Is Liberia’s Budget Failing its Key Sectors? Agriculture and Tourism Left Behind in 2024 National Plan+
The draft of Liberia’s National Budget for 2024, which sets the agenda for President Joseph Boakai’s administration, is currently under review by the Legislature. The proposed budget of US$692.41 million is slightly lower than the previous administration’s budget, as President Boakai wanted to align it with the priorities of his government.
Decline in Budget Due to Decreased External Resources
The draft Budget attributes the decrease in the budget to a projected 61.4% decrease in external resources. Domestic revenue is expected to reach US$649.98 million, with tax revenue comprising US$531.48 million and non-tax revenue US$110.78 million. External resources are forecasted at US$42.43 million.
Disparity between Recurrent Expenditure and Public Sector Investment Programs
The total expenditure envelope is divided into two main categories: recurrent expenditure and spending on Public Sector Investment Programs (PSIP). Financial experts argue that there is a substantial disparity between these two categories. Recurrent expenditure, which accounts for 92.5% of total expenditure, primarily focuses on day-to-day operational costs such as salaries and maintenance. On the other hand, PSIP receives only a 7.5% share, indicating a limited emphasis on capital projects and long-term investments critical for economic expansion.
The disproportionate allocation between recurrent expenditure and PSIP is a cause of concern among economists. Inadequate investments in infrastructure hinder productivity and competitiveness, limiting job creation opportunities and economic growth. Insufficient investments in key sectors like education and healthcare perpetuate socio-economic inequalities, exacerbating poverty and reducing human capital formation.
Agriculture and Tourism Left Behind
The draft Budget has received criticism for failing to address the Agriculture and Tourism components of President Boakai’s ARREST Agenda. These two growth-enhancing sectors are not given sufficient attention, both in terms of on-budget and off-budget allocations.
Notably, there is absolutely no allocation for tourism in the budget, despite its potential to boost the economy, create jobs, develop infrastructure, and promote cultural exchange. This oversight undermines the importance of tourism as a pillar of the Boakai-led development agenda.
Senator Konneh, the Chair of the Senate Committee on Public Accounts and Audit, expressed concerns about the budget’s lack of investment spending. He emphasized the need to allocate more funds towards growth-enhancing sectors like agriculture and tourism in order to stimulate economic growth and improve living conditions for Liberians.
Strategies to Prioritize Investment Spending
Senator Konneh proposed three key strategies to prioritize investment spending during budget negotiations:
- Increase domestic revenue through enhanced tax collection and fiscal transparency, including reviewing tax waivers and strengthening oversight of public corporations.
- Reallocate savings from recurrent expenditures towards investment spending by optimizing budget allocations.
- Strategically borrow to finance development projects, while practicing responsible debt accumulation and restructuring the country’s debt portfolio.
In addition to these fiscal measures, Senator Konneh emphasized the need for broader reforms to lay a foundation for sustainable economic expansion. This includes maintaining fiscal stability, enhancing regional integration, strengthening institutions, addressing the electricity crisis, and prioritizing investment in education and key sectors like agriculture and tourism.
By addressing these challenges and creating a conducive environment for investment, Liberia can achieve self-sustaining growth and prosperity. It is essential to enforce rules impartially to combat corruption and ensure equitable development.
While the draft Budget may fall short in addressing the needs of key sectors like agriculture and tourism, there is an opportunity for the government to make adjustments and allocate resources more effectively to support the growth of these sectors and drive economic development in Liberia.