PAYNESVILLE, Montserrado – The Liberia Revenue Authority has announced that it has generated at least 51 percent of the US$600 million required to support the 2016-2017 fiscal budget.
LRA’s Commissioner General Elfrieda Stewart Tamba said a total of US$307 million has been collected as of Jan. 31, 2017.
According to Tamba, a balance of more than US$292 million is expected to be collected by the LRA between now and June.
“Total collection consists of US$245.6 million, or 80 percent in domestic revenues, and US$62 million, or 20 percent in external resources,” she said. “Of the total domestic revenues receipts, domestic tax contributed US$141.6 million, or 58 percent, while customs contributed US$104.1 million, or 42 percent.”
Domestic revenues account for US$528.9 million of the total budget.
Tamba said the original GDP estimate on which domestic revenues were forecasted was US$2.3 billion.
“When compared to domestic resource forecast, the tax to GDP rate was 23 percent,” she added.
The revised estimate by the International Monetary Fund reveals a decline in GDP growth from seven to five percent.
Although the domestic resource envelope has not been revised to reflect the drop, she said discussions have been held with the technical team and the IMF and that the Minister of Finance would announce the new collection figure that would reflect, so far, the excess risk in the economy.
Commenting on the exchange rate indicator, Tamba said it was assumed at the budget period that over the fiscal year, the average exchange rate would be L$95.5 to US$1.00.
However, she said there is a 10 percent depreciation in the value of the Liberian dollar currency when comparing to monthly average between July 2016 and January 2017, and eight percent when compared to the forecast rate. The monthly average rate is now 98.2 percent.
The LRA commissioner general also revealed that a reduction in trade has continued to contribute to the relatively slow performance of the country’s economy, with the value dropping 19 percent from the previous year.
She said trade is a major indicator for the performance of any economy.
“When you have decline into the trade coming into your country, definitely, it would have a trickle-down effect on other taxes. You will have your custom duties and related taxes declining,” Tamba said. “This will also affect your domestic taxes because you have a signal that there would be reduction in demand, and businesses in the country would begin to report lower sales – and when you have lower sales and exchange rates declining, that means you have less money to spend, because once the exchange rate deteriorates, the purchasing power would reduce.”
However, Tamba clarified reports that the recent three-day strike by businesses affected the government’s revenue generation.
“While it might have slowed our daily collection, we still collected those dues after the three days,” she said.
On Jan. 31, a group of local businesses under the name Patriotic Entrepreneurs of Liberia, or PATEL, staged a three-day strike, closing down their businesses.
The protest was aimed at drawing the government’s attention to the prevailing economic hardship in the country, including inflation of the exchange rate and the increase of taxes on imported goods. The strike crippled much of Central Monrovia and other parts of the region, as most shops were closed.
Featured photo by Gbatemah Senah