What Sierra Leone’s budget did not say
The Ebola outbreak last year seriously dented the country’s economic outlook. Now as the fightback begins to resuscitate the economy, those in charge of the country’s finances should be more open about the financial implications for the medium term.
IN every sense, it is an understatement to say this is a crucial time for the Sierra Leonean economy. Evidently, key national areas like health and sanitation, education, economic productivity are being starved of attention. So one could be forgiven for thinking the glossy outlook presented in the budget by the Finance Minister, Dr Kaifala Marah, recently just does not add up. Yet, the press and civil society are blasé as usual. And as if in approval of the statement, there has not been a squeak from the opposition parties.
A budget, for an economy that has lain comatose for nearly two years should instigate serious debate. But not in Sierra Leone; for a culture is embedded where no relevance is attached to the budget. In fact, it is fair to say the budget has come to be accepted as an empty government ritual, rather than an indicator of the economic trajectory of the financial year. Frankly, it is this sort of indifference to matters of such importance that has allowed successive governments to get away with fallacious fiscal computations. Is it not hypocritical to act surprise further down the road when the extent of the damage to the economy is revealed?
That the finance minister could present a budget to the nation without revealing the size and figure of the national debt is as spectacular an act of deceit as there ever was. The reality is, Marah’s budget for 2016 should be attracting scrutiny especially after the last 18 months that saw the collapse of the country’s largest tax contributor, Africa Minerals Limited. But it is not. Principles of democratic seriousness demands that. If only for the simple fact that the anomalous omission of the national debt has the potential of affirming the unfortunate view held by most serious international economic observers that the country is one of Africa’s fiscally unreliable.
The most recent figures from the World Bank put Sierra Leone’s debt at nearly $1.5 billion. Incredibly, while the finance minister smoothly eschewed that figure in his budget, he was overly liberal in presenting a breakdown of debt interest payments for 2016 to the tune of Le299.6 billion. Of that figure, he announced that interest on domestic debt was Le254.2 billion. Note: not debt repayments, but interests. Which begs the question: which domestic financial houses (or individuals and groups) are owed such interests and for what? Importantly, what are the debt figures that require such sums, not in repayments, but interests?
The idea that the international interests for 2016 amount to Le45.4 billion or about a million dollars is incredulous. If Sierra Leone is serious about progress, Marah should be forced to explain that figure. At a glance, without reading the details, any economist worth his or her salt will reject that figure instantly. Is Marah actually suggesting that the country’s main creditors are domestic, and that Sierra Leone only pays a million dollars in annual interest to international creditors?
Assuming a dispensation exists for Sierra Leone to pay only a million dollars in international interests. For the minister to not consider ways of reducing the debt but chose the minimum interest repayment is remarkably imprudent and bankrupt economics. If the annual interest is one million for an international debt of $1.5 billion, will the country ever reach a position to repay its debts? A statement that lists spending based on projections with no achievable certainties, and circumvented the need to clarify national debt volumes is no budget at all.
It seems the minister set out to deceive the nation with cosmetic economics. In doing so, he could just be making the country’s desperate economic situation even direr. Without a coherent debt-servicing plan that could withstand a rigorous test by international creditors, securing new loans to remedy exigent projects crucial to economic salvation could prove problematic.
Economic difficulties cannot be wished away by uplifting statements and falsities. Sadly, the trickery in this budget is purely a product in that line. Put simply, wishful thinking. And that should not be acceptable in 2015.
There is plenty of that and quite right too. So without exonerating government, the blame for any inexcusable shortfalls in the budget should be the finance minister’s first and foremost. Only that way can individual ineptitude be weeded out of public life. It is time the convenient use of the generic term government for sheltering poor performers is put to bed if the ultimate is a change in culture. Sierra Leone is not a society where elected officials resign when their views conflict with government. Therefore, individuals that serve contrary to the nation’s interest should be hung to dry for their part in government failure.
The Finance Minister must be brought to book for not stating the size of the debt. With the current system of government where the government is both privy to the state’s main revenue streams and responsible for taking loans on the country’s behalf, without censure, there is a very clear need for the budget to be thoroughly examined. That way the public is able to make the judgement on that serve them short and ask that they be replaced where warranted.
Of course, this is not the first time finance minister Marah has fallen short on factual accuracy regarding economic projections for the country.
Not too long ago he pompously told our parent publication, New Africa Analysis, that oil discovery in the country had reached commercial viability or commerciality in the jargon of oil producers. As everybody now knows, and embarrassingly so, the whole oil picture was a fiction. And then there is his other remarkable pronouncement that Sierra Leone had successfully crossed the threshold, and achieved the Millennium Challenge Corporation’s approval for a cash windfall for development. That was not the case then, and not the case now. But of course as is customary, he got away without even a question asked.
Crossroads is a word used at the end of every crisis in the country. It is more so now. And as always, the decision of taking the correct turn can only begin when the path to ruin is crossed out as an option. For lacking the quality of prudence, the public must demand that Marah explains the decision to leave the debt out of his budget. The job of a finance minister is not to cobble up data that sound pleasing, but to formulate a way out of stagnation.
This all the more important now in the wake of the Ebola outbreak, which saw economic growth plummet from double-digit GDP rates of 15.2 per cent and 20.1 per cent in 2012 and 2013, respectively, to 6.0 per cent in 2014. GDP is projected to fall further to as low as -2.5 per cent in 2015 before reaching 2.8 per cent next year.
A recent African Development Bank report on the country’s economic outlook noted: “There are…many uncertainties with regard to 2015 and 2016 as developments pertaining to [Ebola] and the financial difficulties facing the two main iron ore mining companies are expected to have a negative impact on growth.
“The impact of Ebola and of the crisis in the mining sector will continue to dampen economic activity in 2015 and possibly into 2016. Due to the adverse effects of Ebola, inflationary pressures have been higher in 2014 than anticipated and only a gradual easing is projected.”
Above: Dr Marah in the then newly created role of Chief of Staff to the President, he was also lead of the EITI
Main photo: Dr Samura Kamara at the White House representing President Koroma in 2014. He was seen as a more competent hand at the Ministry of Finance