What’s in the Central Bank Coffers for UP Govt. as Weah’s CDC Prepares its Exit

Monrovia – Will the incoming Boakai Administration be in dire fiscal straits? Are the coffers bare? Will the administration have enough money to pay civil servants their outstanding salaries and have enough to run a government? What is the total time frame before the country run out of essential commodities including gasoline, the staple food rice, medicine, and foreign currency for imports? Does the country have enough net foreign exchange reserves to pay for essential imported commodities? The standard is three months of import cover, enough in foreign exchange reserves to buy three months of imports.

Ahead of next week’s inauguration of the Joseph N Boakai presidency, FrontPageAfrica delves into some issues that Mr. Boakai’s predecessors grappled with upon taking office including questions on whether the Joint Presidential Transition Team (JPTT) is operating efficiently and armed with sufficient information to overcome these hurdles?

Can the current stock of essential commodities cover three months, six months, one year? That’s the million-dollar question likely to gauge the first 100 days of the Boakai presidency. Liberia is an import dependent economy with 90 percent of consumables, especially essential commodities coming from outside of the country. The ability to keep sufficient quantities of these commodities in the country and to track the time before they run out have bedeviled preceding administrations.

Much of the issues, FrontPageAfrica has learned have not been addressed due to lapses in communication within the joint transitional team comprising of the incoming and the outgoing government.

CBL Mum on Reserves

The JPTT set up shortly after President Weah accepted the results of the election, was tasked with facilitating the smooth transfer of power from the current Coalition for Democratic Change government to the newly elected administration. It was agreed between both sides that decisions within the JPTT would be made by consensus, with any disagreements to be resolved jointly by the Incumbent President and the President-elect. The team’s mandate will cease upon the publication of the Final Report, ensuring the completion of the transition no later than 48 hours before the Inauguration of the President-elect and Vice President-elect.

With only a few days to inauguration, FrontPageAfrica has learned that the JNB team has been unsuccessful in gathering the necessary information from the outgoing government. These consist of key components including the total bank balance for all ministries, agencies, commissions, state owned enterprises, and projects; Total liabilities including advancement borrowings from banks to pay salaries. More importantly, some agencies have been borrowing from local banks since April 2023 to pay salaries. What is also unknown, FPA is gathering, is the total assets being inherited including cars, furniture, computers.

In January 2020 for example, three years after Weah assumed the Presidency, an error in the accounting of fuel supplies in state-run tanks left the country with 1.1 million gallons of fuel, a fraction of the 4.4 million that the government thought it had. And just like that, the government had a crisis on its hands.

Similar concerns are being when it comes to rice, medications, and foreign exchange for import.

Audits vs. Reality

Regarding drugs, at the country’s leading medical facility, the John F. Kennedy Medical Center, patients, in most cases are made to purchase their own medications.

Ironically, JFK, the National Drug Service, and the ministry of health, all bring in their own drugs into the country, with the NDS, ordering their own drugs through the World Health Organization. FrontPageAfrica has learned that there is only a two-month supply of drugs.

Inheritance has been a recurring theme for governments assuming control of the state.

When President Weah took over in 2018, he used a portion of his first annual message to hit home the point that his government was inheriting an empty coffer. “I inherited a country that is very broke, depleted by political malfeasance. We have to make sure that the things that happened will not happen again,” Weah said.

The President went on to state: “I ordered a complete audit to make sure that what belongs to the government goes to the government.”

Those audits never took place.

Ironically, his successor, Boakai is also coming under immense pressure to audit the Weah administration.

The issue of audits is central to most governments assuming power.

In 2018 for example, when Mr. Weah took over, he remarked in his Annual Message that while he had been President for only one week, he could not be expected to report with authority on the expenditure and income of his predecessors. “Of course, during the transition process, certain information has been provided to us on both income and expenditure, containing balances, which we now inherit to carry forward.”

President Weah reported that total revenues collected in calendar year 2017 amounted to 489.1 million US Dollars, which is a 13 percent decline over revenue collected in 2016, which was 565.1 million although he stated that he could not vouch for the accuracy or completeness of this information, in the absence of verification by a full and proper audit conducted by a competent authority.

For President Weah at the time, such highly unusual situation is caused by the delays in the recent electoral process, which had the effect of reducing the transition period from three months to three weeks.

President Weah went as far as to note that despite the above-described situation, the state of the economy he inherited left a lot to be desired. “This is plain for all to see, for we are all affected by it. Our economy is broken, our government is broke, our currency is in free-fall, inflation is rising, unemployment is at an unprecedented high, and our foreign reserves are at an all-time low.”

President Weah’s predecessor, Ellen Johnson-Sirleaf also did similar when she delivered her first Annual Message in January 2018. The President said: “Our Administration will therefore embark on a process of rationalizing our agencies of government to make them lean, efficient, and responsive to public service delivery. This will require the creation of a meritocracy that places premium on qualification, professionalism, and performance. As a major component of our Civil Service Reform Agenda, we will review our public service wage system with the view to ensuring that those who work in our Civil Service are paid commensurate with their qualifications and performance – and that they are paid on time. It may take us some time to achieve this objective given our inheritance of a bloated and poorly paid civil service for which there are currently salary and benefit arrears totaling some US$20 million.”

