2013年-世界发展银行全球_Liberia_Public_Expenditure_Review___Options_for_Fiscal_Space_Enlargement_85页_1mb

Liberia Public Expenditure Review: Options for Fiscal Space Enlargement

Core Content

This document outlines the options for fiscal space enlargement in Liberia, focusing on how the government can increase its financial capacity to support the Agenda for Transformation (AfT), a medium-term development strategy aimed at achieving middle-income status by 2030. The report is prepared by the World Bank and includes analysis of public expenditure efficiency, external grants, revenue mobilization, and external borrowing as potential sources of fiscal space.

The government of Liberia, having successfully recovered from post-conflict instability, now faces the challenge of scaling up public investment to meet the growing needs of its development agenda. The AfT is estimated to cost US$3.36 billion over 2013–2017, with 65% allocated to infrastructure, agriculture, and private sector development.

The report explores four main options for expanding fiscal space:

1. Improving the efficiency of public expenditure
2. Increasing external grants
3. Mobilizing domestic revenue
4. Increasing external borrowing

Each option is analyzed for its impact on fiscal sustainability, economic growth, and social development.

Main Views

1. Improving Efficiency of Public Expenditure

• Current Expenditures: Wages and Salaries

  • High wage bill compared to ECOWAS countries.
  • Weak payroll control, ghost workers, and redundancies.
  • Recommendations include biometric registration, strengthening payroll control via HRMIS, implementing wage reform strategies, and functional reviews to reduce redundancies.

• Goods and Services – Transport Expenses

  • High costs due to fuel allowances and lack of fleet management policy.
  • Recommendations: Rationalize vehicle models, reduce the number of vehicles per ministry, set clear fuel coupon entitlements, and estimate the cost of fleet management policies.

• Goods and Services – Foreign Travel

  • Rising costs of foreign travel.
  • Recommendations: Rationalize delegations, reimburse only for business travel, review travel allowances, and enforce expenditure reporting.

• Transfers to State-Owned Enterprises (SOEs)

  • Increased transfers to SOEs.
  • Recommendations: Assess regulatory SOEs, adjust fees or reduce operating costs, eliminate budgetary transfers to commercial SOEs, establish dividend policies, and require regular financial reporting.

• Capital Expenditure

  • Low execution rates of capital budgets.
  • Recommendations: Integrate donor-funded projects into the consolidated budget, improve procurement planning, conduct implementation capacity assessments, and perform mid-term reviews of budget execution.

2. Increasing External Grants

• External grants are a significant source of funding, with on-budget grants estimated at US$93 million annually and off-budget grants at over US$300 million.
• Challenges: Unpredictable inflows due to donor priorities and political conditions.
• Recommendation: Strengthen donor coordination to increase funding predictability.

3. Revenue Mobilization

• Tax Revenue

  • Natural resource sectors (agriculture, forestry, mining, and petroleum) are expected to generate significant revenue.
  • Implementation of a Common External Tariff (CET) is recommended to increase trade tax revenue, with an estimated US$136 million over three years.
  • Replace cascading GST with VAT to harmonize the tax system with ECOWAS and improve tax collection efficiency.

• Non-Tax Revenue

  • Some SOEs and agencies lack transparency in reporting non-tax revenue.
  • Recommendation: Enforce compliance with the Public Financial Management (PFM) Act.

4. External Borrowing

• Liberia can borrow up to 4% of GDP in net present value terms without increasing debt distress risk, assuming concessional terms.
• Recommendation: Borrow for high-return investments such as infrastructure, while ensuring long-term fiscal and external sustainability.

Key Information

• Fiscal Space: The ability to increase public spending without jeopardizing macroeconomic stability or increasing debt risk.
• Macroeconomic Performance (2006–2011): Liberia experienced strong GDP growth (7–12%), declining inflation, and increased public revenue.
• Debt Relief: Following the HIPC initiative, Liberia significantly reduced its external debt.
• Simulation Exercise: The Maquette for MDG Simulations (MAMS) was used to evaluate the trade-offs between different fiscal space options, with a balanced approach showing the best outcomes for growth and development.
• Fiscal Deficit: Declined to a very low level due to improved revenue and controlled public spending.
• Exchange Rate: Stabilized, leading to increased public confidence in the Liberian Dollar (LD).
• Donor Coordination: Improved coordination is needed to enhance the predictability and effectiveness of external grants.
• PFM Reforms: Strengthening Public Financial Management is critical for enhancing transparency and accountability in public spending.

Implications and Recommendations

• Simulation Results: A balanced approach to fiscal space enlargement, combining increased tax revenue, improved expenditure efficiency, and external grants, leads to better development outcomes.
• Mineral Export Prices: Lower export prices reduce fiscal space, highlighting the importance of diversifying revenue sources.
• Recommendations:
  • Improve public expenditure efficiency through biometric registration, rationalizing pay structures, and fleet management.
  • Strengthen donor coordination to increase the predictability of external grants.
  • Implement VAT and finalize CET agreements with ECOWAS.
  • Ensure transparent and efficient SOE operations.
  • Use external borrowing judiciously for high-return projects.

Conclusion

The report emphasizes that fiscal space enlargement is essential for supporting Liberia's development agenda, especially under the AfT. While external grants and improved expenditure efficiency are less burdensome, increasing domestic revenue and careful external borrowing are necessary to ensure long-term fiscal sustainability and economic growth. A balanced and coordinated approach is recommended to maximize the impact of fiscal space on infrastructure development and human development services.