REACTION OF THE COLLABORATING POLITICAL PARTIES (CPP) TO PRESIDENT WEAH’S STIMULUS PROPOSALS AS CONTAINED IN HIS LETTER TO THE LEGISLATURE DATED APRIL 13, 2020
In his April 13, 2020 letter to the Legislature, President George M. Weah stated that, “The State of Emergency has imposed necessary economic costs on Liberians and the broader economy…which may well undermine the public health and public safety aims of the State of Emergency”. The President also provided justifications for the imposition of the State of Emergency and proposed several measures to “address social and economic ramifications deriving therefrom”. Additionally, the President provided several sources of funding for this effort including US$17 million from the World Bank, US$15 million from the European Union, and undetermined amount being sought from the AfDB’s US$10 million support to African Countries. The President also suggested a reallocation of US$25M from the current budget. At the very least, this means a possible funding envelope of approximately US$57 million, not including any contribution from AfDB.
The CPP hereby provides the following opinion on the interventions outlined in the President’s proposal:
1) A PROPOSED US$40 MILLION FOOD-AID PROGRAM IN “DESIGNATED COUNTIES” TO BE SUPPORTED THROUGH BUDGET REALLOCATION IN THE AMOUNT OF US$25 MILLIOM AND WORLD BANK CONTRIBUTE US$10 MILLION “USING RESOURCES REALLOCATED FROM EXISTING PROJECTS”.
The proposal does not identify the budgetary items that will be cut to raise the US$25 million, leaving that difficult exercise to the Legislature, which is not privy to all the facts to make an informed decision.
The proposal does not identify which existing projects will suffer as a result of the World Bank’s reallocation of the US$10 million contribution.
Food aid in “designated counties” begs the question of which counties will be included and which will be left out? Given how small our country is and the interconnectedness of our people, if seems unjustifiable that there is a county in Liberia that can be excluded from the government’s food aid program.
In the proposal, the government has said that the cost of the food aid is 25M and could go up to 40M but did not say how long such amount will supply “designated” counties for. Is it one month, two months or six months? We don’t know
The President state in the proposal that “I’m setting up a COVID-19 Food Support National Steering Committee comprising relevant government and the international development community to provide oversight over the process”. According to the proposal, this steering committee will provide an oversight role and prescribe rules while WFP will implement the program. This means that WFP, the UN agency with expertise in such tasks will work at the behest of the National Steering Committee
Before approving US$40 million for a food aid program, the Legislature needs to ensure that the funding requirements for an effective holistic fight against COVID-19 are secured, including adequate and prompt payment of salaries and incentives of health workers, purchase of equipment including ventilators, personal protective equipment, hospital beds, etc. Additionally, the Legislature needs to assure itself that the Government has the capacity to make timely payment of civil servant salaries, as the current delay in the monthly payment of civil servants’ salaries is still an issue of concern.
Government should identify the proposed sources or budget lines that will be cut to fund the US$25 million program and specify the World Bank projects that will suffer cuts in order to fund the food aid program.
When convinced about the availability of fiscal space to fund the holistic COVID-19 fight, priorities in the food aid program should be given to orphanage homes; the elderly, the disabled community and other vulnerable groups. A comprehensive distribution plan must be developed that clearly address issues such as who benefits, the frequency of distribution as well as the composition of the food aid. This strategy must be approved by the Legislature.
Government should include the WFP as a core member of the National Steering Committee that should work out a purchasing and distribution scheme of food supplies that are inclusive of all local producers and importers of staple food commodities. The WFP and UNFPA should play distribution in those counties that have been mandatorily locked down.
To raise the public confidence in the fair distribution of the food aid program, the committee in charge of the food aid should incorporate representations from recognized and reputable religious, traditional, youth and student groups, and other eminent citizens in the society.
2) PRESIDENT WEAH PROPOSES ELECTRICITY AND WATER SUPPORT DURING STAY-AT-HOME PERIOD
The proposal does not provide any data on what these interventions would cost. Rather, the government has made a payment of US$4 million dollars to LEC, representing a significant settlement of Government arrears to the entity. He also proposed a similar support for the Liberia Water and Sewer Corporation.
