Lawrence Williams: Sierra Leone Telegraph: 29 August 2020:
The Public Financial Management Consortium (PFMC) has questioned the credibility of the Sierra Leone government budget. Critical analyses by the Consortium documented in two separate reports launched yesterday indicate that government expenditure surpasses revenue generation. (Photo above – Finance minister JJ Saffa).
The Consortium defined budget credibility as the ability of the government to accurately and consistently meet their expenditure and revenue targets. The analyses show a huge variance between actual expenditure and originally budgeted expenditure.
Budget heads have also increased from 75 in 2017 to 87 in 2019. This means that we now have more ministries, departments and agencies of government to fund out of the meagre revenue collected by the National Revenue Authority (NRA).
The PFMC says delays in disbursing budgetary allocations to MDAs have a significant impact on service delivery, adding that more needs to be done to reduce the difference between approved and actual MDA budgets, as well as to improve the credibility of expenditure composition to reduce changes to individual budget lines.
Though there has been a significant drop in payment of arrears from 169 billion Leones in 2017 to 86 billion Leones in 2019, public debt has increased substantially from 14.9 trillion Leones in 2017 to 21.5 trillion Leones in 2019.
“Even with all these measures to increase revenue, the government public debt continued to rise. In 2017, total debt was Le 14.9 trillion which represent 51% of the GDP. In 2018, it increased to Le 18 trillion (59% of GDP) and it further increased to Le 21.5 trillion (58% of GDP) in 2019,” the report states.
The study found out that the NRA is losing huge revenue due to the Covid-19 pandemic.
“The daily domestic revenue for April 2020 reduced by Le 6.2 billion compared to April 2019. This reduction was due to the slowdown in economic activities in the country caused by the COVID-19 raft of measures, which affected business operations,” the report states.
It explains further that if the situation persists NRA will not meet its revised revenue target for 2020 and that would have a significant impact on the proposed GDP target for 2023.
“The revised domestic revenue target for 2020 is Le 6.47 trillion and the total revenue collected so far (January to April) is Le 1.78 trillion, which represent 27.5% of the revised revenue target. If this trend continues, NRA may not meet its target for 2020,” PFMC warns.
The Consortium says that government is now spending more than it is collecting from domestic revenue on a monthly basis, adding that this situation has forced the government to adopt other measures to finance the gap through means such as selling of treasury bearer bonds, ways and means, among others.
PFMC recommends that: “Government should try to ensure that it decreases the big difference between operating expenses and domestic revenue, but social sector spending should not be affected as citizens need these services now more than before.”