— Amid U.S. aid cut

In an effort to address current economic challenges and promote fiscal discipline, the Government of Liberia has announced a series of strict fiscal rules to be implemented in the 2025 budget year.

These measures, which cover salary deductions, fuel allowances, consultancy services, and state-owned enterprise (SOE) compensation, are aimed at ensuring more efficient use of government resources amid recent suspension of U.S. government aid to Liberia through USAID.

The new fiscal rules, released by the Ministry of Finance and Development Planning, include detailed guidelines on salary cuts based on income thresholds. The salary deductions are designed to progressively scale with income levels.

Employees earning between US$1,001 and US$1,500 will face a 3.5% deduction, while those earning between US$1,501 and US$2,500 will see a 5% cut. For individuals earning between US$2,500 and US$5,000, a 7.5% deduction will be applied, and employees making between US$5,001 and US$7,861 will be subject to a 10% deduction. For those earning above US$7,861, salary deductions will align with the ministerial payroll.

The Ministry of Finance and Development Planning also announced restrictions on fuel allowances for government officials. In line with the ongoing austerity measures, fuel allowances will be limited to specific thresholds for operational use by various government entities.

The Office of the Head of Entity will receive a maximum of 150 gallons per month, while the Office of the Deputy Head of Entity is allowed a maximum of 125 gallons. The Office of Principal Assistants and other units within the entity are both capped at 100 gallons per month.

In addition to fuel allowances, scratch card allowances for government officials will also be tightly regulated. The new guidelines specify that the Office of the Head of Entity will have a monthly scratch card allowance of up to US$200, while the Office of the Deputy Head of Entity will be allowed up to US$175. Principal Assistants may use up to US$150 for scratch cards, and other government units within the entity are allocated a maximum of US$125 per month.

One of the most significant changes outlined in the new fiscal rules pertains to consultancy services. The government has established a clear policy on individual-based consultancy contracts, stating that remuneration for these contracts should not exceed the salary of the principal deputy of the institution.

Furthermore, the rules emphasize that consultancy contracts must be task-based and include provisions for knowledge transfer to ensure that civil servants can take over the tasks once the contract expires. In a move to prevent misuse, consultancy contracts for recurrent tasks within government institutions will not be approved unless they are for specialized units, such as the Presidential Delivery Unit or the ECOWAS Secretariat. In such cases, Presidential approval will be required.

The new fiscal rules also address compensation for state-owned enterprises (SOEs) and public corporations. It is now explicitly stated that board members of SOEs will not receive sitting fees, and Cabinet Ministers serving on SOE boards will not be entitled to additional board or sitting fees.

Any proposal for board fees must be submitted to the President for approval, and commissions without oversight boards must submit senior management compensation proposals for Presidential approval. The government has also outlined that, in cases where a board has performed exceptionally, any bonus proposals should be submitted to the President for approval.

Another key provision within the fiscal rules concerns vehicle maintenance and repair. The government has clarified that it will only be responsible for maintaining and insuring utility vehicles and vehicles assigned to Presidential Appointees, provided those vehicles were not purchased under the Fleet Management Program.

In such cases, maintenance and insurance responsibilities will fall to the vehicle’s owner. The General Services Agency (GSA) will oversee the maintenance of government vehicles assigned to Presidential Appointees.

These new fiscal rules come at a time when the Government of Liberia is grappling with economic challenges and the need for fiscal sustainability. The austerity measures, which aim to create savings for the government, reflect a commitment to fiscal responsibility and the effective use of public resources.

The Ministry of Finance and Development Planning has indicated that these rules are part of broader efforts to ensure that Liberia’s financial resources are managed in a way that supports the country’s long-term development goals.

As the country prepares for the 2025 budget year, it is clear that these new fiscal policies will play a critical role in shaping the financial landscape of Liberia in the coming years.

Source: Daily Observer