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 The 2009/2010 Budget hearings: our inability to see the forest from the trees
“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 safe guard 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
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