Liberia: Watchdog Urges Vibrant Economic Governance

— Proposes new fiscal pathway for Boakai-Koung Gov’t

Integrity Watch Liberia (IWL), a local corruption watchdog and advocate for good governance, is urging the new Unity Party government to prioritize vibrant economic governance. In line with this, IWL has developed a Fiscal Policy Options paper that proposes a new fiscal pathway for the country.

IWL’s fiscal policy options paper seeks to call on the Joseph Nyuma Boakai-Jeremiah Kpan Koung government to begin on a new footing and create a new slit of fiscal stewardship and economic governance for the Liberian State.

“With a review of the Draft Abridged National Budget FY2024, which has already been submitted to the 54th National Legislature, and without seeing any new or significant changes to the many fiscal policy options IWL has proposed to the Weah led government consecutively since FY2018/19, we have deemed it expedient to present to the new government the blow fiscal policy actions for implementation,” Harold Aidoo, IWL Executive Director, said in the Policy paper shared with the Daily Observer on Tuesday, January 23. “We believe, when considered, this policy option paper will accelerate sustainable growth and development.”

With a series of recommendations proffered in the policy option paper, IWL emphasizes the need for the new government to take swift and prudent fiscal actions in order to inspire trust and foster good governance in a nation that has been yearning for good governance and financial probity for so long.

The paper suggests several measures to enhance fiscal stewardship and economic governance, including expanding the domestic revenue base, closing revenue loopholes, reducing recurrent expenditure, and developing effective fiscal policies.

“We want the government to expand domestic resource mobilization by establishing a comprehensive real property registry all across the country and decentralizing taxpayer services in each county consistent with provisions of the Local Government Act of 2018 and the Revenue Sharing Act of 2021,” IWL said in its policy paper.

The watchdog called for the revision of all mining activities, as well as the mining agreements of Bea Mountain, MNG Gold Mining, and others with the objective to address bad labor practices, illegal mining activities, tax evasion and illicit financial outflows.

“Reduce the size of tax expenditures by extensively reviewing the list of beneficiaries (government institutions, religious institutions, and private businesses), thereby eliminating discretionary powers and wastage inherent in Executive Orders, Tax Waivers and Tax Incentives and, establish and implement a rigorous monitoring and compliance regime,” the policy paper proposed. “Eliminate the import tariff of “cargo tracking’ being imposed on goods and services at the Free Port of Monrovia, which continues to create high costs on consumers, and enact economic policies to make the Free Port of Monrovia operational 24/7. This will create jobs and reduce the extra charges for storage.”

The watchdog recommends the expansion of domestic resource mobilization, revising mining agreements to address issues like tax evasion and illegal mining activities, reducing tax expenditures, eliminating import tariffs, and reviewing government’s recurrent expenditure by removing ghosts, duplicates, and non-essential employees.

IWL called on the government to review the concession with APM Terminals to ascertain performance and compliance with terms and to allow all marine services to return to the ownership and operations of the National Port Authority.

On the reduction of the government’s recurrent expenditure, the Watchdog indicated that there is a need for the new administration to clean up the National Wage Bill by objectively removing ghosts, duplicates, illegal hires, and non-essential employees.

“There should also be the removal of illegal and unjustifiable award of salaries and benefits, and commission a mandate-function review and head-count reforms, affecting all levels of the Government to produce and publish the actual size of the National Wage Bill for a small, effective and efficient government,” the paper indicates. “This process should also culminate into the enactment of a Public Service Commission which will have the jurisdiction over the entire government workforce management.”

The Government Wage Bill is bloated, unmanageable, and unsustainable because of the uncontrollable manner in which recruitment and hiring processes have occurred since 2006, which now account for about 49.2% of the national budget.

Since 2006, it is evident that the government has only paid lip service to these critical public sector reforms. For example, in 2006, President Sirleaf’s government reportedly inherited more than 89,000 employees on the payroll and introduced a downsizing-rightsizing policy to bring the public service workforce to no more than 35,000, a target which was reportedly achieved by the Civil Service Agency (CSA) but the salary scale was broken.

This, experts said at the time, was attributed to the fact that the CSA, with its current mandates, functions, form, and structure which limits its authority to have jurisdiction over political employees and political institutions, cannot fully perform this task without itself being reformed.

In 2018, the CDC government announced a major salary harmonization policy, which soon became enacted into law by the 54th Legislature, thereby affecting all levels of government. The government defended that it could no longer afford an inherited US$327 million annual wage bill against a US$500 million national budget. To date, as of December 31, 2023, it is estimated that the actual size of the government’s wage bill is more than US$360 million.

A thorough analysis of major expenditure categories such as Compensation of Employees, Use of Goods and Services, and Grants reveals a creeping expenditure nightmare. “With these ever-creeping costs in compensation, no government would make any meaningful progress in development,” Aidoo said.

He said there is also the need for the revision of the public debt portfolio, especially the domestic debts of the country, to create fiscal space by negotiating with various creditors to defer repayment of the debt principal.

IWL also advocates for the revision of the public debt portfolio, implementation of an efficient Fleet Management Policy, and enforcement of the Common Pricing Catalog of Goods and Services.

The current debt service projection of US$60.8 million on the FY2024 Draft Abridged National Budget has crowded out the fiscal space needed, Aidoo said, therefore, budgeting for only interest expense and a deferment of principal repayment could potentially create a fiscal space of US$30 million.

“This amount of money may be re-prioritized for critical expenditure needs of the government,” he said. “Additionally, a review process of the public debt portfolio, especially domestic debts, will give a comprehensive understanding of the legitimacy and implications of the servicing of domestic debts.”

IWL also wants the new government institute and implement an efficient Fleet Management

Policy Regime to standardize vehicles for us by defining categories of government officials and institutions, controlling the costs of acquisitions, and reducing the costs of servicing and maintenance.

Aidoo called for an update and enforcement of the Common Pricing Catalog of Goods and Services that was developed by the Public Procurement and Concessions Commission (PPCC), which standardizes unit pricing in specific commercial localities or zones within the country.

Additionally, the watchdog suggests that the new government should enact and publish its first 100-day Deliverables, commission audits on all government assets, and develop comprehensive National Development Plans with measurable objectives. Within the first thirty (30) days after taking the Oath of Office, Aidoo said the President must enact and publish his first 100-day Deliverables as part of its interim national development plan. “The new government should immediately commission audits on all of its assets-human, financial, and other properties-at home and abroad,” he said. “Within the first 100 days in Office, the new government should be able to develop its National Development Plans, including well-defined, measurable and verifiable objectives, indicators, outputs, outcomes.”

Aidoo noted that the President must make it mandatory for each government institution to have its own Strategic Plan, covering the same lifespan as the Sector and National Development Plan

These recommendations, according to IWL, aim to accelerate sustainable growth and development in the country and establish a framework for transparent and accountable governance.

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