Weah’s War Against Crippling Inflation -From 2022 Shrink Of 13.6 to 6 Percent, Any Good News In Pending SONA?
MONROVIA – Consistent with Article 58 of the 1986 Constitution, President George Manneh Weah is expected to address the nation in what is commonly called State of the Nation Address (SONA) at the joint chambers of the National Legislature next Monday, January 30. All eyes and ears would be open to the Chief Magistrate of the State to brief his people as well as international partners on the welfare of the state and its people. Since the economy is dear to Liberians nowadays upon which many determine their political choice, the President will not escape the issue of inflation—thorny inflation—which his administration walked into in 2018 with suffering much injury to the nation. But when the President reported last year, the nation celebrated the economy which accordingly picked up huge signs of growth with much force against contraction and shocks. It was then said by President Weah that inflation was slashed from over 13 percent to 6 per cent. Certainly, there could be good news next Monday, January 30, as The Analyst reports.
Last year’s State of the Nation Address triggered in most Liberians much hope and trust in the administration of President George Manneh Weah when he told the nation that the State of the Nation was safe and secure and that the messy economy had grown appreciably.
To the delight of the people, particularly the impoverished majority of the people, President Weah reported that despite the challenges of dealing with the COVID-19 pandemic, the economy grew by 3.6 percent from negative 3 percent in 2020, and growth this in 2022 was expected to be 4.7 percent, through increased agricultural and public investments in social compact program.
In nominal value the Liberian economy expanded by more than US$300 million in 2021, the President excitedly told the nation, indicating that inflation was reduced to less than 6 percent in November 2021, from 13.1 percent in December 2020.
“We were successful in increasing the gross international reserves of our country to more than US$600 million, representing more than 4 months of import of goods and services in compliance with ECOWAS convergence target,” the President said at the time, reiterating the fact that the Constitution of Liberia places upon him the solemn responsibility to report on the State of the Republic, with specific mention of public expenditure and national income.
Thus, he continued: “Revenue collection for 2021, including grants, was $646 million U.S. dollars, compared to $653.9 million U.S. dollars in 2020. This apparent decrease is attributable to more international Covid-related funding that was received in Calendar Year 2020. This revenue performance was driven by higher receipts of tax and non-tax revenues, especially taxes on international trade.
Of this amount, domestic taxes was $577 million U.S. dollars and external resources received from our Development Partners was $68 million U.S. dollars. The last fiscal year recorded the highest level of domestic revenue performance since the end of the civil conflict. We are all encouraged and challenged to sustain these efforts.”
Relating the good news in January 2022, the President said on the other hand, total cash expenditure for the same period under review was $668 million U.S. dollars. Of this amount, 44 percent was spent on compensation of Government employees, 25 percent on goods and services, 17 percent on domestic and international debt, and 5 percent on Public Sector Investment.
He mentioned how his administration cut the corner for at least the last five decades during which Liberia has had a fiscal year that runs from July 1 to June 30.
But now, he said: “Liberia has been the only country in the ECOWAS sub-region that has run this fiscal year, which is out of alignment with the rest of the countries in the region. We have been encouraged by ECOWAS for nearly two decades now since the end of the civil war to revise our fiscal calendar.”
He continued: “I am proud to report that the change has finally taken place, and the year 2022 will be the first fiscal year that is also a calendar year for the national budget and other instruments and processes of the Government.”
To facilitate this transition, he noted that his administration had to enact a special transitional budget which you approved at $347.9 million US dollars in the year under review, recalling that in December 31, 2021 it was concluded this transitional budget, which was funded exclusively by domestic revenue, and the draft national budget was presently before the House of Senate for consideration, having been passed by the House of Representatives.
According to him the 2022 budget was passed by the House at $785.6 million U.S. dollars.
He boasted that that was the largest national budget in the history of Liberia, and with the support of the National Legislature we hope to make it the most transformative. Domestic revenue is projected at $640.5 million US dollars, or 81.5 percent, while external resources are projected at $145 million US dollars, or 18.5 percent.
Further relating improvements in the economy when he was delivering the Annual Message, President said: “We have increased capital spending in the proposed Fiscal Year 2022 budget. In response to the need for more development, we are putting more resources to solving the many development challenges confronting our people in various sectors.”
