What observers describe as a budget ‘vuvuzela’ (noise surrounding budgetary allocations) has engulfed the draft 2010/2011 US$340M national fiscal budget, with spending entities calling for additional millions on their allocations, while the General Auditing Commission (GAC) claims that the
Ministry of Finance had dwarfed its 2009/2010 allocation.
Serious controversies, lobbies and claims and counter claims remain prominent, especially on the grounds of the Capitol Building, the seat of the National Legislature, with women and youth groups pressuring the legislators to allot more cash for health and education.
But the Ministry of Finance has reacted to the GAC’s claims that the Ministry cut down its 2009/10 appropriation by US$400,000, and has warned spending entities to cease pushing the National Legislature to increase allotments.
The GAC claimed Tuesday that the Ministry of Finance has frozen US$432,053 of its US$500,000 allotment provided by the National Legislature in the 2009/10 budget.
The GAC said its budgetary allocation was diminished by the Ministry of Finance following its HIPC audit of the Ministry, and the actions has considerably undermined the work of the GAC as the commission lacks funding for auditors to print audit observations.
The GAC, among others, lamented that the budget cut has negatively affected the entire work of the Commission which faces a shortage of vehicles and a need for a new generator which can not be handled in the absence of funding.
Complaining that the Ministry’s action has choked its functions, the GAC called on President Ellen Johnson Sirleaf to intervene to bring the situation under control.
The Commission in its allegation said it fear that it will further be strangulated in the pending budget just as the Ministry drastically reduced several of its allotments to nothing in the last budget.
But the Ministry of Finance has strongly rejected as “false and misleading” media reports that the General Auditing Commission was being financially strangulated.
The truth of the matter, according to the Ministry, is that the Government’s financial position during the current fiscal year has been characterized by uncertainties in revenue flows.
The FY2009/2010 Budget contained some inherent risks from the time the budget was approved in mid 2009, the Ministry said in its reaction
“In August the assessed revenue risk was US$35.9M or 9.6% of the US$371, 9M budget. In October the risk has escalated to US$58.5M or 15.7% October. Consequently, an equal amount was frozen from the expenditure side. The risk profile as we go towards the end of the fiscal year has further deteriorated, necessitating further cuts across government,” a statement from the Media Services Department of the Ministry said.
It clarified that while the overall expenditure cut contained in the budget risk management strategy concluded in October 2009 was 15.7%, some agencies were treated with special preferences compared to others. “The GAC happened to be one of such agencies that were prioritized. At the onset, US$432,000 was frozen out of the GAC’s US$3.7 million, but US$200,000 was returned by way of budgetary transfers.”
“Thus”, the statement indicated, “net amount frozen out of GAC’s budget was US$232,000 or 6.2%, which is far smaller compared to other Ministries and Agencies of Government. Ministry of Public Works’ budget was reduced by 18%, Ministry of Agriculture 17.1%, Ministry of Finance 15.3%, Governance Commission 13%, Judiciary 12.5%, Ministry of Defense 10% and Liberia Anti-Corruption Commission 6.3%.”
The Finance Ministry said it is therefore clear that even when the rest of Government was sharing the burden imposed by low revenue performance, the GAC was given the priority while others experienced more severe budgetary reductions.
“That the GAC authorities could attempt to mislead the public in the face of this glaring reality, which they are very much aware of, is disingenuous to say the least,” the MOF statement noted.
The Ministry of Finance said it “detests and considers as infantile the GAC’s continuing habit of provoking unnecessary controversies by constantly preferring to discuss financial management issues in the press just for the sake of creating controversies where they don’t exist”.
The statement said the only immediate gain for the perpetrators of such acts is to invoke undeserved sympathies and public favor.
In spite of more stringent measures, other agencies of government are proceeding with the judicious management of their available resources and the GAC should do likewise for prudent financial management is the key deterrent to fraud, waste and abuse.
“Nevertheless, the Ministry of Finance will not be drawn into unnecessary distractions as it has more urgent and pressing national priorities to deal with,” the MOF noted.
Spending Entities Warned
As the noise and debate continue, the Ministry of Finance has warned spending entities to desist from pilling pressure on the lawmakers to increase budgetary allocations to them.
The Ministry said any attempt by the National Legislature to increase the proposed fiscal budget will result into another budget shortfall as being experienced with the current budget.
“The budget was drafted and appropriated based in the revenue inflow, if it is increased, it is likely that we will face another budget shortfall, and the same risk management measure will be instituted,” the Media Services Division noted.
“People must understand that we run a cash-based budget, that is, we spend only what we have, and it is based on such revenue projection that we have drafted the budges; so, any move or pressure on the Legislature to increase the budget will result into people complaining again,” the Ministry warned.
Last year’s budget was estimated at US$347M, but the lawmakers increased it by about US$50M, while the budget experienced a shortfall of about US$60M.
The Ministries of Health and Social Welfare and Education Monday pleaded with the National Legislature to add millions to their budgetary allocations in the new budget.
On Tuesday group of women and youth including school children were seen at the entrance of the Capitol with placards calling for more cash for education and health. Their placards called for more monies to support literacy programs, teenage pregnancy and HIV/AIDS education, among others.
The budget is currently in committee room with spending entities appearing to defend their allocations.