The free electricity program will be an additional cost to LEC that will require additional funding from government over and above the US$4 million the Government paid as a partial settlement of its age-old arrears to LEC. It is unreasonable to expect LEC to fund the Government’s free electricity program from the GOL US$4 million payment to LEC representing arrears, especially given the existing challenges that LEC currently faced with in delivering electricity to paying customers. Rather, it is more conceivable that payment of these arrears would, at most, enable LEC to begin to provide reliable paid electricity.
The proposal does not have the cost to LEC for providing free electricity and water support during stay-at-home period. The proposal should have included the estimated monthly bill for electricity and water to areas connected to the grid and water system to enable the Legislature to make informed decision on the costs these measures will impose on the utility providers.
The proposal does not consider for the millions of Liberians who rely on generators as a source of electricity.
Government should specify how the cost and how free water program will be funded, as the President’s letter to the Legislature fails to address this issue.
The government should properly identify the population it intends to service through this intervention, supported by due diligence and data, provide a rough estimate of cost and allocate funding accordingly.
The Government should identify another source for funding its free electricity program, probably requesting external partners to help; alternatively, if the Government is expecting LEC to fund the “free electricity” from the US$4 million, the Government needs to accept that its obligation to LEC will increase by the cost of the free electricity program; and should find means to quickly infuse funds in the entity so as to avoid breakdowns and power outages in this critical period.
Government should conduct similar due diligence exercise and work out a mechanism with importers and retailers, including tax credits and suspensions of tariffs, to ensure the supply of gasoline and diesel at reduced prices to power homes that are otherwise reliant on private generators.
3) PAYMENT OF LOANS OWED BANKS AND “OTHER CREDITORS” BY MARKET WOMEN AND PETTY TRADERS:
The proposal does not specify the number of persons to benefit, the total amount of loans to be defrayed, or who the creditors are, leaving this burden to the Legislature. This indicates a lack of due diligence on the actual amount required to fund this intervention and could open the door to serious fraud and abuse. Much like the US$25 million that was intended for mopping up excess Liberian dollars. If the Legislature approves, they would be giving the President a blank check which was never intended by the Constitution, even in times of a State of Emergency.
The proposal does not identify any investigative mechanism that exists to ensure legitimacy of these “loans” and of the recipients of these payments. Who are the “other creditors” to whom the President refers? Are they Susu Clubs, Credit Unions, friends? What are the controls in place to ensure that we do not have a repeat of the ‘Mop Up Exercise’ where unknown, unregistered, and nonexistent Forex Exchange Bureaus and businesses were used to “buy” USD. Without these controls in place, this would be an easy avenue for the government to channel money to cronies and a select number of CDCians in the various communities under the guise of paying the loans of market women and petty traders. The lack of monitoring and compliance measures puts donor and government funds at a huge risk of not being expended for the intended purpose. Rather than rebuild public trust around transparency and accountability, the President, yet again, is looking to exploit a public health threat which the country faces for financial gains through malpractices to benefit himself and his friends.
We all know the immense support that women provide to the sustenance of families by selling in the markets. Women are also the primary caregivers in the homes. They represent the largest number of informal traders. In the leeward counties of Liberia, Liberian women also make farms to feed their families. The current crisis now threatens their productivity and their hopes. The very World Bank that is giving most of the money the government will use during this crisis had struck a hopeful note before coronavirus that extreme poverty would show some signs of improvement in Africa, Liberia included, although not enough to end extreme poverty by 2030 and our women were the ones driving that poverty projections. Those gains will likely be erased under current coronavirus conditions. Juxtaposing this thought to Liberia, the SOE is disrupting the markets for women. This means no food for their children.
Until more clarity is given on the potential beneficiaries, the exact amount owed by each potential beneficiary, the financial institutions owed, and the grand total of the loans, this proposal should not be approved. The legislature must not be seen as giving approval in the dark.
Even if a listing of beneficiaries and the amount owed is presented along with the financial institutions concerned, such listing should be subjected to verification by the General Auditing Commission (GAC) before payment is done.
