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

Key Priorities for Budget Reforms in Africa Liberia: An Early Reformer Perspective Anthony G. Myers Special Assistant to the Minister of Finance Monrovia, Liberia. Outline. 1. Liberian budget process before 2006 2. Objectives and scope of reforms Policy and administrative reforms

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Key Priorities for Budget Reforms in Africa Liberia: An 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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