LIBERIA: FINAL PASSAGE OF 2008-2009 BUDGET SHOWS TREMENDOUS

UNCLAS MONROVIA 000608

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/W AND EEB/OMA
TREASURY FOR RICHARD HALL

E.O. 12958: N/A
TAGS: EFIN ECON PGOV LI
SUBJECT: LIBERIA: FINAL PASSAGE OF 2008-2009 BUDGET SHOWS TREMENDOUS
GROWTH

REF A) MONROVIA 591 REF B) MONROVIA 435 REF C) MONROVIA 409


1. (U) The Senate passed a $298 million 2008/2009 fiscal budget
August 4, which is $21 million higher than the initial submission by
the executive branch and $116 million more than last year's initial
budget (REF C). However, when last year's supplemental budget and
actual (rather than projected) revenues are included, the 2008-09
budget is only about 20% larger than last year's. (Note: all
amounts are in US dollars. End note.) The 64% increase in the
initial budget far exceeds GDP growth. The budget now goes to
President Sirleaf for signature.


2. (SBU) We are told the $21 million in revenue above what the
executive branch submitted includes almost $13 million in surplus
from the previous fiscal year, additional payments of $1 million
from the Liberian Petroleum Refinery Company and unspent budget
support grants of $3 million from the World Bank and France. The
budget also calls for an additional $2.5 million from the
telecommunications regulator, which is in the process of trying to
renegotiate GSM contracts (REF B). The official line is that much
of the additional money will go to the counties.


3. (U) Some civil society organizations greeted the Senate approval
with loud expressions of disappointment that the increase in civil
servant salaries was not greater. This budget raises the minimum
salary 27% to $70 a month, up from $55 a month, but increasing
prices of food and fuel make that amount even less viable. The
civil society groups claim that a minimum salary of $150 a month
would allow civil servants to survive without needing to resort to
corruption.


4. (SBU) Comment: Despite pressure to pass the budget before the
July 1 start of the fiscal year (Liberia does not have a continuing
resolution mechanism, and ministries were forced after July 1 to
juggle books or delay payments and salaries),both the House and
Senate were distracted by political infighting. That said, the
budget process was more mature this year. The budget document
itself is more detailed, with distinctions between core and
contingent revenue; legislators took an active and productive role
in negotiations and the press commentary, compared to previous
years, was better informed. All ministries and agencies, including
the Bureau of the Budget, need continued improvements in the
budgeting process (REF A) but this document is proof of continued
financial transparency and lays the foundation for more accountable
government, once Liberians learn to really use the information (such
as amount spent on cars and travel) that it provides.

ROBINSON