11/11/2025
Detailed Explanations of Key Parts and Topics in Liberia's FY 2026 Draft National Budget
The FY 2026 Draft National Budget for Liberia, submitted by President Joseph Nyuma Boakai on November 7, 2025, totals US$1,211,085,220. As an economist, policy expert, development specialist, budget analyst, and observer of Liberia's longstanding socioeconomic challenges, I'll provide in-depth explanations of various sections and topics within the document. This budget reflects the government's ARREST Agenda (Agriculture, Roads, Rule of Law, Education, Sanitation, Tourism), but it grapples with structural issues like heavy reliance on volatile revenues, high recurrent spending, and limited capital investment. I'll break it down by major components, drawing on available details to explain their economic implications, policy rationale, impacts on infrastructure, civil servants, and the masses, while highlighting historical context (e.g., post-war recovery, corruption, and poverty rates exceeding 50%). Recommendations are woven in for improvement.
1. Overall Budget Size and Framework
The proposed budget amounts to US$1.211 billion, a significant increase from previous years (e.g., FY 2025's approved budget was around US$800-900 million based on trends, though exact figures vary). This represents a roughly 37.5% rise, driven by optimistic revenue growth assumptions amid global commodity volatility and domestic reforms. Economically, this expansion signals ambition but risks fiscal instability if projections fall short—Liberia's GDP growth is projected at 5-6%, but historical underperformance (e.g., due to Ebola and COVID impacts) often leads to deficits.
Policy-wise, the framework aligns with the Public Financial Management (PFM) Act of 2009 (amended 2019), requiring submission by October 31 (extended here to November 7). It emphasizes "inclusive development," but in practice, it's top-heavy, with 76.5% recurrent spending perpetuating a cycle where operational costs crowd out growth-oriented investments. For the masses, this means continued struggles with basic needs, as only 23.5% goes to capital projects that could create jobs or improve living standards. Recommendation: The House should cap recurrent at 65% to free up funds for pro-poor initiatives, like subsidized farming inputs.
2. Revenue Projections and Sources
Revenue is forecasted at US$1.211 billion, with 94% (US$1.13 billion) from domestic sources and 6% (US$72 million) from external aid. Breaking it down:
- Tax Revenue (US$726.97 million): This forms the core, including income taxes, goods and services taxes, and property taxes. Policy experts note improvements in collection via the Liberia Revenue Authority (LRA), which hit record highs in FY 2024 (~US$700 million total domestic revenue). However, the system is regressive, burdening low-income earners through indirect taxes on essentials like rice and fuel, exacerbating inequality in a country where 83% live below the poverty line.
- Non-Tax Revenue (US$83.92 million): From fees, fines, and royalties (e.g., mining concessions). This is underdeveloped; historical corruption in extractives (e.g., iron ore deals) has led to lost billions.
- Mittal Sign-on Bonus (US$200 million): A one-off payment from ArcelorMittal for concession renewal. As a development expert, this is problematic—it's non-recurring, creating a fiscal cliff for future budgets. Liberia's overreliance on mining (60% of exports) echoes pre-1989 issues that fueled civil unrest.
- Contingent Revenue (US$28 million): Uncertain inflows, like unexpected grants.
- External Resources (US$72 million): Grants and loans from donors like the World Bank and IMF. Donor fatigue from governance lapses has reduced this; historically, aid was 50%+ post-war but has waned.
Economically, this structure is unsustainable without broadening the tax base (e.g., via agro-taxes) or combating illicit flows (US$1B+ annually lost). For civil servants and masses, weak revenues mean delayed salaries and underfunded services. Recommendation: Diversify via tourism levies and digital tax systems; the House should scrutinize the Mittal deal for community benefits.
3. Expenditure Breakdown: Recurrent vs. Capital
Expenditures total US$1.211 billion, split into recurrent (US$926.6 million, 76.5%) and capital/PSIP (US$280 million, 23.5%, plus minor others). Recurrent covers ongoing costs like salaries, goods/services, and debt service, while capital funds new assets.
