Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698837058680.pdf (Sierra Leone)
PARLIAMENT OF THE REPUBLIC OF SIERRA LEONE GOVERNMENT BUDGET AND STATEMENT OF ECONOMIC AND FINANCIAL POLICIES FOR THE FINANCIAL YEAR, 2013 ____ (HANSARD) ____________________ OFFICIAL HANSARD REPORT FIRST SESSION-FIRST MEETING FRIDAY, 21st DECEMBER, 2012 SESSION – 2012/2013 1 PARLIAMENT OF THE REPUBLIC OF SIERRA LEONE Government Budget and Statement of Economic and Financial Policies for the Financial year, 2013 ____ (HANSARD) ______________ OFFICIAL HANSARD REPORT VOLUME: I NUMBER: 5 First Meeting of the First Session of the Fourth Parliament Of the Second Republic of Sierra Leone.
Proceedings of the Sitting of the House Held on Friday, 21st December, 2012.

_____________________________________________ C O N T E N T S I. PRAYERS II.

BILL THE APPROPRIATION ACT, 2013 2 Being an Act to authorize expenditure from the Consolidated Fund for the Services of Sierra Leone for the year 2013.

INTRODUCTION AND FIRST READING THE MINISTER OF FINANCE AND ECONOMIIC DEVELOPMENT III.
GOVERNMENT MOTION THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT 3 THE CHAMBER OF PARLIAMENT OF THE REPUBLIC OF SIERRA LEONE OFFICIAL HANSARD REPORT OF THE PROCEEDINGS OF THE HOUSE ___________________________________________________________ FIRST SESSION-FIRST MEETING OF THE FOURTH PARLIAMENT OF THE SECOND REPUBLIC _____________________________ Thursday, 21st December, 2012.

The House met at 10:00 a.m. in Parliament Building, Tower Hill, Freetown.

I. PRAYERS [The Clerk of Parliament, Hon.


Ibrahim Sulaiman Sesay, Read the Prayers].

[The Speaker, Hon.

Justice Abel Nathaniel Bankole Stronge, in the Chair].

The House was called to Order.

II.

BILL THE APPROPRIATION ACT, 2013 4 Being an Act to authorize expenditure from the Consolidated Fund for the Services of Sierra Leone for the year 2013.

INTRODUCTION AND FIRST READING THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT DR KAIFALA MARAH (Minister of Finance and Economic Development): I.
INTRODUCTION: Mr Speaker, I rise to move that the Bill entitled “An Act to provide for the services for Sierra Leone for the Financial Year (FY), 2013” be read the first time.

2.
2.

Mr Speaker, Honourable members of Parliament, in his Inaugural Address of the State Opening of Parliament on Friday 14th December, 2012, His Excellency the President, Dr Ernest Bai Koroma catalogued the achievements under the Agenda for Change (2008–2012) and outlined the broad objectives of the successor Agenda for Prosperity (2013-2017).
The Agenda for Prosperity will build on the gains made under the Agenda for Change, address the remaining challenges and introduce new programmes and policies to bring prosperity to all Sierra Leoneans in the years to come.

The 2013 Budget will therefore, describe, indicative activities, and programmes in the Agenda for Prosperity- the country‟s five-year plan and poverty reduction Strategy Paper, that charts the way forward to 2017.

3.
3.

The Agenda for Prosperity has eight core pillars, which are inter-related, complementary and mutually reinforcing.

These pillars are economic, diversification, managing natural resources, human development, international competitiveness, employment and labour, social protection, governance and gender equality and women‟s empowerment.

4.

Given the planned strategies and objectives, the success of the Agenda for prosperity will ultimately be the responsibility of Government.
However, without the support of Civil Society, the Youths, the Private Sector and the International 5 Community, success will be difficult to attain.

Therefore, we are calling for commitment and collaboration from all stakeholders in our country‟s affairs and to work relentlessly towards the vision laid out for the Agenda for Prosperity.

5.

Hence, this Budget marks the beginning of our journey towards becoming a middle- income country and the march to prosperity.

6.
6.

Mr Speaker, Honourable Members, let me at this point review developments in the world and regional economies and their implications for our economy.

II.

GLOBAL ECONOMIC OUTLOOK AND REGIONAL DEVELOPMENT 7.

Mr Speaker, Honourable Members, the Global Economy is yet to fully recover from the multiple crises that have been slowing world-wide economic activities since 2008.
Un-resolved structural issues in advance economies such as financial markets hesitancy and high debt and un-employment levels, have led sluggish output growth in those economies and also to weaver demand for imports from the rest of the world.
In addition, major emerging economies including China and India are now affected by the consequences of reduced global demand with knock-on effects for other developing economies facing structural issues such as small domestic markets and over reliance on commodities whose prices are often volatile.

8.
8.

Despite expectations that global economic growth will reach 2.5 and 3.5 percent in 2012, there are a number of downside risks which, if not tackle effectively, could derail any attempts at rapid global economic recovery.
Among these risks are the protracted Euro Zone Sovereign Debt Crisis, the possibility of prolonged financial market and stability, the increasing probability that China‟s economy will slow further, and the persistent challenges of raising employment levels throughout advance emerging, and developing countries alike.
Nevertheless, we remain optimist that these risks will be adequately dealt with by policy makers and that global economic growth in 2013 will be higher than that of 2012, allowing Sierra Leone to capitalize on renewed economic optimism.

9.

In Sub-Saharan Africa, the outlook is brighter.

The economic growth of roughly 5 percent was projected for the region in 2012 and a slightly higher figure is 6 forecasted for 2013.
Expanding domestic markets the gradual shifting on formal activity into the formal sector are manageable inflation levels, are just a few of the reasons for strong regional performance.

10.

Mr Speaker, for us, we will of course ensure that our domestic macro-economic environment continues to be resilient in the face of any down-size developments globally.
Through pursing economic diversification, encouraging foreign direct investment and by continuing to expand social safety mechanisms, our country would not be adversely affected by any further global slow-down, and indeed, is primed to follow a strong growth trajectory.

11.

Mr Speaker, Honourable Members, I will now review the performance of our economy in 2012.

III.

MACRO-ECONOMIC AND BUDGETARY PERFORMANCE IN 2012 Macro Economy Performance in FY 2012 12.
Mr Speaker, economic activities in the country continue to expand rapidly as foreign direct investment inflows increase and public investment infrastructure is scaled up.

Real GDP growth; which was six percent in 2011, is estimated to have accelerated to 21.3 percent in 2012.

More than three times the average for sub- Saharan Africa.
Economic growth in 2012 is driven mainly by the expanding mining sector but also supported by increased activities in agriculture, construction, manufacturing and the services sector.

Excluding Iron ore, domestic output will increase by 6.3 percent in real terms.

13.