Sirleaf had inherited a country out of a brutal civil war and most of her assertions at the time were justified.

Her predecessor, the interim government of Charles Gyude Bryant was accused of widespread corruption. So did Bryant’s predecessor, Charles Taylor who was accused of diverting nearly $100 million of Liberia’s funds while in power. According to the New York Times, Taylor used the money to buy houses, cars and illegal weapons while fighting the civil war.

A Haunting Dilemma

What incoming governments inherit is crucial to how successive governments perform, how they deal with the lack of essential commodities, the bread and butter issues, which in most cases lead to strikes, riots and protests as was the case of the June 7, 2019 protest when thousands of Liberians gathered in the  capital to protest against the Weah government’s failures to tackle corruption, economic mismanagement and injustice.

Riot police lined the streets of Monrovia where more than 5,000 people turned out despite the rain for one of the city’s biggest protests in living memory, according to witnesses. The protesters walked to Capitol Hill to present the government with a list of demands.

This was less than 18 months after Weah had succeeded Sirleaf.

Upon ascending to power, Weah had immediately sought the help of rice importers as he tried to convince them to slash the price of the staple food, rice and ensure that it was substantially reduced and made affordable for ordinary Liberians.

Despite his plea and lashing on importers that it was intolerable that amid acute hardship and mass unemployment the price of rice continues to increase. “I am ready to collaborate with you and resolve all the issues that underpin the galloping price of rice so that our people will afford to buy. If government-imposed tax is an issue, you can rest assure that my government is more than ready to grant reasonable adjustments in the tax regime to make the reduction of rice price possible,” the President said.

Weah, who had run his campaign for President on a pro-poor mantra, was successful in negotiating the reduction of the price of rice by US$2 on a 25kg and a US$4 on a 50kg bag of rice respectively but those terms were only temporary and short-lived.

In the buildup to the June 7 protest, the President injected up to $25 million into the forex market, in a bid to bring more local cash into the formal banking system, part of what the President said were concrete measures to tackle rampant inflation and poverty. “I am fully aware of the negative impact of the declining exchange rate on the economic well-being of the Liberian people, and the serious hardship that this is beginning to cause,” Weah said in an address to the nation. “We believe a more aggressive enforcement of monetary policy should go a long way to … address the problem,” including giving the central bank stronger powers to regulate money changers and banks, he said.

Recurring Themes on Replay

Weah said the injection of dollars would help mop up some excess Liberian dollars, adding that 90 percent of local cash in circulation was being held outside the formal banking system, where there was no oversight.

The injection of the US$25 million proved to be the straw that broke the Weah’s government back as Liberians expressed outrage when billons of local currency wen missing with the revelations that 15.5bn Liberian dollars ($104m, £82m) of freshly minted currency had disappeared from Liberia’s port. Even more troubling was the management of the 25m US dollar cash injection into the economy last year.

Another potential headache for the incoming administration is the status of Liberia’s foreign exchange reserves. Have they been depleted due to spending to fund an election campaign? According to the World Bank, Liberia’s import bill has risen to nearly 2 billion dollars, meaning 500 million dollars in net foreign exchange reserves would be required to cover 3 months of import. Economists who prefer to speak off the record indicate that it would be near impossible for Liberia to have 500 million dollars in net reserves due to the heavy spending over the election period. This will present a burdensome problem that will require a quick fix.

For the immediate future, political observers say, as it was done by preceding governments, the incoming government’s first few days could be marred by the blame game of what the previous government did or didn’t do, what it should have done but failed.

This is why the foreseeable future could prove to be one of the unexpected. In the absence of clear and succinct turnover notes detailing what the incoming government is about to inherit, unforeseen problems could pop up when least expected, especially when the reality of new challenges begin to set in.

It can be recalled that seven months after taking office, the Coalition for Democratic Change (CDC) government in Liberia reiterated what President Weah had stated in his annual message, that it inherited a virtually depleted national coffers and that hundreds of millions of US dollars have spirited out of the country’s economy.

Finance and Development Planning Minister Samuel Tweah, at the time, said that more than US$500 million had left the economy and the government inherited US$65 million debt with commercial banks.

The Boakai Administration will also be looking for missing revenues over the last six years. Were all revenues accounted for and spent through the appropriate budgetary process? Was expenditure made in accordance with the budget which is a law? Several big-ticket items, including prepayment of taxes of US$30 million dollars, and a payment of 17.5 million dollars from Arcelor Mittal paid to the GOL’s consolidated account for onward payment to Solway remains unaccounted for and the company has filed a suit against the government.

Ironically, the refrains of the early days of the Weah administration could find itself hitting the reset button as the Boakai administration prepares to assume governance of a nation, now becoming a recurring theme of bad governance, corruption, greed, and the ultimate blame game at the last resort. The success or failure of the Boakai Administration would depend heavily on how it makes accountability, efficiency, and compassion for its people.

Source: Frontpage Africa