Centralization and Zero Budgeting: CENTAL Analysis of the Draft Budget

It is argued that Liberia’s problems require new ideas and practical solutions. The country is beset by myriad challenges that require a robust, responsive, and targeted approach to attain meaningful progress. Among others, this could mean breaking with the past, building on past legacies, rethinking of legitimately created institutions as well as creation of new ones. But no matter how one sees it, reform is critical.

The Executive Mansion, seat of the executive branch of government.                                         Many Liberians supported the presidential bid of then candidate George M. Weah, evidenced by his election performance. For some, he had not been entrenched and entangled in the politics of the day—years of professional football kept him away from the shenanigans. For others, wealth accumulated over the years would better position Mr. Weah to discourage officials from feasting on public resources through waste, corruption etc. And there were also those who saw Mr. Weah as a patriot of great potential to restore the lost years. He would win the war on corruption, salvage the economy, rebuild infrastructure, enable the health sector to provide quality health care, and restore the education system to its glory days. In him they placed their hopes. While some “changed for hope” knowing that progress will be incremental and that all things will not be perfect, others expect rapid transformation that sees the country’s underdevelopment and governance woes addressed sooner than later. In the end, they desire an administration vastly different from others in many respects in terms of being transparent, accountable, accessible, and responsive to the plights of ordinary citizens who were the lynchpin of the electoral victory.

Using Budget to Transform?

The national budget is a major tool in driving reform. Basically, it reflects government’s priorities in terms of its wises and aspirations for the country and people. If used properly, the national budget could address access to healthcare, improve service delivery in education, rebuild broken infrastructure, and awaken the agriculture sector. And if the recast budget 2017/2018 and the draft national budget 2018/2019 are anything to go by, there are some positive signs.

On April 30th 2018, the Executive Branch, under the leadership of President Weah, submitted its first draft national budget to the Legislature for review and passage, in keeping with its constitutional mandate. This is the first budget entirely crafted by the Weah Administration. So, it can be said that it represents the administration’s priorities.

To begin with, the government plans to undertake about twenty-nine (29) projects affecting the Social Development Services, Education, Infrastructure, Security & Rule of Law, Health, Agriculture, Municipal Government, and Public Administration sectors. For example, $1.2 Million dollars will be used to construct pro-poor housing units, and One (1) Million dollars will go towards job creation programs for youths. These projects could provide shelter for hundreds of people living in deplorable conditions and provide jobs for many young people who have no means to earn a living. In education, Seven Hundred and Fifty Thousand dollars ($750,000) will be used to renovate Sixty-nine (69) public schools and another Seven Hundred and Fifty Thousand dollars ($750,000) to equip laboratories in six (6) public high schools. This is also welcoming as we look to change the narrative surrounding education in Liberia. And in agriculture, $2.6 Million dollars will go towards developing rice value chain. At long last, we can look forward to producing enough food to feed ourselves. In sum, approximately 74.2 million dollars will be used on 29 projects. Many would agree that these interventions are timely and relevant. But when considered in light of other priority spending, one might conclude that even more could be done. Besides, given the bad history of public sector corruption and bad governance in Liberia, timely and successful implementation of these projects, void of corruption and wastage, will be even more critical and appreciated by the public.

Coming to Terms with the Realities of Governance?

The model underpinning these interventions have led to challenges, which range from sustainability, bloated public service, power centralization, to government paralysis etc. And if the cumulative effect of these challenges are considered against the benefits of the interventions, there just might be a need to pause, take a break, and reflect before going ahead. Although the recast 2017/2018 budget provided a “pro-poor” projection payment of WASSCE/WAEC exam fees, the 2018/2019 draft budget does not. There were questions around the motive and intended impact of such arrangements. And it seems, government is now in agreement that the project cannot be sustained and is not worth the resources. Instead, Three Hundred and Fifty Thousand Dollars ($350,000) will be used to purchase printing equipment for WAEC. Hopefully, this could lessen exam fees. Also, the government has called-of the “stimulus credit line for the private sector”. The latest fiscal out turn report shows that the amount previously allotted under the recast budget has not been spent, and the proposed budget also does not have an allocation for private sector credit. Given the improprieties associated with the Private Sector Development Initiative (PSDI) loan of the Sirleaf administration, there were concerns around reviewing structures and policies associated with the credit and it is laudable that the government has pulled the breaks. It is important, therefore, that sustainable and well-defined projects that represent value for money are identified and funded.

