Vision to Strengthen Disposable Income of Civil Servants -Boakai’s New Finance Minister Unveils Novel Fiscal Tactics

MONROVIA – Liberia’s Finance and Development Planning Minister, Augustine Kpehe Ngafuan, has reaffirmed Unity Party government’s commitment to enhancing the disposable income of civil servants.

The revelation of the new finance minister, made during a live talk show, comes as debate continues regarding President Boakai’s plans to reverse former ruling CDC government’s “harmonization policy”.

Minister Ngafuan reported during the radio talk show on the National Broadcaster, ELBC, that current inflation stands at 7.7 percent, with expectations of a decline to 6.6 percent by next year due to proactive government measures but stated that if the only issue facing the government was harmonization, it could be resolved quickly.

He however was quick to outline a range of challenges that have placed significant strain on the country’s budget, limiting the government’s ability to address harmonization immediately.

Among these challenges, Minister Ngafuan highlighted the US$83 million that the previous government withdrew from the Central Bank of Liberia, with the current administration planning to allocate US$15 million toward its incremental settlement in next year’s budget.

He also noted an outstanding ECOWAS Trade Levy of US$18 million as one of the inherited issues the government must tackle. Furthermore, he indicated that there was a substantial increase in the overall size of government salaries towards the end of the previous administration. Minister Ngafuan emphasized the government’s commitment to addressing these challenges.

During his appearance on ELBC, which was broadcast nationwide, Minister Ngafuan assured the public that efforts are underway to increase the disposable income of civil servants, with key details to be revealed in the upcoming national budget.

Reflecting on the fiscal constraints facing the government, Ngafuan noted that when he last served as Minister of Finance over twelve years ago, the budget was approximately US$500 million.

He expressed concern that, over that time, the budget has only increased by a little over US$200 million. He attributed this limited growth to external shocks, such as the Ebola outbreak and the global COVID pandemic, as well as what he referred to as “slippages.”

The Minister acknowledged some progress made by his predecessors but stressed that he also inherited significant challenges.

He recalled his previous efforts that led to the cancellation of over US$5 billion in external debt during his last tenure in public service. He noted that, due to this debt cancellation by multilateral partners, the debt service obligation at that time was minimal.

In contrast, he disclosed that the government has proposed US$328 million for debt service obligations in FY2025.

Given the total debt stock of US$2.57 billion, he described this amount as merely a drop in the bucket, highlighting the significant debt burden inherited by the government. With domestic debt nearing US$1.1 billion, he pointed out that domestic obligations have been increasing, underscoring the necessity for careful scrutiny of domestic debts. However, he clarified that incurring debt can be beneficial for economic expansion if directed toward meaningful ventures or infrastructure investments that promote growth and development.

Infrastructural Project Plans for Dry Season

Meanwhile, Minister Ngafuan also unveiled a significant public sector infrastructure initiative focused on energy and road development in the country.

Minister Ngafuan stated that the development of major growth corridors will increase during the upcoming dry season, along with an expansion of electricity services, which will include the purchase of energy from Ghana. During Thursday’s simulcast appearance on the Liberia Broadcasting System (LBS) in Monrovia, Minister Ngafuan stated that the government plans to undertake significant infrastructure projects.

A 20MW solar plant at Mt. Coffee is set to become operational by August 2025. Furthermore, Minister Ngafuan noted the government’s collaboration with China on various road projects, including the overpass at the Ministerial Complex and a road project between Gabriel Tucker Bridge and St. Paul Bridge supported by Japanese funding.

Ngafuan emphasized the government’s commitment to counterpart financing for all projects funded by multilateral partners, which will take priority in the FY2025 budget.

In a recent private sector discussion held on October 15, participants expressed concerns about the high costs of electricity, which they believe are undermining business profitability.

Entrepreneurs, including those operating two Airbnbs, urged the government to address these energy challenges. Acknowledging the difficulties faced by the government, Ngafuan assured that while turbulent times are ahead, there is hope for recovery and progress.

He noted that, twelve years ago, he left behind a budget of US$500 million, and now the budget stands at a little more than US$700 million with economic growth has been stagnant.

He also addressed the issue of government debt, which has risen significantly, with FY2025 debt servicing projected at US$328 million.

While acknowledging that debt can be harmful, he emphasized its potential for development when utilized wisely.

Ngafuan also lamented the decline in the government’s relationship with vendors, stating that the credibility lost over time has led to vendors being reluctant to honor letters of purchase orders (LPO) without upfront payment. He stressed the need for the government to restore its commitments.

Moreover, the finance minister announced that recently the International Monetary Fund (IMF) approved a US$210 million Extended Credit Facility (ECF) program for Liberia.

He clarified that these funds are not intended for the national budget but will instead serve to strengthen the country’s reserves, as Liberia is currently facing a balance of payments issue where imports exceed exports. The funds are intended to be disbursed over a 40-month period.

He highlighted the importance of economic indicators, noting that a healthy economy typically has reserves capable of financing three months of imports. Unfortunately, Liberia currently has reserves sufficient for less than two months of imports, a situation he described as indicative of macroeconomic imbalances.

In addition to the IMF support, Ngafuan reported that Liberia recently secured a grant of €108 million (approximately US$117.2 million) from the European Union for the FY25 budget. The government has also obtained US$40 million from the World Bank for direct budgetary support, alongside US$20 million earmarked for disaster management, totalling US$60 million. The release of the World Bank funds is contingent on meeting specific prior actions.