He told the nation that those capital investments would cover roads, electricity, education, national security, health, water and sanitation, transport and several other sectors.
Thanking the House of Representatives for approving $10 million U.S. dollars for projects under the County Tour that I undertook in the year under review. These county tour projects will bring serious relief to many of our people, especially those in rural areas, the President made it clear at the time that the success of this budget depends on strong revenue measures.
“It depends on all citizens paying their lawful taxes and doing so in a timely manner. In this regard, the Government in 2022 will support even more vigorously the domestic resource mobilization strategy of the Liberia Revenue Authority.
Commenting on Revenue Performance
Further praising the performance of his government, President Weah told the nation that “Government, through the LPRA, has launched a program to keep 50 percent of all real estate taxes collected back to the counties, districts and cities where the real estate taxes are collected. This is a measure to boost real estate taxes by involving local communities and their residents, as well as ensure that part of the money stays at the local level, in keeping with the Decentralization Law that was recently passed under my Administration. The program is being piloted in Margibi County.”
He said his administration was working with the National Legislature to limit tax waivers or tax expenditures, which in the last three years alone have cost us more than $300 million U.S. dollars.
“While duty-free privileges and incentives are important to spur development, I believe that, as a country,” he noted, “we have been too generous with these instruments and must now begin to take a more conservative approach.”
Controversial Domestic Debt
As Domestic Debt had been generating controversy, others politicizing it, the President took up time in the last SONA to update the people of Liberia on the status of it.
He said: “We have made significant progress in restructuring our domestic debt. All legacy debts owed the Central Bank of Liberia, including the debt owed to the former National Bank of Liberia, were bundled into a Restructured and Consolidated Loan at the start of the IMF-supported program two years ago.
“This Restructured Loan totaled $487.5 million U.S. dollars. The Government pays an annual interest of $13.9 million U.S. dollars to the Central Bank of Liberia on this loan and will start to pay principal in the year 2030. The total stock of domestic debt now stands at $660 million U.S. dollars and the total stock of external debt now stands at approximately $1.03 billion U.S. dollars for a total public debt stock valued at $1.69 billion U.S. dollars as at December 31, 2021.”
He said the total debt stock grew by 6.29 percent compared to end-December 2020 debt stock of $1.59billion U.S. dollars and this growth was from disbursement on both external and domestic loans.
On both domestic and external debt the Government paid the amount of $83.4 million US dollars in debt service.
Of this amount, he said, $62.8 million U.S. dollars was paid for domestic debt to the Central Bank of Liberia, to commercial banks for Treasury Bonds, and to other institutions, while $20.6 million U.S. dollars was paid to multilateral and bilateral partners.
One of the issue the President has often mentioned in this Annual Messages and which he did last year and could comment on again this year, was the fight against corruption.
Regarding the national menace, the President said: “We must continue to show strong gains in the fight against corruption, money laundering and illicit financial flows. The Government is strengthening and empowering the Liberia Anti-Corruption Commission to prevent fraud and acts of corruption before they occur. You will be aware that the House has already passed the new LACC Act giving a broader mandate to the LACC to fight corruption. It is my hope that, in the supreme interest of the Liberian People, the Senate will soon concur.
He also reported how the House has also passed the new anti-money-laundering legislation, which empowers the Financial Intelligence Unit to fight illicit financial flows, such as money laundering, and drug and terrorist financing. We will spare no effort to bring Liberia within international compliance in the fight against corruption and illicit financial flows.
In further fight against corruption, he reported that with the support of the Legislature, “our Administration continues to implement several reforms on the Central Government payroll and pension schemes. For example, we have successfully placed all Government workers on biometric ID; reduced non-contributory pension scheme from about 17,000 pensioners in 2017 to about 6,000 pensioners to date; expanded social security coverage and increased social security contribution by 300 percent in some instances.”
President Weah divulged last year that the Government, through the Ministry of Finance and Development Planning, the Civil Service Agency and the National Social Security and Welfare Corporation, intends to fully reform the entire process of retiring and paying retirees on time. In this regard, I am hereby admonishing all relevant entities to accelerate their work and complete the reform by the middle of this year.
At the completion of this exercise, he said, workers who retire today must receive their money the following month. I will be looking to announce this to the Nation in my 2023 annual message.
As the President takes the SONA State at the Legislature, the populace is poised to hear if much was similarly done in last year.