Several Liberian Senators have expressed their frustration that there were not enough details to make a sound decision on President George Weah’s stimulus package for the State of Emergency, days before it is signed.
One of the key documents lawmakers say they were denied viewing was the agreement between the Government of Liberia and the World Food Programme regarding the distribution of food to various communities across the country.
The issue is crucial in the wake of concerns regarding the debate over the rationale of paying an international aid organization, the World Food Programme US$9 million dollars just to distribute food.
The WFP in a statement Thursday said the total budget of the COVID-19 Household Food Support Programme (COHFSP) is US$30 million, comprising the cost of the food basket (rice, beans and vegetable oil) as well as costs of storing, transporting and delivering the assistance to vulnerable households targeted through this programme.
Said the WFP: “These account for US$25 million directly from the Government of Liberia and US$5 million from the World Bank. WFP understands that the Government has transferred the amount to WFP’s account as per the signed Memorandum of Understanding between the Central Bank of Liberia (CBL) and the Ministry of Finance and Development Planning (MFDP).
The value of the food is estimated at an approximate total cost of US$20.4 million, pending the final award of all contracts to suppliers. The portion of the budget that constitutes the costs of storing, transporting, and delivering the assistance (or operational costs) is estimated at US$7.8 million.
These costs include in-country transport cost, costs for cooperating partners supporting the programme, food safety and quality control, casual labour services, household enumeration/registration, among others. LISGIS’ enumeration exercise will cover over 500,000 households at less than US$ 3.4 per household.”
What is unclear is how much of that money the WFP is in control of and how much is being managed by the GoL.
According to the WFP, the COHFSP is an important safety net for people affected by COVID-19 in Liberia. “This programme is providing a month’s supply of food (50 kg of rice, 10 kg of beans and 1 gallon of vegetable oil per household) for around 2.5 million most vulnerable people across all of Liberia. Transportation and distribution will cost approximately US$3.60 per person and are covered under the WFP budget.”
The WFP says around 6 percent of the budget goes towards meeting essential minimum costs for WFP to deliver its lifesaving assistance – this is standard across all the countries where WFP works and is in line with international standards of aid delivery.
“These include allocations toward the support costs of the Liberia Country Office directly linked to the execution of the programme (e.g. applicable rental costs, back office staff costs etc) and allocations toward the support costs of WFP Headquarters/Regional Bureau in their oversight and support function, called Indirect Support Costs (ISC). Together, these can be referred to as the administrative costs.”
Earlier this week, Representative Samuel Enders(District No. 6, Montserrado), raised eyebrows early this week when he expressed uncertainty that he and other lawmakers may not have been aware when they signed off on the US$25 million allocation toward the feeding program, without actually knowing whether it was a loan or a grant.
Said Rep. Enders: “It is also misleading and very troubling to read that the US$25 million is a loan. I cannot remember signing a loan agreement for such. We need to know how much loan was taken and who authorized the loan during the COVID-19 period with specific reference to the recast.”
Besides the agreement between the GoL and the WFP, much of the stimulus package relied on a set of conditions and policy measures, the International Monetary Fund(IMF) laid out prior to agreeing to an approval in Principle for the IMF Rapid Credit Facility (RCF)-supported program.
Last week, the Executive Board of the International Monetary Fund (IMF), approved a little under half of that amount, giving the greenlight to the disbursement of US$50 million; 1.7 percent of the country’s GDP, to be drawn under the Rapid Credit Facility (RCF).
“The Rapid Credit Facility (RCF) provides rapid concessional financial assistance with limited conditionality to low-income countries (LICs) facing an urgent balance of payments need. The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis. The RCF places emphasis on the country’s poverty reduction and growth objectives.”
The GoL had initially sought a total of US$87 million of budget support.
According to the IMF, with debt relief approved in April 13, the money would will help meet Liberia’s urgent balance of payment needs, mostly stemming from fiscal needs necessary to respond to the pandemic.
Part of the reason the IMF agreed to approve the loan stemmed from the COVID-19 pandemic, coming at a time when economic activity was already declining.
In order for the credit facility to be approved, the IMF requested that a number of measures by the Liberian Legislature was key.
The IMF requested that Legislators formally approve — some in principle and some formally — several measures as prior actions for the RCF arrangement.
The IMF document demanded the following:
Following such approval, and (i) upon signing of the RCF-supported program Letter of Intent by the Minister of Finance and Development Planning and by the Governor of the Central Bank of Liberia; and (ii) upon signing by the Minister of Finance and Development Planning and by the Governor of the Central Bank of Liberia of a Memorandum of Understanding governing the on-lending of all disbursements under the RCF for use as budget support by the Government of Liberia, it is anticipated that IMF budget support to Liberia equivalent to US$87 million will be made available before the end of May 2020.
For this to happen, the IMF noted that measures would need approval by the legislature.
Firstly, that upon disbursement of the US$87 million of funds under the Credit Facility arrangement, US$35 million will be immediately transferred to the account of the World Food Program for execution of the food support program agreed by the Steering Committee for COVID-19 Food Support Program.
Secondly, the IMF demanded that the excise tax on fuel of 30 cents per gallon to be made effective immediately. “This measure is programmed to yield $28 million ($3 million before end-FY2020; $25 million in FY2021). Due to the declining world price of oil, this tax is not expected to result in an increase in the pump price of fuel,” the IMF said.