Recast Budget has US$20M Surplus: Tweah -Confident of No Shortfall

MONROVIA – In line with Section 23 of the Public Finance Management (PFM) Law of Liberia which mandates the Minister of Finance to regularly update the National Legislature relevant to the supplementary budget annually, the Minister of Finance and Development Planning, Mr. Samuel D. Tweah, appeared Monday, July 18, 2022 at the Liberian Senate to respond to issues, queries, concerns around the recast budget of 2022, and provide more information on the recast processes. Briefing the Senate in response to an invitation extended him, Minister Tweah explained how the recast budget was projected, and how the supplementary budget is potentially a surplus to the 2022 national budget, noting that the Government of Liberia has projected an additional revenue source of US$20 million.

Minister Tweah, as head of a delegation comprising economists, fiscal managers and representative from the MFDP, the Liberia Revenue Authority (LRA) and the Ministry of Justice, informed the senators that the PFM law states that every year, at midterm review, if the revenue is not performing, the Minister is charged by law to inform the legislature on the basis of reapportioning to meet the financial numbers in the case when revenue is not performing.

“We’ve done a number of supplementary budgets in the past, especially during difficult times, like 2019, 2020. This year, June, we’ve had additional opportunity to do a recast. A supplementary budget means if we have more revenue. And technically when we say a recast, it means we don’t have revenue, but because of national emergency we may reapportion so that there are some urgencies that are compelled to recast. In this case of a recast, we have additional revenue. We have US$15 million additional revenue from the World Bank. Originally, the World Bank decided to provide US$40 million, but this year they decided to increase that budget support to US$55 million,” Minister Tweah briefed the senators.

The Government fiscal boss said the government of Liberia has entered into an agreement following work done by the legislature regarding the implementation agreement with the Government of Guinea, and that the government entered into a framework agreement with HPX moving towards a multi-user road system.

“In 2019, the government received US$7 million under those agreements. This year, the government entered into another framework agreement for US$30 million. In the budget this year, we also have US$25 from ArcelorMittal. Actually, we had the six months budget and this budget, we had more than US$55 million from ArcelorMittal, pursuant to the finalization of the agreement with ArcelorMittal. That agreement did not materialize. So, the budget was risked by that.

“One of the reasons why the law says we need to do a recast is that when there is significant shortfall in revenue because of an event, in this case the event is the fact that the Mittal agreement was not consummated, therefore the revenue would not come. And if the revenue would not come, for example, US$25 million of the revenue would not come, it means the government would miss one month salary payment because the annual bill for salary is around US$23-24 million. So just because ArcelorMittal did not come, technically we should fall behind in salary by one month. That is a risk. And so, the law requires that the national legislature, along with the government, the Ministry of Finance, should address that risk. The way to address that risk is through the US$30 million that was received from HPX. That means the US$25 million was in the budget for ArcelorMittal, and US$30 million was provided by HPX; technically, the Mittal risk is solved, and we have US$5 million surplus or difference. So, you add that US$5 million to the US$15 million from the World Bank, you have a revenue source of US$20 million. So that’s the revenue supplemental. The additional US$21 million would constitute re-appropriation from all across the budget to meet pressing emergency situations,” Minister Tweah stated.

He said one of the major concerns of the government is to provide constant, affordable electricity through the CLSG lines, which amounts to around US$65 million.

“Actually, we have been warned by LEC that the projection might be underestimated, that we may be short around US$15 million. We can work with US$65 million within this budget year and next budget year in order for the dry season challenge to at least be solved. People are actually commending LEC for the constant supply of undisrupted electricity supply during this rainy season, but will that be the case during the dry season? So, we have to find the money to make sure we have regular supply of electricity during the dry season.

 Minister Tweah then addressed other issues that would be tackled under the supplementary budget, to include subsidies to rice importers, the Roberts International Airport, among others.

“Rice is a major challenge in the country right now. Importers are knocking on our doors, demanding that if we don’t give subsidy right now, the rice situation will get out of hand. So we have put money in there to support on a temporary basis the price of rice because I don’t think the government is able to sustainably do this intervention. We’ve appropriated money to have the price of rice stay as it is. As the situation escalates across the world, we don’t see rice price rising here,” Minister Tweah assured.

The finance minister further disclosed that the supplementary budget will also handle the issue of repayment of US$6 million that the previous government owed the Norway government, and because of that, Norway, which was Liberia’s biggest donor in terms of the energy sector, withdrew its support from Liberia.

“The government of Norway withdrew from funding Liberia. It used to be one of the biggest donors in the energy sector. But they are saying that there were some events with the last administration which means money has to be refunded to the Government of Norway to the tune of US$12-13 million. This government renegotiated that it was not in office when that event happened, and that Norway should give us fiscal space to renegotiate through the National Legislature. So, Norway asked us to make some commitment. We renegotiated the amount to US$6 million to allow Norway resume its international assistance to Liberia. We have placed US$1 million in this recast budget. If Norway comes back with the kind of support like US$40-50 million that they used to give Liberia, our energy future will be brighter. We agree with the IMF that payment of that debt is important,” Minister Tweah said, noting that recast budget also includes support to the RIA. He then called on the national legislature to sail through with the recast budget as it addresses significant priorities to solve national issues.

Responding to Minister Tweah’s deliberation, the senators raised concerns ranging from the need for the Executive to provide more details about the framework agreement signed between Liberia and Guinea; more clarity on the list of those budget items that would be shifted in the supplementary budget so that the shifting doesn’t impact important sectors like education, health, among others.

Of paramount concern also was the need for the Executive to disclose the amount in terms of dollars and cents government’s subsidize on rice; the need to present the legislature with programs that inform the senate on activities in the supplementary budget; and the need to present to the legislature the quarterly performance report on the budget.

Minister Tweah promised to provide the senate with additional information that he had not earlier presented, but informed the senators that the quarterly report had already been published on the MFDP website, promising to send a letter to the Senate referencing the placement of the report on the ministry’s website.

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