Budget Unaligned With Govt’s Pro-poor -CePAR Says of FY 2019/2020 Draft Budget

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Except for budget commitment to education in Liberia’s draft national budget of fiscal year 2019/2020, many proposed commitments across sectors covered in the budget are not aligned with government’s development plan, the Pro-Poor Agenda for Prosperity and Development (PAPD), the Center for Policy Action and Research (CePAR) has said in a press release. The Center also said of the eleven (11) sectors of the governance program covered in the budget, the agriculture sector has the second lowest budget allocation and a total anticipated spending on the agriculture sector is US$ 6,208,754.00 or 1.16% of the national budget.

Other sectors of the governance program covered by the budget include Public Administration, Municipal Government, Transparency and Accountability, Security and Rule of Law Sector, Health, Social Development Services, Education, Energy and Environment, Agriculture, Infrastructure and Basic Services and Industry and Commerce Sectors,

A CePAR release of August 15, 2019 said the national budget for the period under review has a forecast of US$532,906,966.00 with US$489,956,966.00 or 91.9% of the budget dedicated to recurrent expenditure.  The Center has issued its 18-page analysis of the Draft National Budget of Fiscal Year 2019/2020 as its report, which is an analysis of both estimated outturn and draft budget. It included key findings of the draft and provided recommendations.

In its analysis titled, “A Pro-Poor Budget? An Analysis of Liberia’s 2019/2020”, CePAR indicated that the Draft Budget is Contrary to the desired outcomes provided in the Human Capital Development subsector that includes the utilization of the country’s demographic dividend as a potential driver of growth and transformation starting with expanding social inclusion through work and life skills opportunities, funding for vocational and technical training programs have actually been sliced thereby undermining the commitment for scaled-up TVET interventions.

CePAR further indicated that a major thrust of the pro-poor agenda aimed at raising total spending on social protection related investments from less than one percent to four percent of GDP is not demonstrated in the allocations as not only did appropriations for subsidy receiving organizations were reduced by an average of 62 percent, allocation under the public sector investment plan for High Vulnerable Population was removed.

“Funding for higher education too was also sliced by almost 50 percent from last year’s appropriation constraining performance and undermining strategic interventions linked to the PAPD including the revision of contents for degree-granting programs among the network of community colleges to make them more relevant to anticipated local demand for 
a mid-level professional workforce. Moreover, the current tract that reduces allotments to spending entities by removing subsidies from private health providers among others does not reduce out of pocket payments for health care cost which is a major objective of the PAPD,” the group said in its analysis.

It said several state-owned enterprises, including the Liberia Water and Sewer Corporation (LWSC), Liberia Electricity Corporation (LEC), Liberia Airport Authority, (LAA), National Oil Company of Liberia (NOCAL) and the Forestry Development Authority, are expected to operate at a loss this year.

“An analysis of the revenue component of the budget suggests a potential budget shortfall based on unrealistic revenue projections. Many revenue lines are projected significantly higher than their performance trends. Besides, it is more than likely projected World Bank financing of US$40 million dollars may not come through due to the triggers,” the CePAR release said.

 Key Findings

In the group’s key findings shows discrepancies affecting key areas such as health, education, youth and sports,  roads and bridges, tourism,  security and the rule of law, agriculture, public utility and energy, other Expenses, and revenue.

 Health:  

Commenting on the health sector, the CePAR analysis disclosed that allocation for overall healthcare is US$75,478,910.00 or 14.1% of the draft budget. Whilst this is about US$1.2 million more than what was actually spent over the last budget year, it is actually a US$6 million dollars decrease from the appropriation in FY 2018/2019.

The group also disclosed that allocations to spending entities across the health sector have decreased. Except for the Ministry of Health (whose budget was upped as the result of a USAID Support of US$6.2 million dollars) and the Liberia Pharmacy Board with a budget increase of US$1600.00, all other spending entities experienced budget cuts, the CePAR analysis pointed out.

The Group further said that other spending entities experienced budget cuts include but not limited to the John F. Kennedy Medical Center, Jackson Fiah Doe Hospital, Phebe Hospital, National Public Health Institute, Liberia Medical and Dental Council, Liberia Board for Nursing, National AIDS Commission among several others.

“Subsidies for almost all of the private health providers including but not limited to the ELWA Hospital, St. Joseph Catholic Hospital, African Dream Clinic, SDA Cooper Hospital, St. Francis Health Center in Pleebo, Ganta United Methodist Hospital and Ma-Watta Medical and Eye Clinic were removed.

