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The
2009/2010 Budget Hearings: Our Inability To See the Forest from the Trees
Saturday,
June 20, 2009
By Nyankor Matthew
“The budget
formulation, budget execution and financial reporting systems need to be
rehabilitated… there is no medium term framework guiding the budget process,
the budget is not tied to programs or development results, there are no reliable
estimates of revenues, budgetary ceilings are not notified to line ministries in
time, the budget circular and the formats therein are unclear resulting in line
Ministries sending inflated proposals.
After the budget
is passed, Ministries are rarely notified of their allotments, with allotments
being changed multiple times during the month /year at the sole discretion of
the Bureau of the Budget resulting in Ministries not knowing at any point in
time what their allotment is. There is no reporting system and communications
are weak with the revenue management authorities (Ministry of Finance, Central
Bank of Liberia, and Cash Management Committee). This causes uncertainty both at
the commitment stage as well the final payment stage resulting in the excessive
build up of large arrears”
- (Final
terms of reference for BoB budget expert-February 24, 2006).
The above excerpt from the GMAP
terms of reference is exactly what is being put on display for the fiscal 2010
budget hearings. The minister of Finance
assertion that delay from various ministries, agencies, and the different
branches of government in meeting the budget submission deadline gives me the
impression that the Ministry of Finance and the department of budget are not in
control of the budget process.
The ministers, including the
minister of Finance answer directly to the president, so if the ministers are
not adhering to budget submission deadline, surely there has to be a way to
rectify this problem. It is
unacceptable for the minister of finance to wait until budget hearings to tell
the nation that due to a lack of cooperation from his fellow ministers, he and
his staff are unable to properly execute their responsibility.
The over emphasis on the
“floating” $500,000 for the past few days seems to have distracted those
following the budget hearings from viewing the amount in context of the entire
budget. There’s more waste in the current proposed budget that far
exceed the five thousand dollars that everyone seems to now be so focused on.
We seem to be looking at one tree in the middle of an enormous forest
instead how the one tree relates to the entire forest.
Minister Ngafuan says that “there are a lot of things to be achieved by
the budget this year. But the budget can’t accommodate all of the dreams and
aspirations of all these things”. The
minister’s statement is accurate; however, the current proposed budget in my
humble opinion is accommodating the wrong dreams and aspirations.
I also find it interesting that
the Finance minister has taken on the role of budget director.
When did Mr. Ngafuan relinquish his position as Minister of Finance to
become Director of Budget?
The
2009/2010 budget document states: “The
Department of Budget is responsible to coordinate the budget process by
developing and/or participating in the formulation of policies, guidelines, and
procedures for the formulation, implementation, monitoring and evaluation of the
national budget. The Department also reviews, analyzes, and consolidates budget
estimates and requests and performs annual surveys of the economic activities
against which budget guidelines and procedures are developed, and administers
the national budget through data processing or allotment to ensure quality,
transparency, efficiency and accountability”.
According to the 1972 Act which
created the Ministry of Finance, the ministry was created and authorized to
manage, direct and coordinate the financial affairs of the Country. It is
mandated to collect revenue; engage in loan arrangement, disburse Government
funds, and service the National Debt.
The ministry is also charged
with the following duties:
1) To effectively and
efficiently manage the financial resources of the Republic; be the depository of
Government funds and of all indicia to title of assets of Government
2) To administer the revenue
program of the government, including supervision of the collection of the
revenues
3) To report the financial
activities and financial position of the Government to the President and the
Legislature
4) To maintain the
central accounting records of the Government and prescribe for all Government
agencies of accounts reporting and documentation necessary to safeguard the
assets of the Government
5) To formulate fiscal policies
for financial planning
6) To disburse Government
funds in accordance with legislative appropriations
The ambiguity of roles and
responsibilities in the Liberian public sector continues to perpetuate the cycle
of misplaced priorities, wasteful spending, fraud, and abuse of government
resources. Case in point, the
appearance of the Finance Minster before the legislature for the 2009/2010
budget hearings; instead of the
Finance Minister briefing the legislature and the nation on the global and
domestic economy, including fiscal issues impacting government revenues and
expenditures, a political theater has been created for the – intentional or
unintentional – inclusion of the infamous “floating” $500,000.
I am not down playing the fact that $500,000 is a lot of money that
should be accounted for, and granted the Minster of Finance bears some
responsibility for missed deadlines that have led to inflated budgets as well as
the poorly prepared ministry budgets, in his defense, it is not his
responsibility to defend or justify detailed level line items in the budget.
When the Minister of Finance
appears before the legislature to present the nation’s budget, his
presentation does not entail the minute details buried deep within the budget,
this is why Liberia has a budget office with a budget director and several
budget analysts. His most important responsibility is to brief the legislators
and the nation on the economy, debt position of the nation, and the nation’s
financial condition and position. He’s
responsible for briefing the nation on the major drivers in expenditures for the
upcoming fiscal year, the future outlook for revenues and expenditures, tax
policies, future challenges on the revenue side, etc.
As the individual entrusted to
safeguard the nation’s resources, my advice to Minister Ngafuan for future
reference would be to be more aggressive and assertive when it comes to saying
no to wasteful spending by ministries, and holding their feet to the fire for
meeting budget submission deadlines. When
it comes to the allocation of government financial resources, most government
entities have a tendency of over inflating their budget request, and will always
justify why such amount is needed.
Whether or not their need for
more money is justified falls under the purview of the budget office and budget
analysts. It is the responsibility of the budget analysts/office to
efficiently distribute the government’s financial resources by examining the
budget request from the different ministries for accuracy and completeness.
If in their professional judgment they believe that a Ministry, agency,
or commission’s budget request is inflated, inaccurate, and not complete, by
the power of their office they should be able to recommend a smaller amount and
ways to improve the budget estimates sent to them from the ministries.
The position of Ministry of
Finance is a very powerful position. In some countries the Minister of finance
is more powerful than the prime minister. Finance
Ministers have broad control of the government's spending, making the position
quite powerful; but I don’t think Mr. Ngafuan has realized the power he has to
become a transformational leader by using his position to effectuate tremendous
change within the public finance sector in Liberia.
Nyankor Matthew can be
reached at Nyankorm@gmail.com
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