20.4 C
Sierra Leone
Thursday, May 26, 2022

President Koroma sanctions austerity measures

October 4, 2016 By Abu-Bakarr Sheriff  & Alusine Sesay

President Koroma is reported to have told his Cabinet yesterday that austerity measures announced in March would be implemented until the first half of 2017 “in order to stabilize the current [dire economic] situation.”

The new measures were reportedly proposed by a subcommittee of Cabinet and subsequently approved by Cabinet. They include:

  • 30% cut in recurrent expenditure across the board (estimated cost savings Le309 billion from March to September 2016;
  • Suspend all domestic finance capital projects and suppliers’ contracts until further notice;
  • No new procurement of Government vehicles until further notice;
  • No purchase of new office furniture and fittings;
  • 50% cut in fuel allocations to all MDAs;
  • 50% cut in monthly office imprests;
  • 70% of all payments to suppliers/contractors that have foreign components to be effected in Leones;
  • 50% cut in DSA for local travels;
  • Elimination of overtime payments;
  • No purchase of office equipment (computers, printers and photocopiers);
  • Restrict all overseas travels and rationalize delegation sizes;
  • No top-up allowance for sponsored international travels;
  • 50% cut across the board in vehicle maintenance;
  • All seminars, retreats and workshops should be held in office facilities;
  • Eliminate double payments of pensions and salaries across the board.

Also, the release from State House noted that the government has approved the following measures aimed at domestic revenue mobilisation:

  • Start effective implementation of the Treasury Single Account (TSA);
  • Transfer 60% of existing resources including projected revenues of all financially autonomous agencies into the Consolidated Revenue Fund (CRF);
  • All business outfits to pay outstanding arrears of taxes within 30 days;
  • All commercial banks should transfer monies in transit accounts within 24 hours (strict penalties would apply in the event of failure to comply);
  • Minimise discretionary duty waivers and rationalize statutory duty waivers.

The released added that President Koroma urged the Ministry of Information and Communications to sensitise the public on the austerity measures and to fully engage civil society organisations to be part of the process.

“If we are able to fight Ebola, we should be able to put up a fight that would turn around the economic fortunes of the country,” he is quoted to have said.

The president is said to have urged ministries, departments and agencies to cut down on their expenditures and focus on measures that would stabilise the economy.

“While considering the recommendations put forward by the International Monetary Fund, We must look at practical ways to minimize the challenges facing the country,” President Koroma is quoted to have emphasised.

The latest austerity measures though are not new as nearly six months ago similar measures were announced by a memorandum to public servants, in tacit acknowledgement that the “economy is facing significant challenges”, which some commentators referred to as “looming bankruptcy.”

A Cabinet Paper signed by a certain Ms. Sonia U. Karim, on behalf of Secretary to the Cabinet and Head of the Civil Service, dated on 14th March, 2016, noted that the present economic situation in the country was hindering effective implementation of the approved budget for this year.

The government had blamed the economic meltdown on “high interest rates on domestic borrowing, increasing trend of extra-budgetary expenditure, Post-Ebola shocks affecting domestic revenue mobilization, and off –budget revenues held by Subvented Agencies.”

In response, the Cabinet Paper said that a high-level policy committee had been set up by the President to proffer short to medium-term measures “on expenditure rationalisation and domestic revenue mobilisation”, aimed at cushioning the effect on the citizenry.

The committee comprises the Attorney-General and Minister of Justice, Chief of Staff at State House, Minister of States in the Ministry of Finance and Economic Development, Secretary to the President, and the Central Bank Governor and his deputy.

The Cabinet Paper further stated that the president had given his approval to what it referred to as “prudent yet realistic measures”, adding that “Government needed to manage the implementation of the measures so as not to cause undue alarm and panic domestically as well as internationally.”

The government though talked tough about turning the dire economic situation around then. Deputy Minister of Information and Communication, Cornelius Deveaux gave assurances that they were working round the clock to turn the embarrassing situation around.

Like President Koroma, he was quick to blame the Ebola outbreak.

But the economic woes show no sign of abating as the United States Dollar continue to appreciate against a weak Leone, with the attendant increase in basic foodstuff and services caused by an unprecedentedly high inflation.

Also, economists have blamed the economic downturn on a bloated workforce, following the establishment of myriad commissions and agencies, and recruitment of more than required personnel in ministries, departments and agencies.

Just last week a delegation from the International Monetary Fund recommended that the government scrap massive subsidisation of petroleum projects and to fix new pump prices, which they noted is the lowest in Mano River basin.

But the government though seems reluctant to do so as such would increase brewing dissatisfaction among the citizenry, with crucial multi-tier elections in early 2018 in mind.

In a seminal article in March, private legal practitioner, Francis Ben Kaifala wrote in an article titled “Looming Bankruptcy of Sierra Leone: The Perspective of an Economic Doomsayer” that: “In a panic mode, the government has introduced subtle austerity measures (a good move if applied properly) like the unilateral cut on workers’ benefits to their disadvantage (a clearly illegal move considering that there was no legal basis for it), increased taxes on income (as high as 35%), and various other planned actions to salvage the embarrassing state of the economy.”

He added: “It confirms the belief that those we have elected to look after our affairs are not as in charge of doing so as we would expect them to be, or perhaps they do not fully understand what it would take to save the economy.”

He proffered the following recommendations:  “We need to export more to other countries as we import goods from them so as to reverse the trade deficit that is weakening our currency. In other words, what we need is more export by Sierra Leoneans to receive US Dollars in return, which will cushion the supply of FOREX and not have its price continue to rise to catch up with the demand for it. Clearly, that is not going to happen soon. The other alternative we have is to reduce export and consume more of what we produce. That too is almost impossible as we currently lack policies that encourage or likely lead to self-sufficiency. What the government should be doing is trying to address these two policy considerations and move the country towards a favourable balance of trade or self-sufficiency.”

It therefore remains to be seen whether the new measures announced yesterday would lead to the prosperity the president promised citizens in 2012 as part of his second and final term as president.

Related Articles

Latest Articles