“Also all budget subsidies to the Red Cross, the Planned Parenthood Association of Liberian (formerly FPAL), the National Drug Service, Fish Town Health Center, Foya and Curran Hospitals in Lofa have ended,” the group further revealed.

The analysis however said there were new allocations to health centers that did not receive budget support in the past. “They include but not limited to Gbarzon and Konobo Health Centers in Grand Gedeh, Gbondoi Health Center in Bong, Zekepa and Karnplay Health Centers in Nimba and Marshall and Kakata Health Centers in Margibi.”

Besides, the group said compensation across the health sector took a hit by 9.2 percent or almost US$5 million dollars. This is the largest cut in compensation for health workers in more than two decades and the only cut in compensation for health workers in the last 14 years, saying that transfers (grants) to all the county health teams also decreased.

   “The National Public Health Institute of Liberia received the deepest cut; equivalent to70% of its last year’s budget. Whilst there were increases in allocations for some public hospitals when compared to actual subsidies to those health institutions, overall appropriation decreased in the draft budget. Some of the affected institutions are JJ Dossen, Redemption, St. Timothy, Martha Tubman, Kolahun and Rally Town Hospitals,” CePAR pointed out.

The group asserted that Increase in allocation for service delivery institutions like hospitals went to the central bureaucracy at the Ministry of Health; fuel cost, vehicle insurance and security guard services almost doubled; for example, whilst overall allocation for drugs and medical consumables remained mostly flat, administrative expenses saw an increase of almost 80 percent.

 Education:

On the Education sector of the FY 2019/2020 Budget, it was discovered by the group that government’s proposed spending on education in FY 2019/2020 is 81,557,132.00 or 15.3% of the budget. However, compensation for staff in the education sector took a US$1.2 million cut when compared to the amount spent during FY 2018/2019. Total compensation for the education sector is US$51,208,375.00 whilst last year’s spending was US$52,414,649.00.

There are spending cuts for a number of institutions including the Booker Washington Institute, National Commission on Higher Education, William VS Tubman University among several others, the analysis indicated, and stated that when compared to approve appropriations in FY 2018/2019, cuts are also experienced in the budgets for Ministry of Education, University of Liberia and Booker Washington Institute. However, the biggest beneficiary of this budget year is the Monrovia Consolidated School System which saw an increase and compensation and for the renovation of schools.

“All three rural teacher-training institutions, Kakata Rural Teacher Training Institute, Webbo Rural Teacher Training Institute and Zorzor Rural Teacher Training had budget cuts. Nevertheless, all the community colleges did get budgetary increases of an average of US$110,000.00 per school with the largest increase affecting Sinoe Community College with a budgetary increase of more than 110%; from US$273,588.00 to US$601,983.00.

“Except for subsidies to the Cuttington University, all other subsidies to private-run degree granting institutions were removed entirely. Also other private providers like Christian Association of the Blind, Liberia Opportunities Industrialization Center (LOIC), Liberia International Islamic School System, Monrovia School for the Deaf, Todee Presbyterian Mission School and the Lutheran Educational System were also removed from GoL’s subsidy programs for education,” CePAR observed in its analysis.

Youth and Sports

Regarding Youth & Sports, the total appropriation for all the youth and sports development programs is US$2,487,918.00 or 0.46% of the draft budget. Funds for key youth development including vocational and technical programs like the National Cadet and Youth-on-the Job Training programs, subsidies for training at the Monrovia Vocational Training Center and the Business Domestic Occupational Training Center are sliced to accommodate some sports programs, the analysis further revealed.

CePAR asserted that the beach and waterways maintenance program providing short-term jobs for disadvantaged youth has been re-introduced. “Funding to the National Football Team is $300,000.00. This represents 0.056% of the national budget; all 29 National Sporting Federations and Associations received only US$69,555.00”, according to the group.

The analyzers of the budget spoke of the compensation for the President’s Young Professionals Program, which they said has been removed entirely from the National Budget.

 Roads and Bridges

On the development front, CePAR said proposed investment in roads and bridges for the FY 2019/2020 is US$29,300,000.00 or 5.49% of the draft budget. This is slightly below what was appropriated in FY 2018/2019 (US$29,663,236) but higher than what was actually spent last year (US$12,380,420.00),  while the government’s investment spending on tourism is a pocket change of US$4,000.00 demonstrating a fundamental lack of understanding on where to invest for pro poor growth.

     Regarding security and the rule of law, allocations to several institutions in the security sector were reduced for FY 2019/2020 when compared to appropriations for FY 2018/2019. For instance the Liberia National Police, National Fire Service, the Palace of Correction, Drug Enforcement Agency (DEA) and the Department of Corrections have fallen victim to this reduction in budget. However, even as allocations to the institutions take a nosedive, compensation for staffs increased at DEA, Liberia Immigration Services (LIS), National Police Training Academy and National Fire Service.

