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GOL Suffers US$11M Budget Deficit Poised to Streamline Expenditures By: George D. Kennedy Courtesy: Liberian Observer May 15, 2009  MONROVIA,The
Government of Liberia (GOL) has suffered US$11 million budget shortfall
for fiscal year 2008/09, Finance Minister Augustine K. Ngafuan has
disclosed. The budget deficit, according to Minister Ngafuan, is due to
the global financial and economic crisis and delays by the National
Legislature in ratifying certain major concession agreements that would
have accrued revenues to Government.Speaking to economic reporters in Monrovia Friday afternoon, Minister Ngafuan named the recently ratified US$2.6 billion Mineral Development Agreement (MDA) signed between the Government and China Union as one of the concession agreements that suffered delays at the Legislature. “We had projected nearly US$40 million from the mining sector, but the process of ratification was dogged by delays. We had also thought that the Western Cluster deal would have been done,” said Minister Ngafuan. According to the Finance Minister, Government had projected US$21 million from the forest sector, “but the three forest management contracts are yet to be ratified by the Legislature.” Minister Ngafuan appealed to the Legislature to do due diligence to the contracts, adding that “such screening process should be fast-tracked to ensure that Government generates needed revenues on time.” Mr. Ngafuan disclosed that Government was only able to collect US$12 million of the US$25 million projected from GSM companies operating in the country. He also said the current global financial and economic turmoil had reduced Government's revenue generating capacity as the prices of the country's major export crops, such as rubber, cocoa and coffee including iron ore, had fallen dismally on the world market. The US$11 million budget deficit constitutes about 5% of the country's total fiscal budget for 2008/09. The deficit is a major setback for the Government that is operating on cash-based budget, a requirement by the international community for the country to be included in the Highly Indebted Poor Countries (HIPC) initiative. “We run a cash-based balance budget and we cannot borrow under the HIPC term. We only give when we get. So, the basic rule is that there is no deficit financing,” Minister Ngafuan disclosed. He divulged that Government was in the process of streamlining its expenditures in response to the deficit. The Minister, however, pointed out that civil servants' salaries would not be affected by the budget shortfall. “There are other expenditure items within the budget lines of line ministries and agencies of Government that will be affected,” he noted. Liberia is one of the poorest countries in the world that is nursing a record US$4.7 billion debt overhang. The country has successfully achieved the cancellation of nearly US$3 billion of this amount under the HIPC term after complying with most of the conditions. |
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