international trade, US$191.83 million accounting for 35.6 percent of total tax revenue; goods and services tax at US$85.02 million accounting for 15.8 percent of total tax revenue, while real property and other taxes account for US$14.36 million, representing 5.79 percent.”
On the other hand, non-tax revenue is estimated at US$110.78 million, of which property income tax is US$85.35 million representing 77.0 percent as the major driver of the non-tax revenue.
Debt Service
Total debt service is projected at US$129.00 million, representing 20.1 percent of recurrent expenditure and 18.6 percent of total expenditure. Of the total debt service, Domestic Liabilities constitute US$69.18 million or 10.0 percent while Foreign Liabilities and subscriptions account for US$ 59.82 million or 8.6 percent of total expenditure, respectively. Key components of domestic debt include interest charges on securities, domestic loans, government bonds, and other liabilities. Foreign liabilities include multi-lateral and bi-lateral loans, interest charges on these loans, subscriptions, and other payables.
Public Sector Investment Plan
The Public Sector Investment Plan (PSIP) is estimated at US$51.89 million, representing 7.5 percent of the total expenditure portfolio. PSIP is focused on key capital investments including counterpart funding, national road fund, and completion of ongoing projects. US$ 6.35 million is allocated as Counterpart funding to service commitments in various sectors while US$26.32 million constitutes GoL commitment to the National Road Fund.
US$19.22 million is allocated for the implementation of the President’s 100-Day Deliverables, which include the construction of roads and bridges, acquisition of equipment for Roberts International Airport, rehabilitation of At-Risk Youth, youth capacity building in ICT, KUSH must go project (fight against illicit drugs, etc.
Liberia’s economy expanded to 4.8 percent in 2022 despite widespread global contractions from the war on Ukraine, high global inflation, and subdued demand in advanced economies. The expansion was largely driven by mining, agriculture, services, and manufacturing. When compared to growth estimates in 2021, growth declined modestly by 0.2 percentage points in 2022. Growth is expected to decline to 4.6 percent in 2023, reflecting increased global uncertainties and commodity price shock, before reaching an average of 6.0 percent over the medium term (2024-26) as the country benefits from investments in mining and structural reforms in sectors such as energy, trade, transportation, and financial services.
Despite the 14.0 growth in mining output for 2022, there was a 3.6 percentage point decline in the sector when compared to the 2021 growth estimates (from 17.6 percent to 14.0 percent) on account of a steep fall in gold production from 33.0 percent in 2021 to 22.0 percent in 2022. Mining sector growth is projected to further decline to 5.2 percent in 2023 on account of subdued gold extraction. It is expected to rise to 9.1 percent in the medium term beyond 2024.
The agriculture sector is projected to grow modestly to 0.7 percent in 2023, down from an estimated growth of 1.2 percent in 2022. The anticipated dip from 2022 to 2023 is based on a projected fall in rubber and palm oil production. Growth in this sector is expected to surge to 5.9 in 2024 before edging further to 6.6 percent in the medium term. The expected surge in agricultural output in 2024 will be fueled largely by growth in the production of cassava and palm oil.
