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Budget Performance: Tax Revenues Exceed Projections Despite Shortfalls

by Lennart Dodoo
July 22, 2024
in Economy, Featured
Reading Time: 3 mins read
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Budget Performance: Tax Revenues Exceed Projections Despite Shortfalls

Monrovia – The Public Accounts and Audits Committee of the Liberian Senate has released its detailed analysis of the budget performance for the first quarter of the fiscal year 2024. The report shows a positive start in tax revenue collection, surpassing projections by 11%. The Minister of Finance, according to the report, stated that tax revenue for the quarter reached $163.4 million, exceeding the projected $151.4 million. This figure represents 26% of the full-year projection of $540.2 million.

However, the report also noted a decline in revenues from the Goods and Services Tax (GST) and taxes on residents, which fell short by $4 million each, creating an $8 million deficit in these areas for Q1. Non-tax revenue was also down by 8%, attributed to a slow start in revenue-generating entities like the Liberia Immigration Service (LIS) and the Ministry of Foreign Affairs (MOFA).

Despite these positive outcomes, the report underscores the underperformance of State-Owned Enterprises (SOEs). None of the SOEs contributed to the government’s revenue collection for the quarter, despite a projection of $2.1 million. This situation poses a growing fiscal risk and requires immediate attention.

On the expenditure side, the Ministry of Finance and Development Planning (MFDP) allocated $144.97 million but only disbursed $77.1 million, which is 53% of the allotment. This disbursement represents just 10% of the full-year appropriation, raising concerns about the potential contractionary impact on the economy. Given that Liberia’s economy heavily depends on government spending to stimulate growth and protect jobs, this low disbursement rate could hinder economic activities and the government’s ability to provide essential services.

“It is unacceptable to have money sitting at the bank and not spending as was seen in Q1,” the report states, highlighting the urgency of timely budget execution. The delayed spending, partly due to the slow formation of the government, has adversely impacted various sectors, particularly infrastructure, where disbursement exceeded allotment.

The report also draws attention to the President’s ARREST agenda, which focuses on Agriculture, Roads, and Tourism. These sectors received minimal disbursements, with Agriculture getting only 1%, Roads 8%, and Tourism just 1% of the funds. This raises questions about the prioritization of these critical sectors in the administration’s plans.

In terms of recurrent expenditures, the MFDP allotted $78.7 million for employee compensation but disbursed only 54% ($42.5 million). Domestic and foreign liabilities saw disbursements of 29% and 30%, respectively, indicating that many government employees might not have received their salaries and debt servicing was insufficient. Goods and services received only 37% of their allotment, and social benefits saw a 49% disbursement, potentially leaving socially disadvantaged individuals without necessary support.

Public Sector Investment Programs (PSIP) were notably underfunded, with only $259,000 disbursed for the quarter, reflecting a lack of prioritization of public investment projects despite their critical role in the President’s agenda.

The report calls for several improvements, urging the Ministry of Finance to execute the budget as per legislative appropriations and disburse funds timely to stimulate the economy. It also recommends better alignment of the ARREST agenda with budget classifications for clearer impact analysis, enhanced explanations for variances and gaps, and more analytical data to support revenue and expenditure activities.

Senator Amara M. Konneh, Chairman of the Public Accounts and Audits Committee, along with Co-Chairman Senator Gbehzonger M. Findley, and committee members Senators Dabah M. Varpilah, Darius Dillion, Edwin M. Snowe, Nathaniel F. McGill, Francis Dopoh, Gbleh-bo Brown, Momo Cyrus, Johnny Kpehe, James Binney, and Johnathan Sogbe, finalized the report in the committee room on July 10, 2024.

Tags: 2024 National Budget LiberiaSenate Committee on Public Accounts and AuditsSenator Amara Konneh
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Lennart Dodoo

Lennart Dodoo

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