Other Notable Issues, Elections ignored?

Despite its importance, there are no allocations for holding elections in the national budget. Unlike dates of general and presidential elections that are predetermined using the constitutional framework, by-elections are quite uncertain. But this does not mean that we cannot reasonably expect to have them. Unforeseen circumstances such as incapacity, death, or resignation of a legislator could create a vacancy to be filled by election. Good examples are the by-elections for Montserrado and Bong counties that have been delayed. In fact, there are possibilities of by-elections within the next fiscal year, given that incumbent legislators contemplating contesting the pending by-elections may win. These legislators represent popular parties and may likely win, thereby losing their current representative seats. This leads to another by-election, which inevitably requires resources. Why, then, does foresight not allow us to prepare for these eventualities? Is it money? Obviously not! Money would have been allotted if elections were a priority. A cursory look at the draft budget leads one to seeing huge chunks of funding allocated to the administration’s priority areas. For example, the President will spend a whopping Thirteen (13) Million dollars on renovating the Executive Mansion. This would be in addition to approximately Twenty-two (22) Million dollars already spent on the Mansion in 2016 and 2017 alone. At least a third of the $13million could be allocated toward elections contingency lest we have another constitutional violation and intergovernmental wrangling when the unexpected occurs.

Ranking Health Priorities

It is also now clear that an initial US$2.2 Million will be used to construct a military hospital, although the Redemption Hospital is under serious threat of sea erosion and is near operational collapse. A recent media report revealed that the third quarter allotment for the Redemption Hospital was significantly reduced from $500,000 to $60,000 in the recast budget 2017/2018- something which has greatly affected operations at the largest free public Health Center in the country. Why prefer a military facility and not existing facilities? The strength of the military is below two thousand five hundred (2,500) personnel—a relatively small population when compared to the number of persons the Redemption Hospital alone serves. Factoring in the soldiers’ families, the number of beneficiaries of the Military Hospital will still not be comparable to the population served by the Redemption Hospital. Could we then direct resources toward strengthening existing institutions? Is a medical insurance scheme for service persons not preferable when compared to the cost of building, equipping, and running a hospital over the short-term? Thankfully, we are not at war or engaged in combat, something that might increase the need for dedicated medical care for army personnel. And because resources are inadequate, it would be better to streamline spending over the short-term. It is laudable that Four hundred thousand dollars ($400,000) have been earmarked for a project on improving services at the Jackson F. Doe Hospital in Tappita, Nimba County. Wouldn’t it make more sense to have few equipped and properly functioning referral hospitals than multiple inefficient ones?

Orphanages vs. First Lady

All across Liberia, there are hundreds of orphanages catering for the needs of Liberian children, either independently, through donors’ support or subsidy from the Liberian Government. These groups could be very central to success of the pro-poor agenda, as they directly serve and cater for the needs of underprivileged children who should be prime targets of the government’s pro-poor polices and interventions. Funding these institutions, especially through the national budget, will be a sustainable and viable option in empowering them to properly perform. However, under the proposed budget, the government sees things differently. It places more resources at the disposal of the First Lady, instead of orphanages that may be ultimate beneficiaries of the proposed 1million USD allocated for the first Lady’s humanitarian outreach.