Compensation for employees of both the Armed Forces of Liberia and the Liberia National Police took significant cuts in the FY 2019/2020 draft budget, the analysis which finds that allocation for Special Operations Services, Intelligence Services and Security operations under the National Security Agency have remained very high said, the total allocation for Intelligence, Security and Special Operations Services in the Security Sector being US$8.08 million.

 Agriculture & Public Utilities

For agriculture, the budget Commitment to the sector is US$6,208,754.00 or only 1.16% of the national budget; lower than last year’s commitment of 1.4%. All spending entities under the agriculture sector, including the Ministry of Agriculture, Liberia Agriculture Commodity Regulatory Authority (LACRA), Cooperative Development Agency (CDA), Central Agricultural Research Institute (CARI) and the Rubber Development Fund Incorporated (RDA) took huge budget cuts. General compensation across the agriculture sector was sliced also.

The proposed spending on agricultural Supplies and inputs is US$165,000.00 for FY 2019/2020; support to Rice Value Chain Development (RVCD) has been removed from the budget, coinciding with support to two new programs; Rice Production and support to smallholder farmers and subsidies to Smallholder Farmers Cocoa Rehabilitation & Expansion.

Like FY 2018/2019, allotment to LACRA is largely salary with no funds for basic programs other than basic maintenance costs and fuel for vehicles and generator.

Talking about allotments to Public Utility and Energy, the Liberia Water and Sewer Corporation (LWSC) has the lowest budget support among the public utility institutions accounting for US$ 411,061.00 representing 57% of FY 2018/2019’s appropriation.  However, the LWSC’s allocation is structured in a way that does not provide analysis on spending on wages and core programs of the institution.

Unlike the LWSC, allocation for the Liberia Electricity Corporation (LEC) increased by 21%. But like the LWSC, allocation is so lumped up in a way that makes further analysis impossible as to funds for Transmission and Distribution and other core activities of the LEC. However, the Rural Renewable Energy Agency (RREA) took a huge cut of 42% in wages alone with only US$16,424.00 for fuel and lubricants and no dollar for core operations of the institution.

Other Expenses and revenue

Talking about other expenses and revenue, the analysis of CePAR provides that compensation is 55.7% of the national budget. When compared to FY 2018/2019, this year’s allocation is a decrease of 11.3%. However, allocation in the draft budget is the same for allocation for compensation in January 2018 when the new government was inaugurated.

“Goods and Services (or the wheel for Small and Medium Enterprises) account for 13.56% of the National Budget.  6.4% or US$34,599,815.00 is allotted to the Legislature to defray expense attached to salaries, attend to basic operations including committee hearings among several others. Compensation for the legislature is a whopping 77.74% of the total allotment to the National Legislature for FY 2019/2020; and that the Judiciary is the only branch of the government with an overall increment in compensation. US$15,052,435.00 was the total disbursement for salaries in FY 2018/2019 whilst proposed allotment for FY2019/2020 is US$15,467,612.00,” the group said.

The group also spoke of consultancy which is US$3,177,716.00 or 0.5% of the draft budget, saying that the draft budget has US$700,000.00 for humanitarian efforts for the President of Liberia. There is however no indication as to what those humanitarian issues are.

On the revenue side, Revenue, the group said that revenue estimates in the budget are again not informed by quality projections, like FY 2018/2019. Total revenue envelope for FY2019/2020 is US$532,906,966.00, which when compared to FY2018/2019, indicates a decrease of US$38,000,000.00.

FY 2019/2020 draft budget, the CePAR analysis said, has an anticipation of a loan from the World Bank of US$40,000,000.00. Tax revenue projections are much lower (US$25m) for FY 2019/2020 than they were for FY2018/2019. However, whilst projected contingent revenue for FY2018/2019 of US$12.6 million was not raised, projected contingent revenue for FY2019/2020 is US$47,000,000.00, US$34.4 million more than previous year projection.

“Except for the Liberia Petroleum Refining Corporation, National Port Authority, Liberia Airport Authority and the National Fisheries and Aquaculture Authority, other State-Owned Enterprises including but not limited to the National Housing Authority, NHA, Liberia Telecommunications Corporation, LIBTELCO among several others, will not make any direct budget support to the budget,” the press release concluded, saying that CePAR will always contribute to the national policy discussions as to give the public a better understanding about national instruments affecting them directly.

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