Consumer prices, as measured by inflation, which were high at the beginning of the year, have been declining consistently.

This is largely on account of the stability in the exchange rate.
The moderation in the growth of money supply, increased availability of locally produced food items in the market as well as Government‟s policy interventions to ensure domestic pump prices of petroleum products and our staple food rice remains unchanged.

Inflation fell to 11.3 percent in October 2012 from 16.7 percent in December 2011.

7 14.
7 14.

The external sector of the economy also experienced a significant boosting in 2012 following the commencement of iron ore mining and the improved market conditions for Rutile.

Total value of official exports for the first half of the year more than doubled to 405 million United States Dollars compared to 174 million United States Dollars for the corresponding period of 2011.
Of these total mineral exports accounted for 354 million United States Dollars of which Iron Ore Export amounted to 182 million United States Dollars.

Rutile 87.5 million United States Dollars, Diamonds 69.4 million United States Dollars.

Agricultural exports grew by 12.3 percent to 16.2 million United States Dollars over the same period.

15.

Import levels stabilised in 2012 following the huge increase in 2011 to support new mining activities.
Data for the first half of the year showed that total import value grew by 3.6 percent to 757 United States million Dollars.

The value of machinery and transport equipment accounting for twenty percent of total import declined from 282 million United States in the first half of 2011 to 200 million United States Dollars in the first half of 2012.

The value of petroleum import amounted to 153 million United States Dollars while rice import amounted to 57 million United States Dollars.

16.
16.

As a result of the significant increase in exports and the moderate increase in imports the trade deficit narrowed to 352 million United States Dollars for the first half of 2012 compared to 556 million United States for the same period in 2011.

17.

The exchange rate remained stable during the year.


The higher foreign exchange inflows from export earnings and foreign direct investment combined with a tight monetary policy stance resulted in appreciation of the exchange rate against international currencies.

The official exchange rate to the US Dollar appreciated by almost one percent in October 2012 relative to December, 2011.
Gross International Reserves increased to 417.7 million United States Dollars from 379.8 million United States Dollars at the end of December 2011.

18.

The stock of disbursed and outstanding external debt stood at 911.9 million United States Dollars as at the end of June, 2012, compared to the 848.7 million United States Dollars as at the end of June 2011.
The slight increase was due to new 8 borrowings to fund capital projects in roads, energy, water and agriculture consistent with the Government‟s Agenda for Change.

Despite this, Government is currently meeting debt service obligations to all creditors.

Budgetary Performance – Financial Year 2012 19.


Mr Speaker, Honourable Members, Budgetary Execution in 2012 was enhanced by improved performance in domestic revenues including Income Taxes from the Mining Sector and signature bonuses from petroleum exploration activities.

Even though the difficult external environment weakened the performance of some revenue streams including royalties on iron ore and road user charges, prudent expenditure management resulted in poor public finances.

Revenues 20.
Revenues 20.

Total revenue and grant amounted to 1.5 trillion Leones for the first three quarters of the year and is projected to reach Le 2.5 trillion by the end of the year.

Domestic revenue collected for the first three quarters of 2012 amounted to 1.3 trillion and is estimated to reach 1.9 trillion which is 13 percent of GDP.

By the end of the year compared to original target of 1.6 trillion Leones.

21.
21.

Income taxes amounted to 596.4 billion Leones in the first three quarters of the year and is estimated to reach 780.9 billion which 5.2 percent of GDP.

Total collections from goods and services amounted to 314.4 billion for the first three quarters of the year and projected to yield 434.1 billion which is 2.9 percent of GDP.

Customs and Excise collection amounted to 229.8 billion and is likely to reach 337.3 billion which is (2.3 percent of GDP) at the end of 2012.

22.
22.

Mining royalties and Licenses amounted to 92.7 billion in the first three quarters of this year.

Royalties on Iron Ore is estimated at 66 billion by end of 2012 compared to the original target of 178.8 billion due to production difficulties and weak market conditions.

23.

Fees, licenses and other charges collected by other Government departments amounted to 44 billion during the first three quarters in 2012.

These are expected 9 to reach 67.6 billion by the end of the year.
Road User charges and Vehicle Licenses amounted to Le9.1 billion during the first three quarters of 2012.

24.

External grants from our development partners amounted to Le248.6 billion in the first nine months of the year.

Of this, our budget support partners disbursed Le78.3 billion and the Global Fund, Le12 billion to support salaries for health workers.

External grants for the implementation of projects amounted to Le112.3 billion as at September 2012.

Expenditures 25.
Expenditures 25.

Total expenditure and net lending for the first three quarters of 2012 amounted to Le2.1 trillion and is estimated to reach Le2.7 trillion by the end of the year compared to the budgeted amount of Le2.8 trillion (24.2 percent of GDP).

Of this, recurrent expenditures amounted to Le1.5 trillion and is projected to reach Le1.9 trillion by the end of the year compared to the original budget of Le1.8 trillion.

26.
26.

For recurrent expenditure, the government wage bill amounted to Le687.8 billion by end September 2012 and is projected to rise to Le898.6 billion at the end of the year compared to Le681.3 billion in 2011.

The higher wage bill is explained by (i) the full year effect of the multi-year pay reform, which started in the fourth quarter of 2011, (ii) payment of benefits to ex-military officers wounded in action, and (iii) partial payment of gratuities to outgoing Members of Parliament.

27.
27.

Total interest payments on public debt for the first three quarters of the year amounted to Le191.9 billion.

Interest payments are projected to reach Le287.9 billion by year end.

28.

Non-Salary, non-interest recurrent expenditure amounted to Le619.7 billion as at end September 2012 and is estimated to reach Le729.9 billion at year end.

Transfers to Local Councils amounted to Le43.4 billion as at end September 2012 and are estimated to reach Le74 billion by year end.

29.
29.

Total capital expenditure amounted to Le615.6 billion as at end September 2012.

Capital expenditure funded by foreign loans and grants amounted to Le232.3 billion while that funded by foreign loans and grants amounted to Le232.3 billion 10 while that funded from domestic sources amounted to Le383.1 billion.

Total capital expenditures is expected to reach Le755.9 billion (5.1 percent of GDP) by end December 2012.

Sectoral Spending in 2012 30.


Mr Speaker, Honourable Members, total expenditure performance by key sectors during 2012 has been mixed.

In the Agriculture Sector, total expenditure for the first three quarters was Le25.9 billion compared to the yearly allocation of Le22.9 billion in the original budget.
Of this, expenditure on food security activities amounted to 22.8 billion and includes the procurement of about 35,000 bags of fertilizers, 15,000 bushels of seed rice, and 5,000 bushels of groundnut seeds.

31.

Also, under food security activities, Government supported the training of over 1,000 Farmer Based Organizations and established and equipped over 500 Agriculture Business Centres (ABCs) nationwide.