The “other creditors” as alluded by the President creates a big opening for fraud as was the case with the US$25 million mop-up exercise. Channeling payments through these informal means presents too many loopholes for theft and political manipulation and should be abandoned as it is a dangerous option.
Instead of giving the money to creditors, Government should consider giving it directly to the women and petty traders to be able to restart their businesses when the threat of COVID-19 subsides. This way, these business will be able to repay their debt while contributing to the post-pandemic economic recovery. Government should negotiate with creditors to extend the payment terms for these market women and petty traders so that they are able to grow their businesses and pay back their debt.
4) PRESIDENT WEAH PROPOSES THE ALLOCATION OF US$15 IN THE UPCOMING FY2020/2021 BUDGET TO BEGIN FUNDING DOMESTIC ARREARS.
Although this proposal is not of pressing priority, as it is related to including an item in next year’s budget that begins on July 1, 2020, overall, the payment of domestic arrear serves as a stimulant to the economy and should be seriously considered. This proposal needs to be thoroughly vetted to consider prioritized payments of arrears that have been piling up in recent years as a result of government’s failure to pay vendors for fuel and lubricants and other critical supplies and hospitals across the country, such as Phebe, C.B. Dunbar, Tellowayan, CH Rennie, St. Timothy and others that are inundated with unpaid debts to vendors, thereby seriously undermining their operations.
The Executive should include the US$15 appropriation in the next fiscal budget and prioritize arrear payments for relevant debt that impacts economic recovery.
5) SIX-MONTH SUSPENSION OF SURCHARGE ON IMPORTED GOODS MANUFACTURED IN LIBERIA AND THE SUSPENSION OF PRE-SHIPMENT INSPECTIONS (PSI) PENALTY UNTIL OTHERWISE NOTIFIED.
These recommendations seem to be appropriate and less problematic, except that the Legislature should require the Executive to produce an estimate or indication of the potential revenue to be foregone and the compensating benefits that will be accrued from implementing these measures. The executive should also show how this decision will impact local manufacturers and the strategy to keep them in business.
While we note that the President’s proposal addresses some critical matters of social and economic ramifications for Liberians, which we welcome, we must note that the proposal does not address the public health crisis that necessitated the State of Emergency and lockdown and the subsequent the funding largely from our international partners WHO and IMF. The President’s letter, rather focuses only on a stimulus package to address the so-called economic fallout of the health crisis without dealing with the cause. Unless the health crisis is addressed, there can be no way of assessing and seriously addressing the resultant economic fallout. What the President has therefore presented the Legislature is not a solution to any existing problem for which he declared a State of Emergency, but rather a problematic loophole to unaccountable off budget expenditure disguised as help to the Liberian people. As such, in addition to the recommendations above on the proposals made by the President, we propose that the following additional interventions be included in the holistic fight to prevent and contain COVID-19.
1) Adequate support for healthcare and frontline workers
• Increase pay and pay for insurance for health workers and contact tracers who are at the front lines making sure that the risk has declined sufficiently before put people back in the line of fire.
• Provision of hotels to protect from spread to families, friends and contacts;
• Provision of comprehensive PPEs including protective suits, goggles, caps, face shield, masks, and gloves,
• Provision of proper training in the use of PPEs (We saw the effects of the proper use of PPE during the Ebola crisis).
2) Adequate Response Plan
• Implement rigorous community monitoring & policing to ensure early detection, by making use of and augmenting, as necessary, the existing blueprint, experts and trained personnel from Ebola;
• Implement a rigorous mechanism for early detection including ensuring adequate and reliable inventory of testing supplies and resupply, PPEs, ventilators;
• Develop a Comprehensive Quarantine Plan (CQP), vetted and approved by the medical and relevant healthcare experts, considering the various categories of symptoms in the population – suspected cases, close contacts, confirmed cases;
• Develop a procurement plan that is thoroughly vetted by all relevant stakeholders and addresses and considers all necessary material provision requirements – both medical and non-medical
• Ensure budgetary allocations to support the CQP and procurement plans
• Ensure proper inclusion and placement of trained personnel to work with the response teams
• Ensure a defined make-up of the joint security team necessary to ensure enforcement
• Institute a joint Executive and Legislative oversight team to ensure adequate oversight of the response team, monitoring implementation and compliance of plan, direct communication and monitoring avenues to the healthcare institutions.
