Ngafuan Unveils Strategic Reforms in Liberia’s Fiscal Landscape

By Julius T. Jaesen, II.
coyies2004@gmail.com

On November 20, 2024, Minister of Finance and Development Planning, Hon. Augustine Kpehe Ngafuan II, appeared on the OK Morning Rush on OK FM 99.5, hosted by Clarence Jackson. In a detailed conversation, Minister Ngafuan outlined Liberia’s fiscal challenges, ongoing reforms, and the government’s plans to address key development issues. The interview, filled with candid insights, shed light on the national budget and broader economic strategies.

Minister Ngafuan began by praising the dedication of the Ministry’s employees, particularly budget technicians who, despite challenges, have worked tirelessly to prepare the national budget. “It’s like being in a kitchen,” he explained. “People enjoy the meal but rarely see the effort behind it. These technicians, including women, have made immense sacrifices for their country, often working long hours for months to deliver results.”

He further commended the collaboration between agencies such as the Liberia Revenue Authority (LRA) and the Civil Service Agency (CSA), emphasizing a “whole-of-government” approach to tackling Liberia’s fiscal challenges.

When asked by host Clarence Jackson about the challenges facing the Ministry, Minister Ngafuan did not shy away from addressing Liberia’s significant debt burden. “When I was in this position over 12 years ago, we had just succeeded in canceling $5 billion in external debt. The fiscal space was enormous,” he said. “Today, it’s a different reality. This year’s budget allocates $328 million for debt servicing—money that could have been used for education, healthcare, and other critical services.”

He noted that most of the debt burden is external and emphasized the importance of adhering to repayment deadlines to avoid sanctions. “The government’s credit record is strained, even locally. We owe almost everyone, and that hampers our ability to focus on development. But we must methodically and transparently address these challenges.”

Minister Ngafuan highlighted the disparity between budget growth and population growth, stating that while the national budget has increased to over $800 million, it has not kept pace with the needs and aspirations of Liberia’s people.

Mr. Clarence Jackson, the host of the “OK Morning Rush”, who hosted Finance and Development Planning Minister Augustine Kpehe Ngafuan II, raised concerns about salary payments, especially as December approached. Minister Ngafuan revealed that the government had started paying November salaries as early as November 15, with over 50 ministries and agencies already settled. He described timely payments as essential, not just for employee morale but also for economic stability.

“If you delay salaries, employees are forced to take loans with high interest rates, which effectively reduces their pay,” he explained. “We are determined to make timely payments a routine feature, barring technical challenges or resource constraints.”

He added humorously, “Imagine if government employees could lend money to others before their pay dates and earn interest. That’s the kind of positive change we’re aiming for by making timely payments a routine feature.”

Ngafuan also reminisced about his previous tenure, when government employees were paid well before the month’s end. He challenged his team to replicate that efficiency, inspiring them with the question, “If we did it before, why not now?”

The host pressed the Minister on the delay in launching the government’s development plan, the Arrest Agenda for Inclusive Development (AAID), which is yet to be unveiled despite 10 months in office. Ngafuan responded that the process was deliberately consultative to ensure quality. “Unlike previous plans, this agenda is being developed through extensive consultations across the country,” he said. “We’ve validated the drafts with stakeholders and development partners, and by December, we expect to launch both the National Development Plan and County Development Agendas (CDAs).”

The CDAs are a new feature of Liberia’s development framework, focusing on tailored priorities for each of the country’s 15 counties. “For example, Bong County will have its own development agenda, reflecting the aspirations of its people. This localized approach ensures that both government and development partners like the World Bank and UNDP align their efforts with community needs.”

Minister Ngafuan remarked, “The ARREST Agenda is not just about policies; it is about action. We are designing it to be practical and responsive to the needs of Liberians. The inclusion of County Development Agendas will guide not only government spending but also the contributions of our partners, like the World Bank and UNDP,” he said.

Addressing skepticism, Ngafuan emphasized that the current government is determined to learn from past mistakes. “In 2009-2010, under President Sirleaf, we had County Development Agendas, but they were not sustained. This time, we are institutionalizing them to ensure continuity and impact,” he remarked.

Minister Ngafuan revealed that the 2024 budget includes a new layer of funding to support the implementation of County Development Agendas. “In addition to the usual County Development Funds (CDF) and Social Development Funds (SDF), we’ve introduced post-funding for county projects. This is a significant step toward decentralization and equitable development.”

He also stated by reiterating the government’s commitment to delivering quality services despite the challenges. “We’re not here to whine about difficulties; we’re here to light candles in the darkness. Through hard work and collaboration, we will rebuild trust and deliver on the aspirations of the Liberian people.”

Commenting on macroeconomic challenges and price stability, Ngafuan explained the paradox of a strengthening Liberian dollar and rising commodity prices. “When the Liberian dollar appreciates against the U.S. dollar, prices don’t immediately adjust because businesses often purchased their goods at the previous higher exchange rates,” he said.

The Minister stressed that this delay in price adjustments requires monitoring by government entities like the Ministry of Commerce. “If businesses persist in keeping prices artificially high, market forces will eventually reduce demand for their goods, compelling prices to drop. It’s a process that takes time,” he assured.

Ngafuan also highlighted the need for consistent oversight to prevent unfair practices and ensure that economic benefits reach ordinary Liberians.