Agricultural extension services expended Le3.1 billion.
Key expenditures relating to this activity are: supporting the rehabilitation and development of 18,000 hectares of inland valley swamps for rehabilitation and development of 18,000 hectares of inland valley swamps for improved farming practices and multiple cropping for higher productivity, supporting the rehabilitation and spot improvement on 4,000 kilometres of feeder roads to link production areas to processing market centres; and establishing and supporting 66 Financial Services Associations and 32 Community Banks to enhance the livelihood of rural people, especially farmers‟ access to financial resources and services.
In addition, Le1.8 billion was paid as government‟s counterpart contribution to various agricultural projects.

32.

An amount of Le234.4 billion was paid for road construction activities nationwide compared to Le158.8 billion in the original budget.

The project for the rehabilitation of streets in Freetown and district headquarter towns received a total of Le117.2 billion.
Total expenditure on the widening of Lumley Roundabout to Hill cut Road Junction stands at Le36.8 billion and that for the Lumley-Tokeh Road at Le31 billion.

11 33.

On Transport and Aviation, total expenditure is estimated at Le11.3 billion compared to the original budget of Le11.9 billion.
Of this, Le1.2 billion was spent on procurement of vehicles; Le8.6 billion for the modernization and expansion of the Lungi International Airport; and Le1.3 billion for the completion of phase one of the Airport Transfer Project.

34.

In the Energy and Water Sector, Le103.2 billion was spent on energy related projects compared to Le75.5 in the original budget.
This includes: Solar Street Lights to be installed throughout the country, the rehabilitation of the Bo/Kenema Power Services; procurement and installation of thermal plants for Lungi and Koidu, the rehabilitation of Yonibana/Mile 91, Moyamba, Port Loko, Pujehun, Magburaka, Lunsar and Sumaila Town water supply systems.

35.

Total non-salary expenditure on the Education Sector is estimated at Le133.9 billion by end of year compared to Le84.4 billion in the original budget.
Of this, Le105.8 billion is grants and Technology to University of Sierra Leone, Njala University, Milton Margai College of Education and Technology and other higher educational institutions, in lieu of the increase in tuition fees, and support for improved conditions of service for junior, intermediate and senior staff; Le4 billion for examination fees to WAEC for the WASCE; Le9.3 billion as Grant-in-aid to boarding schools; Le732 million to support the Girl Child programme; andLe775 million to Technical/Vocational education.
In addition, grants for devolved functions in the education sector are estimated at Le30.5 billion, of which school fees subsidies, text books and teaching and learning materials for Government and Government Assisted Schools amounted to Le16.2 billion; and Le5.8 billion as examination fees to WAEC for NPSE and BECE respectively.

36.

In the Youth and Sports Sector, total expenditure is estimated at Le7.4 billion compared to Le3.9 billion in the original budget.
Le5.2 billion was spent on international sports competition and Le645 million for the Youth Commission.

37.

In the Health sector, total expenditure is estimated at Le50.9 billion compared to Le32.7 billion in the original budget.
The over expenditure of Le18.2 billion was largely as a result of extra budgetary payments to various programmes and 12 institutions including Le3.2 billion on overseas medical treatment; Le5.7 billion on procurement of drugs and medical supplies; Le2.2 billion on Measles campaign under the Expanded Programme on Immunization (EPI); Le251 million for the installation of a dialysis machine at Connaught Hospital.
; Le978 million as Government contribution to the Cuban Medical Brigade; Le1.5 billion to GAVI; Le1.9 billion to the Emergency Hospital at Goderich; Le2 billion to the Nigerian Volunteer medical doctors; and Le252 million for the functioning of the tele-medicine unit at Connaught Hospital.

38.

Grants for devolved functions in the health sector are estimated at 30.5 billion.
Of this, support to tertiary health care services amounted to Le15.3 billion; secondary health services, Le7.8 billion and district peripheral health care services, Le7.5 billion.

39.

The Security sector expenditure is estimated at Le128.4 billion compared to the original budget of Le110.9 billion.
Of this, the Ministry of Defence is estimated to have spent Le60.4 billion including Le24.1 billion for rice supplies to military personnel; Le45.9 billion by the Police including Le5.2 billion for rice supplies to Police Personnel and Le5.1 billion for uniforms and protective clothing; Le13.9 billion by Prisons, including Le10.7 billion for diet and drugs; Le2.2 billion by the National Fire Authority, including Le1.9 billion for Fire Engines;Le2.8 billion by the office of National Security, and Le2 billion by the Immigration Department.
40.

The expenditure for the Ministry of Foreign Affairs and International Cooperation is estimated to reach Le20.7 billion by the end of year compared to the original budget of Le16.4 billion.

This overrun was as a result of postings and recall of officials from our overseas missions costing about Le1.9 billion and the rehabilitation of our mission in Monrovia amounting to Le3.1 billion.

Budget Deficit and Financing 41.


Mr Speaker, the overall budget deficit, excluding grants, is estimated at Le733.7 billion (4.9 percent of GDP).

Including grants, the overall budget deficit is estimated at Le181.5 billion (1.2 percent of GDP).

13 42.

The overall budget deficit for 2012 is financed largely by external sources in the form of project and programme loans amounting to Le253.3 billion (1.7 percent of GDP); Domestic financing of the deficit is estimated at Le166.1 billion (1.1 percent of GDP).
Of this bank financing is estimated at Le132.8 billion, non-bank financing Le33.3 billion and privatization receipts, Le22.5 billion.

1V POLICY REFORMS FOR A DYNAMIC ECONOMY 43.

Mr Speaker, Honourable Members, sustainable economic growth, underpinned by increased domestic and foreign investment as conditions for creating new jobs and a better life for the citizenry, is the main objective of the Government for the next five years.
In this regard, Government will pursue policies and reforms not only to ensure a stable macroeconomic environment but to also enhance the efficiency of public institutions to deliver quality services.

To achieve this, Government will deepen and broaden ongoing reforms and continue to improve the business climate and promote investment; enhance transparency and accountability in the use of public funds; and strengthen good governance.

The policies and measures to achieve this are described in detail below.
Public Financial Management 44.

Mr Speaker, Honourable Members, Government continues to strengthen public financial management reforms through the implementation of the multi donor funded Integrated Public Financial Management Reform Project (IPFMRP) which has further consolidated reforms initiated in previous years.
In partnership with our development partners, we are now developing a medium term strategy for public and financial management reforms to ensure that gains already made are sustained and improved upon.

45.

In continuation of our effort towards deepening the implementation of the Integrated Financial Management Information System (IFMIS), Government will roll out the IFMIS to four additional Ministries, Departments and Agencies (MDAs).
These are: the Office of the Vice-President, the Ministry of Energy and Water Resources, the Ministry of Lands, Housing and the Environment and the Human Resource Management Office during the ensuing financial year.

