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Government of Sierra Leone did not spend $24 per litre on fuel subsidy

HomeAYV NewsGovernment of Sierra Leone did not spend $24 per litre on fuel...

Government of Sierra Leone did not spend $24 per litre on fuel subsidy


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The statements made on the BBC on 15 November 2016, by the minister of finance – Mr. Momodu Kargbo, clearly indicate government’s refusal to accept full responsibility for the financial difficulties it now faces, with dire consequences for the people of Sierra Leone.

And whatever your opinion of his handling of the economy, minister Kargbo owes it to the country to ensure that as a public servant, he approaches his duties with diligence and honesty.

Like many Sierra Leoneans who listened to the minister speaking on the BBC Focus on Africa programme, I am of the view that, the ‘government whitewashing’ role he was playing on the airwaves, should have been assigned to the information minister who has little credibility left to lose.

For the minister to tell the world that the Koroma government has been subsidizing the pump price of petrol to the tune of $24 per litre (equivalent to $108 per gallon), is at best an arithmetical error – and worse – inconceivably unscrupulous.

If minister Kargbo’s assertion was true, then the removal of the subsidy, would have taken the pump price to at least, an unaffordable Le180,000 per litre.

There is little doubt that this incorrect statement – whether deliberate or not, has severely eroded the credibility of the finance minister. Such elementary error does not befit a man on whose shoulders the nation’s budget rests.

By removing the subsidy on fuel despite massive political ramifications, may suggest that the ruling APC is yielding under the exogenous pressure of the International Monetary Fund (IMF).

But for the minister to attempt to justify the lifting of the subsidy, by describing the action as a ‘timely opportunity’ for the APC government to overturn the gains its citizens have enjoyed when the going was good, is disingenuous.

What minister Kargbo did not also say is that, the current economic collapse has been caused by the government’s uncontrolled spending, despite numerous calls by the international community and concerned Sierra Leoneans to curb their reckless spending habits.

Now the ‘chicken has come to roost’ in Sierra Leone, at a time when many countries in the world are containing inflationary pressures, by taking full advantage of the drop in global oil prices.

The finance minister was rather complacent during the BBC interview, stating that Sierra Leone has a revenue problem. I do not subscribe to the argument that our revenues have significantly fallen, despite the NRA registering huge increase in domestic revenue collection since 2011.

The slower GDP growth started during the Ebola years of 2014/15, which also saw the closure of the two largest iron ore mines – African Minerals and London Mining. But the NRA’s annual tax collection forecast clearly indicates positive trend for government revenues; assuming we can believe the NRA figures.

Therefore, the APC government’s financial management strategy of finding new ways of raising revenue from its tax–fatigued citizens, in order to finance its frivolous spending spree, is ridiculous.

By its own austerity measures – targeting a series of selective expenditures, the government has clearly indicated the cause of the economic problem facing the country: the lack of disciplined expenditure control.

The ineffectiveness of the austerity measures, in part due to government’s reluctance to eliminate whole expenditure line items (even for calling cards), is the reason it has removed the fuel subsidy – ‘robbing Peter to pay Paul’.

This decision to milk its citizens was sugar coated by the finance minister as a necessary ‘sacrifice’ after the government’s recent payment of salary increases to public sector workers.

Why should the government stoop so low, by referring to the slight welfare improvement experienced by the people as a ‘gesture’?

But the most baffling aspect of this fuel subsidy saga is the phony arithmetic that the minister and his government have been using to explain their actions.

The figures quoted by the government in their initial subsidy withdrawal press release just could not add up, until a subsequent press release – in response to pressures from the public, made clear the distinction between direct and indirect subsidies.

But the indirect subsidy, defined as ‘forgone taxes’ is less clear. One would have thought that withdrawal of this category of subsidy simply implies that the government will henceforth be collecting taxes from the petroleum companies, to further boost its revenue base.

The expectation therefore is for those companies to bear the tax burden. However, the nature of the pump price increases, suggest that the entire incidence of the tax or indirect portion of subsidy, will be borne by the poor ordinary citizens.

It is grossly unfair that government would protect the profitability of the petroleum companies at the expense of the welfare of its citizens; or does this lend credence to the accusation that the very politicians behind the subsidy policy own some of these companies?

It was also not helpful that the Minister would go on to vehemently deny any show of force by the police to intimidate would be demonstrators, notwithstanding the picture and video evidence on social media.

My advice to the finance minister is to avoid using his ‘credibility’ to defend dubious APC positions, since there are many out there who look up to him as a role model.

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