3) Paid Annual and Sick Leave for employees mandated to stay at home due to the State of Emergency
• Mandate payment of annual and sick leave by all legitimately registered employers, including government, regardless of length of employment;
• If the employee has accrued leave(s), then that leave will be mandatorily applied during this period.
• If the employee has already consumed their leave(s) for the current year or have not yet accrued leave due to length of employment, this may (1) be applied to leave to be taken during the following year (meaning that the employee will not be entitled to leave in 2021 or (2) the government can provide 100% tax credit for employers who pay employees for emergency annual and sick leave.
4) Unemployment Benefits
• Application of Temporary Disability benefits under Liberia’s social security law on a salary percentage basis for a specified period of time,
• Funded through budget allocations that have been made for projects and expenditures (like travel, allowances, and other salary perks) that will not be expended during this budget period.
In order to adequately scrutinize the President’s proposals, and those additional proposals being made here by the CPP, from an informed perspective we hereby offer the following general recommendations:
1) The Legislature should require the Executive, through Ministry of Finance, to submit a snap budget performance report covering July 1, 2019- March 31, 2020.
– The Budget Performance Report should clearly identify revenue performance along the different revenue lines up to March 31, 2020.
– Expected Revenue to be collected between now and the end of the fiscal year at June 30, 2020.
– The budget performance of major expenditure lines including appropriation for civil servants’ salaries.
– Note: President Weah also reported that COVID-19 will lead to additional revenue shortfall of US$32 million, raising further doubts about the government’s capacity to fund some of the grand packages announced in the President’s letter.
2) The Legislature should request from the Executive a list of the amounts and sources of external and domestic financial assistance to the COVID-19 fight as well as the GOL allocation/budget for the use of such financial assistance.
3) The Legislature should request from the Executive the list of in-kind contributions to the COVID-19 fight.
4) Legislature should require the involvement of Government integrity institutions, including the GAC and the LACC to the extent possible in order to enhance the transparency of any approved stimulus program. This suggestion comes against the background of the flawed and non-transparent handling of the US$25 Mop-Up Exercise by this very same government.
5) The Legislature should require the Executive to give explanation for the exclusion of the head of NPHIL, Dr. Mosoka Fallah, from its Executive Committee to lead the fight against COVID-19. The exclusion of statutory officials from the fight smacks of a bigger problem in the COVID-19 fight that may require further investigation.
In conclusion fiscal policy is where the rubber hits the road and we must now get it right to avert an economic collapse while trying to address the COVID-19 challenges. The support from our international partners, including the World Bank, European Union, and AfDB provides a relief that enables is to help address the challenges presented by this virus. Further, the debt relief announcement by IMF to several countries including Liberia allows us to redirect resources that could have gone to the IMF for debt service to be used to address the COVID-19 public health crisis. Additionally, our current budget has expenditures which we are certain will not be used in the coming months. While, these funds can go a long way to help in the fight, we also understand that there is not an endless reserve of funding and so we must ensure that the meager resources are adequately allotted to specific and justifiable interventions that will produce results relative to the tangible goals of prevention, testing, and treatment.
We must also be quick to point out that nothing is going to work – not the proposals nor the fiscal policies – if we do not get the public health crisis under control which entails solving the problem of infection and spread, which is rising exponentially, with the numbers of confirmed cases more than doubling and death rate is more than the recovery rate in just a week. Not adequately addressing the real crisis will ultimately lead to false expectations and increase the need for additional funding when this virus is not contained.
While we welcome and encourage the populist policy to feed people and pay light and water bills, we are also of the opinion that most of this money should be directed to support the health sector. It is important that funding available to the government for this response is allocated in a manner that maximizes results, curbs public speculations and build public and donor trust around accountability. Accordingly, there needs to be a comprehensive plan that details all facets necessary for achieving the goal of preventing the spread of the virus and aiding our citizens during this time of crisis.
UNITY PARTY (UP)
LIBERTY PARTY (LP)
ALL LIBERIAN PARTY (ALP)
ALTERNATIVE NATIONAL CONGRESS (ANC)