The Minister touched on Liberia’s debt servicing obligations, revealing that the government is set to pay $328 million, with $137 million already allocated in the budget. He explained that these payments are tied to critical projects, including a $40 million World Bank initiative aimed at supporting small and medium enterprises (SMEs) and other developmental priorities.

As discussions on the budget process continue, Ngafuan urged Liberians to remain patient while the government addresses these multifaceted challenges. “We are committed to ensuring that this development plan works for every citizen, from Monrovia to the remotest parts of our country,” he concluded.

Speaking about the current state of government development funding, Minister Ngafuan emphasized that over $300 million in funding is being mobilized for projects across the country, including $52 million earmarked for rural development initiatives. “We have a national service program in collaboration with the ministries of education and youth, aimed at ensuring that development expenditure is properly tracked and accounted for,” Ngafuan said.

He acknowledged technical rigidities in the current budget framework, particularly in distinguishing between grant and development expenditures. “Some entities receive grants that are used for development, but this expenditure is not being captured properly. This creates a myopic view of the government’s development package,” he explained, adding that the public sector investment program (PSIP) alone is projected to increase from $98 million to $105 million through supplementary allocations.

Minister Ngafuan highlighted Liberia’s total draft budget of over $800 million, with $18.8 million designated as contingent revenue. “If we raise this contingent revenue, we can supplement the budgets of many ministries and agencies,” he noted. He also stressed the importance of analyzing not just on-budget allocations but also off-budget contributions from partners like the World Bank and African Development Bank.

“Some of the development projects in sectors like agriculture and education are funded by loans or donor grants. Government is paying back, but these are part of our development framework,” Ngafuan said. He urged analysts to look beyond percentages and consider the broader development package, which includes both on-budget and off-budget contributions.

When asked about empowering local businesses, Ngafuan acknowledged the inclusion of small business support funding in the budget but stressed the need for a broader approach. “Empowering the private sector goes beyond allocating funds. It requires flexible credit facilities, tax incentives, and strategic partnerships. We are doing some of this, but the experience has not always been satisfactory,” he admitted.

He pointed to ongoing SME-related projects, some initiated during the previous administration, as examples of government efforts to bolster the private sector. “We are working with partners to ensure sustainable funding for small and medium enterprises, recognizing their critical role in the economy,” he said.

The Minister’s remarks also addressed government plans for addressing salary disparities within the civil service, especially in sectors such as health, security, and agriculture. “This is a multi-year effort,” Ngafuan explained. “In the first year, we’ve tackled some pressing issues, such as bringing teachers up to their appropriate pay grades. These actions are just the beginning; we will continue this journey and address disparities incrementally in the coming years.”

A key area of focus, according to the Minister, will be agricultural development. “The President has instructed us to prioritize agriculture, and we are making sure that resources reach those working in the sector,” Ngafuan emphasized. He added that a full package of projects for agriculture workers will soon be unveiled.

 

Minister Ngafuan disclosed that the government, under the leadership of President Joseph Nyuma Boakai has recognized the untenable financial burdens placed on civil servants, particularly in the security services. “The government has acknowledged that this financial obligation has been shouldered by the employees, especially those in the police and military sectors,” Ngafuan said. “President Boakai has deemed it unacceptable for this to continue, and starting next year, all insurance costs for police officers, along with other essential security personnel, will be fully covered by the government.”

Ngafuan outlined that the adjustments to police officer compensation will include an additional $42 in their pay packages. “This will be split into two parts,” he explained. “One portion, between $12 to $15, is tax-exempt, while the remaining amount, approximately $30, will be taxable.” In addition, soldiers, officers of the Executive Protection Service (EPS), and other security officers will receive a similar increase of $40 across the board, which will vary based on their rank and position.

According to Ngafuan, these changes are just the first step in the government’s larger, multi-year plan aimed at addressing broader compensation challenges within the civil service. “This is not the final solution; this is just the first set of actions. We are looking at a multi-year approach to address not only salaries but also other smaller challenges within the service,” the Minister emphasized.

The new compensation package will directly benefit over 28,200 civil servants, representing 45% of Liberia’s total civil service workforce. Minister Ngafuan explained that while this adjustment is a positive development for many, it is part of a larger strategy to systematically address remuneration disparities across various sectors of the public service. “We are moving incrementally, and as the budget expands and revenue collection improves, we will continue taking actions to address these disparities,” he added.

While the focus has been on the security sector and teachers in the first phase of the plan, Ngafuan was quick to note that there are still sectors that will not immediately benefit from the changes. “Not every sector will see the benefits in this first phase,” he said. “Some sectors are still waiting for their turn as we grow the economy and the budget.”

The Minister also mentioned that efforts to increase government revenue and close fiscal leakages will continue, as these are key components of funding the new benefits and future wage adjustments. “We are working hard to raise the revenue that will sustain these ambitions,” he said. “And we will be making sure that as we grow the budget, those civil servants who help us achieve our goals will be rewarded fairly.”

In closing, Ngafuan reiterated that the government’s approach to salary adjustments and civil service reform will be gradual and responsive to Liberia’s evolving fiscal realities. “We are not solving all the problems overnight. But as the budget becomes more elastic, and as we raise the necessary funds, we will continue to take action and move closer to the goals we have set,” he concluded.