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Key Priorities for Budget Reforms in Africa: Liberia's Early Reformer Perspective

Discussion of Liberian budget process reforms pre-2006 & outcomes, focusing on resource maximization, efficiency, & frameworks for bolstering resources. Collaboration, efficiency, accountability emphasized.

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Key Priorities for Budget Reforms in Africa: Liberia's Early Reformer Perspective

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  1. Key Priorities for Budget Reforms in Africa Liberia: An Early Reformer Perspective Anthony G. Myers Special Assistant to the Minister of Finance Monrovia, Liberia

  2. Outline 1. Liberian budget process before 2006 2. Objectives and scope of reforms • Policy and administrative reforms • Ensuring resource maximization • Efficiency in budget utilization • Frameworks to increase budget resources 3. Outcomes of the reforms

  3. Budget Process Before 2006 • Weak or non existent administrative and policy framework • No defined linkage between resource outlay and output • Delays and inconsistencies • Constricted fiscal space • Poor governance • Revenue leakages • Poor donor relations • Minimum to zero accountability and transparency • Even Gov’t MDAs not well informed • Vast and unexplained differences between approved and executed budgets • Limited to non-existent public awareness • Inadequate legislative scrutiny • Highly unsustainable debt burden • Nearly US$1 bn domestic • Over US$4 bn external • Lack of access to almost all multilateral sources of finance

  4. Objectives and scope of reforms • Policy and Administrative Reforms Internally driven reforms • Participatory and consultative budget process • Adherence to regulations of the budget process • Budget calendar and budget guidelines/circulars • Budget laws • Enactment of law on virements • Financial rules and ordinances • Increased interaction with public stakeholders Collaborative reforms • GEMAP, IFMIS, LECAP, PRS, PRGF, EGIRP • HIPC (MTFF, MoF – BoB merger, tax code reform, PFM law, periodic audits)

  5. Objectives and scope of reforms 2. Ensuring Resource Maximization Hard expenditure ceilings • Recurrent cost • Non-recurrent expenditure • Essential and non-essential programs Clear linkages between spending and outputs • Policy linkages Example: iPRS, PRS • Strategic priority linkages Example: HIPC, Kimberley

  6. Objectives and scope of reforms 3. Efficiency in Budget Utilization Cash flow management for balanced budget • Conformity of spending plans with cash flow. • Dynamic spending plans (Flexible for backward/forward rollover) Accountable and time-bound procurement • Budget approval vis-à-vis procurement plans • Accountable and transparent procurement

  7. Objectives and scope of reforms 4. Establishing frameworks to increase budget resources Improved revenue administration • Consolidating revenue accounts • Centrally generated revenues • Administrative service charges and fees • Preshipment and destination inspection regime • Moves towards automation • ITAS • AYSICUDA Bringing aid on budget • Reforms for aid or aid for reform, a chicken-and-egg dilemma • Accounting for off-budget aid • Channeling funds to growth sectors and critical social development

  8. Gains and Challenges • Successive budgets underpinned by policies • FY2005/06 recast to reflect policy of new Government • FY2006/07 and FY2007/08 anchored in iPRS • PRS to determine budget policy from July 2008 – June 2011 • Legal requirements generally observed • Greater Legislative “power of the purse” • Appropriation law scrupulously followed • SAI (required by Constitution) functional • Expenditure inputs and program outputs linked • Budget preparation forms that justifies requests for funds • Approved budget links appropriation with deliverables • PRS relevance identified for each MDA and organizational units • Budget process has become more structured, predictable, and open • Budget calendar, guidelines and call for estimates regularly issued • Increased participation by governmental and non-governmental stakeholders • Deliberate public awareness (publicizing draft/approved budgets, periodic outturns

  9. Gains and Challenges 5. Phenomenal growth in revenue and budget expenditure • 2005: US$80M • 2006: US$129 M • 2007: US$199M • 2008:US$269M • 2009: US$293M (projection) 6. Improved relations with donors • Over US$20M direct budget support since 2007 • Commitment to finance 68% of US$1.6 bn PRS • Concerted support to Liberia’s debt relief 7. Continuing challenges • Capacity constraint at budget authority and MDAs • Accounting/reporting on off-budget aid • Managing the fiscal constraints of multilateral reform programs • Impact of procurement process on budget implementation timeline

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