14 46.

Mr Speaker, as part of the ongoing PFM reforms, capacity building across MDAs and local councils has been reinforced to consolidate gains made over the years.
I am pleased to inform this Honorable House that, in partnership with the University of Sierra Leone, Institute of Public Administration and Management (IPAM).

We have commenced the training of 300 public officials engaged in Public Procurement, Internal Audit, human Resource Management and Administration across MDAs and Local Councils.

This training will be extended to other disciplines during the course of 2013.

47.
47.

During the second half of 2012, we also extended our capacity building drive to Non-State Actors (NSAs) to properly equip them to effectively undertake monitoring responsibilities.

Over 175 NSA organizations from all regions of the country benefited from this training.

My Ministry also launched the demand driven component of the IPFMRP through which grants are provided to qualifying NSA organizations for the monitoring of public financial management in MDAs and Local Councils 48.
During 2012, efforts were also directed towards deepening the Medium term Expenditure Framework (MTEF) process and strengthening budget management in MDAs.

To this end, we adopted the Revised Medium Term Expenditure Framework (MTEF) guidelines.

In 2013, Government will publish MTEF guidelines for Local Councils in order to strengthen strategic planning and budget management at the local level.

49.
49.

Mr Speaker, you would recall that my predecessor informed this Honourable House that Government will publish a „Citizen‟s Budget‟ for the first time in Sierra Leone.

I am proud to inform you that the first „Citizen‟s Budget‟ was published this year and disseminated nationwide.

We shall on a yearly basis publish a „Citizen‟s Budget‟ in a bid to inform the wider segments of our population on the use of public resources.

50.
50.

During the course of this year, Sierra Leone participated in the International Open Budget Initiative (OBI) as further testament of Government‟s determination to ensure the transparency and accountability of our budget process.

The results of this exercise will be published during the first quarter of 2013.

15 Financial Sector Reforms 51.


Mr Speaker, Honourable Members, the financial sector continues to expand with increases in commercial bank branches, establishment of Financial Services Associations as well as microfinance institutions to facilitate access to finance for small and medium-sized enterprises, especially in rural areas.

52.
52.

During 2012, the Bank of Sierra Leone implemented further reforms to bolster the soundness of the financial sector consistent with the Financial Sector Development Programme (FSDP).
To strengthen supervision and regulation of the financial sector, the Bank of Sierra Leone adopted International Financial Reporting standards for local banks in accordance with the Banking Act 2011; carried out joint examination of Nigerian-owned subsidiaries with the Central Bank of Nigeria; strengthened the operations of the Credit Reference Bureau; and implemented the Anti-Money Laundering and Counterfeiting against Terrorism Act.

53.
53.

To facilitate financial inclusion, the Bank has encouraged the promotion of financial literacy campaigns and mobile telephone banking, ATMs, money transfers, linkage banking and the downscaling of some commercial bank activities into microfinance, thus introducing new and desirable products in the financial sector and greater competition.
In 2o13, the Bank of Sierra Leone will continue to implement reforms in macro-finance and rural credit delivery outreach; strengthen the Financial Intelligence Unit; and build capacity in the Bank and the commercial banks.

54.

Mr Speaker, Honourable Members, the Bank of Sierra Leone continues to implement the Payment Systems Modernization Project.
This is expected to „go live‟ by end 2013 and the following deliverables will be achieved: (i)Real Time Gross Settlement System whereby financial intermediaries can settle interbank transfers continuously and in real time for their own account as well as the account of their customers.

(ii)Automated cheques processing and automated clearing house operations; (iii) Purchase and sale of government securities in real time; and 16 Private Sector Development 55.
Mr Speaker, Honourable Members, Government recognizes that transformation is contingent on the active participation of the private sector.

A strong partnership with the private sector is imperative for job creation, poverty reduction and accelerated growth.

While Government will continue to facilitate the enabling environment for the private sector to thrive, it is incumbent on the private sector to undertake investment ventures within the framework of Government policies.

56.
56.

Mr Speaker, Government has removed extensive trade barriers that have for long stalled business initiatives.

This is aimed at encouraging competition and investment in value-addition economic ventures.

Key investment reforms have also been pursued aiming at streamlining doing business procedures thereby reducing time, cost and mitigating risks in the business environment.

Numerous legislations have been passed in this respect by this Honourable House aimed at building investors confidence.
We have also packaged attractive incentives for investors to promote foreign direct investment.

58.

In similar vein, Government pursued policies and measures for growth of indigenous entrepreneurship in Sierra Leone.

We believe that the ordinary Sierra Leonean has much to deliver if given the necessary policy protection and support to move our country forward.
In this regard, we have developed the Competition and Consumer Protection Policy, the Intellectual Property Rights and the Local Content Policy, for economic growth and participation of local economic agents in enterprise development in our country.

59.

Government has set up a Public Private Partnership (PPP) Unit to manage the inflow of unsolicited projects and promote PPP solutions to address the infrastructure and public services bottle neck in the country.
The PPP unit will serve two key functions: (i) Director transactional support to centrally manage the backlog of unsolicited bids received by various Line Ministries, and establishes a clear protocol for dealing with such proposals; 17 (ii) Create an enabling environment to promote PPP solutions while improving the broader environment to consummate such transactions.

60.
60.

Looking ahead, Government will continue to implement reforms to further improve the business environment; establish additional Export Processing Zones; to attract Foreign Director Investment so as to create job opportunities for Sierra Leoneans, especially our youths.

With assistance from development partners, Government will undertake a Diagnostic Trade Integration Study in 2013 to assess the competitiveness of sectors that are engaged in or have the potential to engage in international trade.
Improving Governance 61.

Mr Speaker, Honourable Members, Government will continue to support good governance, the rule of law, human rights, peace and security as these are essential pre-requisites for attaining and sustaining socio-economic growth.

Since 2007, Government, in collaboration with our development partners, worked hard to strengthen institutions and processes to respond more positively to the needs of ordinary citizens.

62.
62.

Mr Speaker, within the governance spectrum, Government committed itself to strengthening and building Parliamentary capacity for passage of bills as well as the Executive for the formulation and presentation of bills; providing sustainable financial and technical support to the Political Parties Registration Commission (PPRC); and increased budgetary allocation to the Anti -Corruption Commission for the fight against corruption.

63.
63.

Mr Speaker, as a result of these measures, our country has made, inter alia, significant strides in promoting integrity and accountability in service delivery.

In particular, the recently published Global Integrity Scorecard showed that among the lower and middle income countries in the world, Sierra Leone has achieved important anti-corruption improvements.

64.
64.