For example, orphanages in Nimba, Bong, Grand Bassa, Grand CapeMount, Montserrado, Bomi, and Margibi will receive a total of Thirty-nine Thousand Four hundred and Eighty-Three ($39,483) for an entire year. Meanwhile, one million dollars ($1,000,000) will be given to the First Lady for humanitarian outreach, in addition to $500,000 appropriated under the recast budget. What if just half of the First Lady “humanitarian” budget could go towards orphans in needs? Instead of submitting huge sums to wide discretion, under-supported orphanages could be assuredly provided for in the national budget. Such appropriation could bring out the true essence of what it means to be pro-poor. It could restore the lost hopes of underprivileged orphans living under harsh conditions. But as it stands, they can only hope that the First Lady have pity on their misery and spends some of the projected 1 million on them, despite the money being their own taxes. Humanitarian work using government and taxpayers’ money? Who then takes credit for the humanitarian aid, the first Lady or Taxpayers?

Undermining decentralization

It is worth noting that only county development funds intended for community development projects have been allocated for counties. There are no allocations towards compensation, operational expenses, and other uses of goods and services etc. With mostly One Hundred Seventy-five Thousand Six Hundred and Sixty-six dollars ($175,666) allocated per county for only projects, one wonders at how the affairs of these political sub-divisions will be run. Who pays Superintendents and other employees? How will administrative buildings be powered on when there are no allocations for electricity? How do County officials move around to properly administer the affairs of their respective counties? But it seems we have an answer. There is a notable $1.8 Million dollar increase in the Ministry of Internal Affairs budget lines on administration, and another $6.1 million dollar increase in the county administration budget line of the Ministry. Hence, there could possibly be a shift of resources from the county level to the central level at the Ministry of Internal Affairs in Monrovia. And if this were the case, the Weah Administration would be reversing gains made by the Sirleaf government in devolving power from the center to the local level. We would basically be weakening local county authorities if we take away their self-management roles. For example, Sinoe County received a total allocation of $1,005,422 under the last budget but will now get $175,675. Grand Kru got a total of $862,102 in the 2017/2018 budget but all allocations to the county under the new budget equal $175,666. Montserrado and Nimba will experience massive cuts from $4,000,345 to $355,909 and $1,293,957 to $581,641 respectively. Once again, we might enter an era of overly-concentrated power and resources to Monrovia-based bureaucrats while local administrative structures are severely weakened. Could it be that the Executive does not have explicit confidence in newly appointed county officials to perform? Is resource centrality the solution to constraints and gaps faced at county levels? Could national level officials be more accountable than their local counterparts?

Increasing Wage Bill

Another notable concern borders on the wage bill. Even though the Weah Administration has pronounced salary cuts, consequences are not visible on budget lines. The wage bills of other public entities have been cut, while many others have been increased. For example, compensation at the Ministry of Finance and Development Planning will increase by 8.4% from about $9.8 million to $10.6million. Amid speculations of massive additions to the civil service over the past months, there is also a revealing increase in the budget of the Civil Service Agency by 8.5% from approximately $19.4million to $21.1million. Consultancy allocations at the Ministry of State for Presidential Affairs have increased by about One Hundred and Seventy-One Thousand Six Hundred Dollars ($171,600). And even though the President has announced a 25% salary cut, more resources are available to his office in other forms. The budget for ‘Special Operation Services’ has gone up by 140.6% from $579,751 under President Sirleaf to $1,395,000 under President Weah. This is in addition to another $500,000 allocated for Special Presidential Projects. And even though the Sirleaf Administration used Four Hundred and Fifty Thousand Dollars ($450,000) on vehicles, furniture, and equipment in the last budget year, the pro-poor President’s office will use Fourteen Million dollars ($14,000,000) on vehicles, furniture and equipment. This represents an over three-thousand percent (i.e. 3011.11%) increase on the budget line. These allocations raise more questions about the underlining rationale of the pro-poor agenda. Is it tailored toward alleviating poverty or promoting the well-being of those in power? Why increase wage bill overnight? Are the employments political appeasements or are they a result of proper vetting for public service?

