Aggregated & Disaggregated levels: Reality of Liberia's National Budget

Liberia’s National Budget is coded at both aggregated and disaggregated levels. This is how it has always been. Some data are in bulk — while some are broken down. Every Lawmaker should know this. Though there are serious conversations about reforms at the budget’s compilation phase. That’ll reflect more transparent bearings for even the layman to understand. But this in no way means there are no supporting documents to every line that pertains to debt payments.

Spoke about this recently at CEIO and on Strong FM and won’t still mind talking about it again. This is in response to Senator Dillon’s recent claim on Kool FM —that there should be a public “listing” for the local debt servicing portion in the National budget. This argument exposes the Senator on two fronts:

1. That he’s completely clueless about the subject matter. A Senator should know that the Ministry of Finance publishes both local and external debt listing regularly. Here’s the link to the reports: https://www.mfdp.gov.lr/.../main-menu-reports/mm-em/mm-em-db.

2. That he’s playing his regular politics and nothing more. A simple reach out to the relevant authorities by the Senator would have gotten him all the answers in the world instead of the normal political ranting. Making it appear that there’s no “listing” for domestic debts.

What the Senator is requesting has always been available at the level of the national budget. But for confidentiality purposes and security concerns, the government wouldn’t go about publishing people's names in the National budget and stating the amount in cash for each person. But Yes! There’s a full disclosure “listing” for local vendors and everyone receiving domestic debt payments. Transparency demands this — and this is how it has always been under this regime.

Annex -1 in the National budget provides a narrative for debts being serviced—that could give any reasonable person a good start. But this is LIBERIA for us! For example, the 72 million domestic debt of last year Senator talked about. That money was adjusted to 64 million. And the budget went on further explain the disbursement procedure of the 64m and the % going to entities. Nasscorp. Treasury Bond. Commercial Banks. CBL. Court claims. Promissory notes, etc. When the Senator read the report he’ll find details for each entity. So please beg him to go read the report.

Fast forward, this is for those who are not following the debt stats of the country. Liberia’s current debt stock is around 1.74 billion. This includes both local and external debts. projecting Liberia’s current nominal debt to GDP ratio at 52%. While the real debt to GDP ratio is about 48%. The former is data from World Bank, etc —while the latter is from the Debt department’s bulletin at MFDP.

This means Liberia’s risk of debt distress is at a very moderate level as compared to many countries in Sub-Saharan Africa like Ghana, Sierra Leone, Zambia, etc.

Prior to HIPC, Liberia’s debt to GDP ratio was around 400% or more. HIPC took the country’s debt record to near 0% after the waiver in 2010. When this current gov took over in 2018, Liberia’s debt to GDP ratio was around 37%. This means in 6 years the past Administration credited more than thrice the amount this regime has credited in 5 years. Since the current real debt to GDP ratio is 48%. It means this regime added about 11%.

Don’t forget there were debts not recorded that IMF had to force this administration to take responsibility for. So technically we can’t put the liability on this regime. So Holding all factors constant, Liberia’s external debt stock was left at $ 868.08 million or more by the previous regime. This excludes domestic debts — i.e. debts from local vendors and debts owed to the CBL, etc. Quantifying all these numbers will land us close to a billion by the previous government.

Looking at the number of the current debt stock around 1.74bn —depicts that there has been some level of fiscal discipline in the last 4 to 5 years. Not crediting from CBL; gov living within its means and servicing the debt burden appropriately.

To conclude, no rational person will argue that since there was $ 100m (for example) to service debt in the National Budget last year, it meant all the debts disappeared, and adding $100m this year will mean corruption.

For crying out loud, our debt stock is around a billion plus. You’ll have to service it every year. And sad but true, it may not finish completely anytime soon since we are still hiring local services/goods. And receiving Donor funding; which in most cases — 50% comes as a loan. And The loan portion accrues interest over time!