Government supports the Extractive Industries Transparency Initiative (EITI), which aims to promote transparency and accountability in the extractive sector 18 through the reconciliation and publication of revenues paid by mining and petroleum companies and is working towards ensuring compliance with the EITI requirements.
As part of these efforts, the Sierra Leone EITI Secretariat conducted a second reconciliation exercise in the mining, oil and gas sectors where companies and Government entities disclosed and reconciled mining revenues for the period 2008 – 2010.

To instill transparency and accountability in sharing the gains from our mineral wealth, the office of the Auditor-General has included in its work plan, the auditing of all Government institutions involved in the collection of revenues from the extractive sector.
Government is also in the process of drafting an EITI legislation which will soon be submitted to this Honourable House for enactment.

65.

Mr Speaker, Honourable Members, the public service continues to play an important role in the attainment of our national development goals and aspirations.

In 2012, Government undertook capacity review processes to restructure and align institutional roles, set targets for institutions and individuals and monitor service delivery.

66.
66.

Mr Speaker, Honourable Members, the public sector faces enormous challenges in attracting, motivating and retaining competent skilled men and women in the public service.

Going forward and with support from the World Bank, Government is implementing the Pay and Performance Project that consists of three interrelated components namely: (i) pay reform; (ii) recruitment and staffing; and (iii) performance management and accountability.
To ensure the implementation monitoring and sustainability of this programme, a collaborative team comprising the leadership of the Sierra Leone Civil Service, Office of the President, the Office of Chief of Staff and the Ministry of Finance and Economic Development has been established.

Fiscal Decentralization 67.


Mr Speaker, Honourable Members, Government will continue to strengthen the decentralization process in order to sustain and deepen the gains already made in the delivery of services in the rural areas.

For fiscal decentralization, the system of allocating grants to councils is being reviewed with a view to making it simpler, 19 transparent and more equitable.
Under the revised grants system, resources will be allocated on the basis of the number of beneficiaries rather than the number of service delivery facilities.

As part of the review process, Local Councils are now provided with unconditional block grant which they can allocate to sectors or functions for which they are better placed to determine local priorities.

68.

For 2013, Government will provide funds to Local Councils to complete on-going projects.
Similarly, Government will continue to fund health and education, infrastructure in all Local Councils in the medium term.

However, from 2014 and beyond, Local Councils would be required to provide 60 percent of the project cost for all economic infrastructure projects they wish to undertake.

Thus, Local Councils are urged to intensify the collection of revenues within their localities.
In this regard, Government will continue to work with development partners to support Local Councils in their revenue mobilization drive.

Management of Natural Resource Revenues 69.


Mr Speaker, Honourable Members, the anticipated boom in iron ore production alongside increased production of rutile, bauxite, diamonds, gold and ongoing oil and gas exploration activities calls for an appropriate fiscal regime to ensure that revenue from these natural resources are maximized to create lasting benefits for current and future generations.
In this regard, since July 2011, the country has benefitted from technical assistance provided by the IMF Fiscal Affairs Department under the “Topical Trust Fund for Managing Natural Resources‟ aimed at establishing a stable and predictable fiscal regime for extractive industries, including mining and petroleum.

70.
70.

With this assistance, a consolidated and comprehensive Extractive Industries Revenue Bill has been drafted to manage the country‟s mining and petroleum fiscal regimes and other related matters.

The draft bill spells out all the taxes, levies and charges that are applicable to mining and petroleum activities.

This implies that the fiscal regime defined in the draft Bill will apply to all future mining and petroleum agreements.
Among key reforms proposed in the draft Bill is the introduction of a Mining Resource Rent Tax and a Petroleum Resource Rent Tax.

The objective is to 20 enable Government drive additional tax revenues from these activities in the event profits are above projections.

Transformation Development Fund 71.

Government is also working with our development partners for the establishment of a Transformation Fund, where slice of all mineral and petroleum tax and non-tax revenues will be deposited.
The Transformation Fund will be a part of the Consolidated Revenue Fund so that all revenues flow through the Government Budget.

The objective is to ensure that revenues from our natural resources are used prudently and in a transparent manner.

72.
72.

Mr Speaker, the Transformation Fund will serve three complementary purposes; (i) finance the implementation of transformative capital projects; (ii) serve as a stabilization fund in case of shortfall in non-extractive revenues and (iii) as a savings fund for surplus revenues.
Furthermore, Government, with support from the IMF, is also working on a fiscal rule to define the proportion of revenues that will be used in any given year in such way that Government expenditures remain stable, sustainable and predictable over time.

Public Investment Management 73.


Mr Speaker, Honourable Members, to improve the efficiency and effectiveness of capital spending, a new public investment management process is being established commencing with the presentation in this Budget of the first Public Investment Programme (PIP) for 2013-2015.

The PIP provides a database of investment projects, including those that are currently being implemented and those for future implementation.
It is a rolling 3 year program undertaken annually and published with the annual Appropriation Acts.

The first year set of projects are those approved in this budget, either as continuing projects or as new projects.

74.

The outer-year projects will comprise fiscal resources assigned to existing projects that are presented in the forward estimates and new projects that have been approved through a quality assurance process which may or may not have assigned funding.
In this way the PIP can be used in discussions with development 21 partners and private partners/financers to provide information on the government‟s strategic intentions and priorities.

75.

In this regard, each MDA will develop its medium-term strategic plan and policy priorities from the National Strategic Plan – the Agenda for Prosperity to ensure consistency with the attainment of Government objectives over the medium term.
It is from MDAs strategies and priorities that projects and programs will be developed for inclusion in the PIP and subsequently in the MTEF and annual budget.

76.

From 2014, no new investment project can be incorporated in the Budget unless it has been approved for inclusion in the PIP and the new projects will have to undergo a quality assurance process.
This process involves: (i) the submission by MDAs early in the fiscal year of preliminary business case proposals, justified in terms of National/MDA strategic goals and assessment of sector benefits, and showing indicative costs, risk profile, procurement method, likely funding source, required policy changes and consideration of alternative projects/approaches; (ii) MOFED will review the business case to ensure the project complies with the Government‟s strategic priorities, that the cost is realistic, conditions are appropriate for the project and whether funding for the project is reasonably likely to be available over the medium term (whether from the Government, development partners or the private sector under PPP arrangements); and (iii) If considered a good strategic fit and feasible, indicative net economic and social returns are significant, costs are realistic, procurement method is efficient and accountable and funding likely, approval would be given for the MDA to prepare a more detailed business case submission.
77.

Mr Speaker, Government will undertake a critical review of the performance of contractors in 2013 with a view to determining their capacity to implement projects.

This includes contracts for all Government and Donor funded projects, especially contractors in the road maintenance sector.