Undue Disparity in Support to Institutions

Another challenge associated with the budget is imminent government paralysis. In other words, a few government institutions will be fully supported and functional while a good number will face gross underfunding and suffer operational constraints. With a careful study of the budget, one would realize what could be described as zero budgeting—the drastic deduction of budget lines to point zero. This must not be confused with zero-based budgeting, which requires afresh decision and approval for every budgeted item each year, thus starting from a zero-base. Rather, our use of the term goes to a fairly new practice we now see with the draft budget. Never before has there been a phenomenon whereby government entities are provided funding only for employees’ compensation, and no funding for operational expenses, program activities etc. It is this situation we have described as zero budgeting. The “zero budget” syndrome has affected about fourteen (14) public entities. Many of said entities fall in the transparency and accountability sector, which has seen a 53% budget decrease from $44.9 million in 2017/2018 to $21.2 million in the proposed budget. The government has said that the cut is attributed to resources used for last year’s national elections, which are not taking place this year. But there are more reasons for the shrinking budget of the transparency and accountability sector. For example, the National Elections Commission (NEC) has no allocations for elections, which is its core mandate. The Governance Commission (GC), Independent Information Commission (IIC), Liberia Land Authority (LLA), and Financial Intelligence Unit (FIU) have no allocations for workshops, stationery, printing and publications, Internet, telecommunications, fuel and lubricants, repairs and maintenance, water and sewage etc., even though these line items were covered in previous budgets.

How are these entities supposed to write letters without stationery? How do they power on their computers and move around to perform public services when there are no allocations for fuel? The budget of the Public Procurement and Concessions Commission (PPCC) was slashed by $194,155; General Auditing Commission (GAC) slashed by $85,188; Governance Commission (GC) decreased by $157,100; Liberia Anti-Corruption Commission (LACC) cut by $193,746; the Financial Intelligence Unit (FIU) slashed by $121,536 and the Liberia Land Authority (LLA) reduced by $362,598. But there are other entities whose lines are covered fully and even increased in some areas. The Liberia Extractive Industries Transparency Initiatives (LEITI) has been substantially provided for. The Internal Audit Agency (IAA) budget has been increased by $775,494. It is important to mention that the LEITI and IAA are headed by persons appointed by President Weah, while the others integrity institutions are not.

Zero Budgets for Key Institutions/Groups

In the health sector, the zero-budget syndrome affects the Liberia Board for Nursing and Midwifery, Liberia Pharmacy Board, Liberia Medical & Dental Council, Liberia College of Physicians and Surgeons, National AIDS Commission etc. In the Social Development Services Sector, the Liberia Refugee Repatriation and Resettlement Commission, and the National Veterans Bureau suffer the syndrome. In energy, the Rural Renewable Energy Agency is affected. Under Security and the Rule of Law, the Law Reform Commission (LRC), Independent National Commission on Human Rights (INCHR), and the National Commission on Small Arms are hit even though the National Security Agency (NSA) budget on Intelligence Services have increased by $500,000 and the line on Security Operations increased by $1,875,000. As for the Executive Protection Service (EPS), an increment of $1,539,878 has taken place. While in Industry and Commerce, the National Insurance Corporation of Liberia and the Liberia Intellectual Property Office are also affected by zero budgeting. This might obviously lead to another problem: Pay Without Work. The draft budget effectively incapacitates public institutions but at the same time provide salaries for people who will have no work to do. In order to avoid shutdown, every component of the entire government structure must be made to execute their mandates as prescribed by law. Of course, there are resource constraints but a tactful and frugal approach to public spending could leverage needed balance across the public sector.

And as the Legislature is empowered to conduct proper scrutiny, we can only hope that they significantly improve upon what has been proposed by the Executive. This should also include adjustments to huge appropriations for the leadership of the Legislature.

About the Authors:

Gerald Dan Yeakula is a writer and researcher based at the Center for Transparency and Accountability in Liberia. He holds a degree in Economics and is an LPAC Scholar at the Louis Arthur Grimes School of Law. He authors the How I See It series.

Anderson D. Miamen is the Executive Director of the Center for Transparency and Accountability in Liberia with years of experience in civil society and research. He has a background in the social sciences.

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