The prime minister has presented a USD 8.3 billion budget for the year
2015. So, I have decided to go on the Central Bank (BCC) website to look for the
2014 budget to see if the government was as crazy as commercial banks’
shareholders that always want 30% growth year-on-year (Y-O-Y).
For 2014, the website has mentionned a CDF 7.4 trillion budget which is
more or less USD 8 billion. Therefore, the increase is a meagre 3% and we can
fairly say that they are not very ambitious.
However, when we look at the 2014 budget rate
of realization as of September 12th, you will realize that they have only
achieved 36% of their budget so far. On a run rate, they will reach 54% by the
end of the year which represents approximately USD 4.4 billion.
Therefore,
at this trend, the budget Y-O-Y increase is 91% !!! I know that it is
important in life to be optimistic but remaining realistic is of essence here.
I haven’t seen the details of this budget yet but I am curious to see how they
will generated this level of revenues. I hope it won't be through fiscal harassment...
Regarding
the expenditures, the internal debt is, as always, the last priority of the
Congolese authorities. Indeed, according to the BCC’s figures, as of September,
they have only paid 1.38% of what was planned in their 2014 budget !!!
This situation has a significant impact on the local suppliers and their
cash-flow and on the economy overall…
To be continued…
3 comments:
Great observation!
I think it shows the lack of accountability in the Government's budget planning and implementation.
One, the budget monitoring department should have waived the red flag once it realized that the previsions were not going to be met. We can guess that by the time the 2015 budget was being elaborated (second trimester), the Government was only about 25-30% of realization when it should have been at around 60-75%. Therefore, the current budget proposal should have been reduced to meet the realistic expactations which should be at around 5 billions (USD) if we're optimistic.
Two, this is probably due to the lack of coordination between the Ministry of Finance and the Ministry of Budget. The Ministry of Budget no longer participates in the weekly economic strategic meeting (political bickering between Prime Minister & Deputy Prime Minister, Budget). Consequence is that the Government economic team is unable to analyse resource fluctuations and budget efficiency.
Finally, coming to the Parliament with a budget reduced by more than 45-50% would have been a major political blow to the Prime Minister who portrays himself as a macroeconomic Policy Tycoon.
Regarding the internal debt, it is definately the Government's achilles hill. If it pays it even up to 40%, it will reveal the weeknesses in the macroeconopic policies since major fluctuations in inflation would be felt HARD. But it is a necessity if the Government wants to enlarge the tax base and have resource increases.
As usual, nothing realistic. I have the feeling that the budget exercise has become more of a numbers' competition than a real planning of expenses and revenues. Which new channels have been identified to realize this "miracle"?
As you said, to be continued...
Hi
Its not really surprising when you know that the 2013 Budget's execution rate was 59% as per the Central Bank data. Yet, they increased the Budget from US $ 6.9bn to US $ 8bn the following year. They are pretty much repeating the same process for 2015. Maybe they expect to finally receive the external revenue they keep on putting in the budget but that never materializes ( approx 26% of the Budget, US $ 2bn ). And yes Hervé, I think its fair to expect some kind of Tax harassment next year...Business as usual :-).
Nina M.
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