The contracts of those whose performance is assessed to be unsatisfactory will be terminated and sanctions 22 applied as agreed in the contract.
In this regard, Government will strengthen the project planning, monitoring and evaluation capacity of the Ministry of Finance and Economic Development through the recruitment of personnel with the appropriate skills mix to undertake reviews and monitoring and evaluation activities of all capital projects.

V. Medium-Term Macroeconomic Objectives and Outlook, 2013 – 2015 78.
Mr Speaker, the overarching goal of Government‟s economic policy for the medium-to-long-term is to ensure rapid and sustained inclusive economic growth and development.

The key objectives are to: (i) preserve the gains made in stabilizing the economy; (ii) ensure rapid and sustained inclusive green economic growth; (iii) create fiscal space for high-priority public investments to spur long-term growth and development; and (iv) ensure sustainable debt levels.

79.
79.

Rising mining revenues, strengthened revenue administration and prudent expenditure management will reduce Government borrowing from the domestic banking system and hence foster macroeconomic stability.

It will at the same time create the fiscal space for enhanced spending on infrastructure and the productive sectors of the economy to accelerate sustained and inclusive economic growth for job creation.

80.

Mr Speaker, the medium term outlook of the Sierra Leone economy is broadly positive.
The economy is projected to expand by 15.1 percent in 2013 and further by 14.1 percent and 12.1 percent in 2014 and 2015, respectively.

The projected growth rate of the economy will be driven mainly by the increased activities in the mining sector, especially iron ore production.

Excluding iron ore, the economy is expected to grown by an average of 6 percent during 2013-2015.
Agriculture, construction and services as well as scaling up infrastructure investments will be the main drivers of non-iron ore economic growth in the medium term.

23 81.

Inflation is projected to return to single digits in 2013 and in the medium term as the exchange rate continues to stabilize and domestic supply of food items increase while monetary policy remains tight.

82.
82.

Mr Speaker, the medium term will see a significant growth in exports at 40 percent while imports will moderate to an average of about 11 percent.

Consequently, the current account deficit, including official grants, will narrow to 12.3 percent in 2013 and further down to an average 8.7 percent in 2014 and 20 15.
Gross foreign reserves will average 3 months of import cover given the huge Foreign reserves will average 3 months of import cover given he huge Foreign Direct Investment related imports required for mining and construction activities.

83.

Mr Speaker, to achieve these objectives, Government will be implementing a combination of proactive monetary policy, a cautious debt management policy and a prudent fiscal policy.

84.
84.

Monetary policy will continue to focus on achieving and maintaining price stability consistent with high and sustainable economic growth.

In 2013 and the medium term, monetary policy will aim to deliver single-digit inflation in an effort to create he enabling environment required to support private sector led growth.
To support these efforts, Government will further recapitalize the Bank of Sierra Leone to strengthen its capacity to implement monetary policy and to cover the losses of the Bank for the period 2009 – 2011 consistent with the Bank of Sierra Leone Act, 2011.

85.

The exchange rate regime will remain flexible to facilitate rapid adjustment to domestic and external shocks and maintain the external competitiveness of the economy.
The Bank of Sierra Leone will continue to build foreign exchange reserves to cushion external shocks and encourage increased foreign exchange sales to support liquidity management and facilitate the absorption of aid flows.

The Bank of Sierra Leone will also continue to intervene in the foreign exchange market to sterilize the impact of external budgetary inflows as well as reduce short term volatilities in the exchange rate.
Measures will be put in place to develop and deepen 24 the inter-bank foreign exchange market for efficient management of prospective foreign exchange resource inflows.

86.

As the Eurozone debt crisis escalates, compounded by the downward revision of the global discount rate, access to external financing for post HIPC countries such as Sierra Leone is becoming increasingly difficult.
To mitigate potential effects on our public debt portfolio, Government remains committed to prioritizing highly concessional loans for financing development programmes.

Recent debt sustainability analysis shows that Government‟s external debt will remain sustainable in the medium –term with a moderate risk of debt distress.

87.
87.

Mr Speaker, Honourable Members, while Government continues to make significant progress in addressing the challenges of external debt, we are also mindful of the challenges posed by the increase in domestic debt.

To address these, Government is taking proactive steps by developing a strategy to mitigate rollover and interest rate risks.
In order to meet the financing needs of Government at lower cost over time, Government, in collaboration with the Bank of Sierra Leone, will commence in 2013 the design and publication of a Quarterly Auction Calendar, which will provide an indication of Government‟s borrowing plans across debt instruments and tenors.

88.
88.

Mr Speaker, going forward, the decision of managing Sierra Leone‟s public debt will be guided by an articulated Medium Terms Debt Strategy (MTDS) to be developed with assistance from the World Bank and the IMF.

89.

Over the medium term, fiscal policy will be guided by the objective of scaling back the fiscal deficit.
To achieve this objective, Government will intensify the ongoing reforms in public financial management, improve tax collection, review he import duty exemptions regime, rationalize recurrent expenditures, and address the threat of high domestic debt burden.

VI.

The 2013 Budget 90.

Mr Speaker, Honourable Members, the theme of the 2013 budget is “accelerating structural transformation and inclusive green growth for prosperity”.
25 Hence, the 2013 budget aims to create fiscal space to support the continuation of the process of our structural transformation as well as to make significant progress towards attaining the Millennium Development Goals (MDGs).

Domestic Revenue Projections 91.

Total domestic revenue and grants for 2013 are projected at Le2.7 trillion (15.6 percent of GDP).

Of this, total domestic revenue will amount to Le2.1 trillion (12.1 percent of GDP).
Income taxes will amount to Le809.6 billion (3.9 percent of GDP).

Income taxes will amount to Le809.6 billion (3.9 percent of GDP).

Personal income tax from both the public and private sectors will contribute Le660.2 billion and corporate taxes, Le 144 billion.

92.

The Goods and Services Tax (GST) is projected to yield Le513 billion (3 percent of GDP).

Of this, GST on imported goods will contribute Le325 billion.

GST on domestic goods will amount to Le188.1 billion.

93.
93.

Customs and excise duties are projected at Le437 billion (2.5 percent of GDP), with import duties contributing Le 305.7 billion and excise duties on petroleum product, Le120.3 billion.

Other excise duties and freight levy will amount to Le 7.5 billion and Le 3.6 billion, respectively.

94.

Mining royalties and licenses are forecasted to amount to Le 189 billion (1.1 percent of GDP).

Of this, royalty on iron ore is expected to amount Le 101.6 billion.
Royalties on diamond and gold will amount to Le20.1 billion.

Royalties on rutile and bauxite are projected a Le7.1 billion and Le6.4 billion, respectively.

Mining licenses are expected to amount to Le53.8 billion.

95.

Revenues from Government Departments are projected at Le76.6 billion.
These include royalties on fisheries projected at Le6.4 billion, dividends anticipated from parastatals Le13.2 billion and fees, levies and charges collected by Ministries, Departments and Agencies projected at Le60 billion.

