By Ralph Simeon Sesay
Sierra Leone’s most criticized Minister of Finance is expected this morning to deliver a ‘make or break’ budget to Parliament and by extension the people of Sierra Leone.
The 2020 budget is expected to speak to the policies and programs of the New Direction Government in restoring fiscal discipline, economic diversification for sustained economic growth, job creation, promotion of human capital development while at the same time increasing the role of private sector and also expanding social protection services.
The New Direction Government financial policies in the 2019 budget were anchored around the above principles, but whether things grew for the better for Sierra Leoneans in terms of executing the above policies remains an answer for all.
The execution of the 2019 budget was projected by the Minister of Finance to have accompanying risks and threats such as the continuous slump in iron prices, rise in petroleum markets and delays in disbursements of donor’s funds to support government budgetary activities.
Government promised to address or pursue prudent fiscal and debt management policies, pro-active monetary policy, stability-oriented financial sector policy and market-based exchange rate policy to address the risks that are likely to challenge the effective implementation of the budget.
‘’This will be combined with reforms to improve the business climate and enhance productivity of agriculture, fisheries and tourism sectors,’’ the 2019 budget states.
Fast-forward into November, 2019 the Minister of Finance will this morning announce another budget, the second under the New Direction’s pursuit of diversifying the economy is yet to come to fruition as budgetary allocations to Agriculture, Tourisim and Fisheries are still around ten or less than 10 %.
The wage bill continues to rise from an inherited Le150 billion around 200 billion Leones with over sixty (60) billion increase just in nineteen (19) months, monetary policy remains weak with the exchange rate at an exponential rate hugely affecting foreign and local businesses.
The Central Bank’s auctioning of the United States Dollars has been rubbished by the Bank Governor, Professor Kallon as an unsustainable measure forced on the bank by people in government who thought that it was the best way to go in addressing the plummeting dollar against the Leone.
The Bank Governor introduced a number of measures such as stopping the trade in off shore currencies by NGOs, limiting the amount of currencies people or organizations should leave or reside with etc.
The issue of enforcing some of the measures amidst porous borders was largely a problem envisaged by the bank even though it had noted that an inter-sectoral collaboration was assured.
The projection to accrue revenue from the Iron Ore sectors with the resumption of Iron Mining in Lunsar in 2019 and Tonkolili Iron Ore in 2021 remains highly unachievable due to the sudden closure of the two mines.
This stand-off between government and the two companies: Sierra Leone Mining and Shandong Iron Ore Company over the termination of their Mining Lease Agreements and Licenses might delay any sudden take-over of the two highly foreign exchange and employment driven companies in the north of the country.
Amidst several measures announced by government to increase revenue mobilization, it is clear that the country’s GDP has increased, but expenditure remains very high and this is devastated by continuous investment in areas that are not likely to bring immediate dividends to the economy in terms of jobs and foreign exchange.
Even though government continues to score international accolades in terms of pursuing a fiscal and efficient management of the economy, the areas around fiscal discipline, inflation rate and the overall macro-economic environment remains bleak.
The MCC score card ratings recently released by the United States speaks failures around fiscal policy to the extent that we are not expecting to see any magic this morning from JJ Saffa’s magic wand that things will turn around in 2020.
The introduction of additional tax collection initiatives by Government in 2019 such as the collection of taxes from self-employed professionals; review of duty waivers, implementation of the extractive Industries Revenue Act amongst others were deemed to have increasingly taxed the private sector and this move is largely deemed to be inconsistent with the Government policy around encouraging private sector development consistent with the Sustainable Development Goals (SDGs).
Many renowned experts around the economies of major and developing economies, including our own Dr.Kandeh Yumkella had criticized government for heavily taxing the private sector which, he recounted, will scare them away from contributing to the growth of the economy.
He has blamed the New Direction Government for not keeping away from the status quo of continuing to spend and increase the wage bill by creating more jobs for the boys.
The former UN diplomat and politician advised government while contributing to the 2019 debate in Parliament to invest more on agriculture and the other trade manufacturing sectors which for him will have an immediate turn-around in the areas of foreign exchange while also creating jobs for our un-employed youths which are badly needed at the moment.
The NGC leader had fumed that leaders of developing countries should have a thorough understanding of how macro-economic variables operate in such free market economy to be able to rule their countries.
He despised former President Clinton’s perspective that Africa needs strong institutions not strong leaders and argues that Africa needs both as it is the strong leaders who make the strong institutions for the overall development of the country.
Having criticized the APC for largely been unable to significantly deliver basic social services especially in health and education which, according to them, had adverse implications at the time for human capital development. Sierra Leone’s ratings in international indexes such as the World Bank Human Capital Development which was at 184 out of 189 has still not improved and it is also not expected to improve in 2020.
The 2019 Sierra Leone Integrated Household survey report still puts the poverty levels at around 58%.
Even though government continues to pay salaries of civil servants reportedly not from bank drafts as alleged by the Finance Minister, coupled with significant spending on the Free Quality Education, the scheme is far from stabilizing as government is still not able to solve one of the most critical issues surrounding the FQE which is the improvement in the conditions of service for teachers.
The announcement of the agreed conditions from the just-concluded Teaching Service Trade Group Negotiating Council (TSTGNC) by government has stalled and the hopes of teachers are alive and kicking that the 2020 budget would bring them goodies from the government or no more.
Other key campaign promises around the welfare of teachers such as the paying of university fees for three pupils of teachers who have done more than ten years in the teaching field, still remains in limbo with reports that government is yet to address the thousands of applications it has received from teachers.
Reports are that the scheme remains unachievable due to the fact that government has underrated the enormity of applications that will flood their desks before making the campaign promise.
What hope is there also for further budgetary support to the Human Capital Development sectors of Education, Agriculture and Health in the 2020 budget?
Government was commended in 2019 for hitting the world and regional target of over 20 % budgetary spending to Education, but what is happening will also surpass and hit the regional targets on Health and Agriculture by pushing through the current budget support at 10 and 5% respectively allocated to Health and Agriculture?
What about fisheries and tourism sectors which are still grappling with low budgetary allocations of 5.6 billion and 35. 1 billion Leones respectively?
Social protection, trade, manufacturing and services sectors are still largely underfunded to support economic growth.
Their continuing inability to support economic growth would largely defeat any attempts at achieving the Human Capital Development flagship project of the government.
In the Human Capital Development the areas around TVET are still very weak, the Ministry of Technical and Higher Education has largely spent a whole year 2019 trying to position the ministry to undertake the huge tasks ahead of them. Addressing the TVET needs of Sierra Leone remains a long journey and the President’s campaign promise of providing at least one TVET institution in each district still remains unachievable.
Energy, water and other social services sectors are also huge challenges for Government.
What plans are there to provide sustainable and permanent solutions especially for the water sector in the 2020 budget?
There are high hopes for sustainable electricity with the CLSG project around the corner.
It came up very clearly in the Budget Committee hearings at the Miatta Conference Hall in Freetown that most critical sectors that are expected to deliver social services and also boost international ratings are underfunded to do their work.
How do we expect them to perform when they don’t have the wherewithal?
The 2020 budget should be a pro-poor budget; it should be able to prioritize the priorities.
Everything remains a priority in Sierra Leone and the NEW DIRECTION should go for what it can chew and swallow and not jumble up everything and remains not able to achieve any.
Indeed this morning’s budget will make or break the New Direction Government from a largely expectant public.