- Recurrent Expenditures: Dominates, including salaries (major chunk for ~50,000 civil servants) and operations. This perpetuates inefficiency—ghost workers and disparities (ministers earn US$10k+/month vs. teachers' US$150-200) fuel strikes and brain drain. Debt servicing is ~US$230 million, a heavy burden (20% of budget), reflecting post-war loans. Policy critique: It ignores wage harmonization promised in ARREST, leaving civil servants exploited amid inflation (10-15%).
- Capital Expenditures/PSIP: US$280 million for investments. This is inadequate for infrastructure deficits (e.g., only 10% paved roads). Historically, ex*****on rates are low (30-50%) due to corruption, echoing Doe-era mismanagement.
For the masses, high recurrent means elites benefit (e.g., perks), while poor infrastructure isolates rural areas. Recommendation: Shift 10% from recurrent to PSIP; House must audit ex*****ons quarterly.
4. Sectoral Allocations and ARREST Agenda
The budget prioritizes ARREST sectors, but details are sparse; allocations are inferred from patterns and snippets. PSIP targets these with ~US$280 million.
- Infrastructure/Roads (Part of ~US$106 million in PSIP): Includes US$45 million for energy (e.g., hydro expansions). Explanation: Liberia's power access is 20%; this could boost industries but is insufficient for nationwide grid. Historically, poor roads cost 5% GDP in lost trade.
- Agriculture: Low allocation (~2-5% historically, likely similar). Policy failure: 70% of Liberians farm, but imports dominate due to lack of seeds/credit. ARREST aims for self-sufficiency, but without more funds, food insecurity persists.
- Education: ~14% (US$170 million est.). Covers schools, but shortages in teachers/books leave literacy at 48%. For masses, this hinders upward mobility; civil servants (teachers) suffer low pay.
- Health/Sanitation: ~10% (US$120 million est.). Post-Ebola, system is fragile; allocation ignores maternal mortality (1,072/100k births). Sanitation projects under ARREST could reduce diseases, but underfunding means masses endure cholera outbreaks.
- Rule of Law/Security: ~12% (US$150 million est.). Funds police/courts, but corruption erodes trust. Historical impunity fueled wars.
- Tourism: Token; potential untapped (beaches, eco-sites), but unsafe infrastructure limits.
As a development expert, ARREST is sound but under-resourced—similar to past agendas like PRS (Poverty Reduction Strategy) that failed due to ex*****on gaps. Impacts: Infrastructure boosts GDP, but skewed allocations ignore gender/child needs. Recommendation: Earmark 20% PSIP for women/youth programs; House cut non-priority sectors like foreign affairs (bloated diplomacy).
5. Debt Servicing and Fiscal Sustainability
Allocated ~US$230 million (within recurrent), covering domestic/external debt (total debt ~US$2B, 50% GDP). Economically, this crowds out spending (opportunity cost: equals education budget). Policy context: IMF ECF program requires discipline; recent surplus in FY 2024 is positive, but one-off bonuses risk deficits. For masses, high debt means austerity; civil servants face pay freezes. Recommendation: Negotiate debt relief; House mandate transparency in borrowings.
6. Implications for Civil Servants, Infrastructure, and the Masses
- Civil Servants: Salary-heavy recurrent exploits them—arrears common, no pensions. FY 2025's raises (min. US$150) are a start, but disparities persist.
-Infrastructure: PSIP's focus is good, but low ex*****on means crumbling roads/power. Historical neglect fueled migration/unemployment (20%).
- Masses: Regressive taxes and low social spending deepen poverty. ARREST could help, but without accountability, it's rhetoric.
Overall, this budget risks stagnation unless reformed. Recommendation: House slash its own US$50-60 million allocation by 40%, reallocating to health/agriculture; enforce AI audits for transparency. This would address bread-and-butter issues like food security and jobs, breaking cycles from Tubman to present.
Alex Jones Vojo Siaman OKFM 99.5 & OKTV Executive Mansion-Liberia Liberia Revenue Authority