Road User Charges and Vehicle Licenses are projected at Le40.8 billion.

96.

Mr Speaker, total grants expected from our development partners in 2013 is projected at Le613.9 billion.

Of this, programme grants will amount to Le 196.7 26 billion.

(1.1 percent of GDP).


Our budget support partners, including the European Union and the United Kingdom Department for International Development (DFID), will provide a total of Le164.1 billion while the Global Fund will provide Le32.6 billion to support health sector human resources.

Project grants will amount to Le417 billion (1.7 percent of GDP).

Revenue and Tax Policies for 2013 97.


Mr Speaker, Honourable Members, to achieve the projected domestic revenue targets in 2013, my Ministry, in collaboration with the National Revenue Authority, will pursue a two-pronged approach as follows: (a) broaden the tax base; and (b) Strengthen tax compliance through robust enforcement of the legislation s for non-mineral revenues 98.
While efforts are being made to improve the capacity of Government to design and administer taxes on the extractive sector, attention will also be paid to the administration of non-mineral taxes.

The international prices of mineral and petroleum products are often volatile and unpredictable.

This makes it absolutely essential for the Government to broaden the tax base, especially non-mineral revenues, to avoid excessive dependence on unpredictable mineral revenues.
In addition, the capacity of the National Revenue Authority to effectively administer taxes on mining activities will be strengthened with support from development partners.

99.

As part of these efforts, NRA will introduce and implement a small and micro- enterprise (SMEs) taxpayer regime.

A simple mechanism will be established to allow the determination of the turnover of these businesses and taxed accordingly.
This will minimize the bureaucracy and relieve business from the huge financial costs incurred to engage accounting and tax consulting firms to prepare audited financial statements.

Additionally, to improve domestic GST performance, the NRA will print and assure GST receipt books to all Registered Business Entities.

27 100.
27 100.

Mr Speaker, in 2013, the Domestic Tax Department of the NRA will be computerized with the installation of the D-Tax software package for the effective administration of domestic taxes.

This will interface with the current Taxpayer Identification Number (TIN) system currently used in the registration of taxpayers.

An effective accounting and reconciliation module is in-built in this system to assist the NRA and commercial banks in revenue collection and realization processes.

101.
101.

For the taxation of foreign nationals, Personal Income Tax Clearance Certificate for foreign staff will be put in place.

This will assist the NRA in ensuring that correct taxes are paid by foreign workers on the income earned in Sierra Leone.

This will be done through the collaborative efforts of the Ministry of Labour, Immigration Department and relevant MDAs.

All of the above measures will be presented in the 2013 Finance Bill.

102.
102.

Mr Speaker, the existing legal framework for tax administration will also be reviewed and modernized.

In particular, the Income Tax Act, 2000 will be reviewed to incorporate and streamline changes the Act has undergone since 2000.

This will see a single document enacted, thus relieving taxpayers and other users from the burden of accessing tax provisions from fragmented legislations.
In addition, a Tax Administration Bill will also be drafted with assistance with assistance from our development partners.

This Bill will also be drafted with assistance from our development partners.

This Bill will clearly show the various processes and procedures that will be adhered to for an effective tax administration.

Expenditure Priorities and Allocations 103.

Mr Speaker, Hounourable Members, 2013 marks the transition from the Agenda for Change to the Agenda for Prosperity.
This budget presents the first step in the journey to prosperity.

The implementation of the Agenda for Change resulted in significant increases in spreading between 2008 and 2012 on the priority sectors of agriculture, roads, energy, health and education.

Despite this, significant unmet needs remain particularly in infrastructure and social services.

28 104.
28 104.

In this context, Government will, therefore, continue to allocate greater amounts of funds from the budget to finance infrastructure projects, including the construction of highways and township streets, the installation of thermal plants and transmission and distribution lines, the construction and rehabilitation of water supply systems, the construction of schools and hospitals and enhanced support from the Free Health Care Programme.
Funds will also be allocated to improve agricultural productivity and to support value-addition activities in the fisheries, tourism and manufacturing sectors.

105.

Mr Speaker, Honourable Members let me now describe the expenditure allocations for 2013 starting with non-discretionary expenditures.

Wages and Salaries 106.

Mr Speaker, Honourable Members, the Government wage bill for 2013 will amount to Le999.1 billion.

This translates to a 12.5 percent increase in the salaries of public sector workers.
The sum of Le2.4 billion is allocated for the recruitment of civil servants to fill critical skills gaps in line miniseries as part of the ongoing pay reform programme.

Interest Payments 107.

Mr Speaker, total interest payments on government debt for 2013 is projected at Le345 billion.

Of this, interest on domestic debt will amount to Le304 billion and interest on foreign debt, Le 40.8 billion.
These higher interest payments represent the cost of funds for enhancing the country‟s landscape through infrastructural development.

Infrastructure 108.

Mr Speaker, Honourable Members, a good infrastructure is the foundation for accelerated development, better competitiveness of the economy and faster flow of goods and persons as well as delivery of services.
Government will, therefore, 29 continue to invest heavily on infrastructure projects to support the transformation of our country in roads, energy, and water supply and in the productive and social sectors.

Roads 109.

Government is allocating Le 430.4 billion to the road sector.
This includes le 214.1 billion from internally generated resources to complete the on-going reconstruction/rehabilitation of roads in the Western Area, regional and district headquarter township streets, the commencement of reconstruction of the Makeni- Kamakwe-Madina-Oula Road and the Mange-Mambolo-Rokupr Road, Bottom – Mango-Signal Hill-Congo Ross Road, widening of the Jomo Kenyata-Hill Cot- Choitram Hospital Roads, Banjuma-Pujehun Road, Taiama Junction-Njala University Road and the construction of bridges in rural communities.
110.

Government counterpart contribution to donor-funded road projects, including Matotoka-Sefadu Road, Port Loko-Lungi Road, Kenema-Pendembu Road, Pendembu- Kailahun Road, Hill-Side Bye-Pass Road, Lumley-Tokeh Road, Makeni-Kabala Road will amount to Le 55 billion.

In addition, development partners will disburse about LeLe216.2 billion under the public investments programme to support the construction of highways indicated above.
Total allocation to the road sector accounts for 25.8 percent of total expenditure.

111.

The Road Fund will receive Le 40.8 billion for periodic road maintenance by the Sierra Leone Roads Authority.

Energy 112.

The energy sector has a strong influence on all economic sectors and represents a pillar for sustainable development.
In this context, Government will promote an efficient, competitive and financially stable energy sector as a condition for a reliable high quality and economically acceptable supply of electricity.

30 113.

Government is, therefore, allocating an amount of Le 82.8 billion under the Public Investment Programme (PIP) to the energy sector.
This includes Le 63.6 billion of domestic resources to support, inter alia, the electrification of district and provincial headquarter towns, the procurement of transmission and distribution materials, the supply and installation of thermal plants, the supply of pre-paid metres and the solar electrification of rural communities.

Development partners will disburse Le 19.3 billion to foreign funded energy projects.
Total budgetary allocation to the energy sector accounts for 7.3 percent of total expenditure.

Information, Communication and Technology (ICT) 114.

Government is allocating Le 3.8 billion to the ECOWAS Regional Backbone Infrastructure and e-governance, West African Regional Communications Infrastructural programme and the National Optical Fibre Project.

Development partners will disburse Le 61.6 billion for the implementation of these projects including the modernization of SIERRATEL.

Transport 115.
Transport 115.

Mr Speaker, an efficient transport system will facilitate the movement of goods and people on time and at a low cost.

Hence, Government is allocating an amount of Le 4.5 billion to the transport sector to finance, inter alia, the cost of preparatory activities for the construction of a modern airport at Mamamah.

Of this, an amount of Le 500 million is allocated for the procurement of motorized ferries for use in rural inland waterways.
Development partners will disburse Le 10.1 billion for the implementation of the Sierra Leone Infrastructural Development Project and the partial upgrading of the Sierra Leone Maritime Administration.

Water Supply 116.

Mr Speaker, Honourable members, there is an urgent need to improve water supply systems in every corner of this country.
In this regard, Government is allocating Le 7.4 billion from the recurrent budget to support the Water Directorate in the Ministry of Energy and Water Resources comprising SALWACO and the Water Resource Management Unit as well as the Energy and Water Regulatory 31 Commission.

In addition, Government is providing Le1.5 billion from the recurrent budget to Local Councils for rural water services.

117.
117.

To achieve our objective in improving water supply, Government is allocating Le 13.7 billion from domestic resources for, inter alia, the completion of the ongoing rehabilitation of water supply systems in Mile 91/Yonibana, Yoni-Seli, Lunsar, Pujehun, Kailahun, Port Loko, Magburaka, Kamabai and Moyamba; construction of wells and gravity fed system in Yormandu and Kamiando, and the commencement of the construction of water supply system in Bonthe city.
Development partners will disburse Le 48.3 billion towards the implementation of the donor-funded Three Towns Water Supply and Sanitation Project and the Kabala Water Supply Project.

Agriculture 118.

Mr Speaker, the agriculture sector remains the backbone of the economy.

It is key to achieving food security for the people of Sierra Leone.

In this regard, Government is allocating an amount of Le 24.5 billion from the recurrent budget to agriculture.
Of this, Le 17.7 billion will support food security activities; Le 1.5 billion for agricultural extension services and Le 2.6 billion is allocated to the Sierra Leone Agricultural Research Institute (SLAR).

In addition, Government is providing Le13.2 billion as transfers to Local Councils to support agricultural activities in rural areas.

119.

Under the PIP, Government is providing Le 6.3 billion as counterpart contribution towards the implementation of various projects in the agricultural sector.
Our development partners will disburse Le 129.3 billion to support the implementation of various agricultural projects including the Small Holder Commercialisation Programme, the Agriculture Sector Rehabilitation Project, the Nerica Rice Dissemination Project, and the Rural and Private Sector Development Project.

Total budgetary allocation to the agriculture sector accounts for 10 percent of the total expenditure.

Education 120.
Education 120.

Mr Speaker, Honourable Members, to improve the quality of education, Government is providing Le 137 billion from the recurrent budget to support the 32 education sector.

Of this, Le 109.9 billion is grants to tertiary educational institutions.
In addition, Government is providing Le23.9 billion from the recurrent budget to Local Councils for the payment of school fees subsidies, the payment of examination fees to WAEC for NPSE and BECE and the procurement and distribution of teaching and learning materials as well as text books for primary schools.

121.

Under the PIP, Government is providing Le 3.8 billion from internally generated resources to the sector.
Of this, Le 1.1 billion is counterpart contribution towards the implementation of donor funded projects in the sector, including the rehabilitation and expansion of Fourah Bay College and the Institutional and Capacity Building to Technical and Vocational Training Project.
Government is also allocating Le 2.7 billion as development grants for the completion of on-going Local Council projects in the education sector as well as the re-construction of primary and Junior Secondary School facilities in our rural communities.

Our development partners will provide Le 19.9 billion towards the implementation of various projects in the sector.

Total spending in education represents 10.1 percent of total expenditures from 8.5 percent in 2012.

Health 122.
Health 122.

Mr Speaker, Honourable Members, Government will continue to invest in various aspects of the health sector in order to accelerate progress towards achieving the MDGs particularly MDGs 4 and 5.

Health is a factor that affects the social position of our population and is a pre-condition for economic growth.

Therefore, Government will continue with efforts to improve, promote, and sustain the health of all citizens.

123.
123.

In this regard, Government is allocating Le 39 billion from the recurrent budget to the health sector.

Of this, Le 13.5 billion is to support the Free Health Care Programme; Le 2 billion for the Immunization Programme; Le6.8 billion for the procurement of drugs and medical supplies; and Le 5.2 billion for primary health services.

In addition, Government is allocating Le 34.4 billion to district peripheral health services, secondary and tertiary health care services.

33 124.
33 124.

Under the PIP, Government is providing an additional Le 3.7 billion, of which, Le 1.7 billion is development grants to Local Councils for the completion of on-going projects including the rehabilitation of the Nixon Memorial Hospital in Segbwema and the construction of peripheral health units in rural communities.

An amount of Le 2 billion is allocated as counterpart contribution to various donor funded health projects including the Global Fund Health Strengthening project.

125.
125.

Development partners will disburse Le 120.6 billion for the implementation of various health sector projects.

Total expenditure in the health sector represents 10.5 percent from 6.8 percent in 2012.

Youth and Sports 126.

As emphasized by His Excellency the President on the occasion of the State Opening of Parliament recently, Government is very much committed to improving the socio-economic status of the youth.
Government is allocating Le 4.8 billion from the recurrent budget to the Ministry of Youth, Employment and Sports, of which Le 2.2 billion is for youth development programmes.

In addition, Le 2.4 billion is allocated to Locals Councils for youth and sport services.

127.

Under the PIP, Government is providing an additional Le 1 billion as counterpart funds for the implementation of youth related donor-funded projects.
Development partners will disburse Le 29.5 billion towards the implementation of the Youth Employment project and the Sierra Leone Community Driven Project.

Social Protection for Vulnerable Groups 128.

Achieving sustainable economic development is possible only through good social protection of the most vulnerable.

As a demonstration of its commitment to support vulnerable groups, Government has included social protection as a stand- alone pillar under the Agenda for Prosperity.
Government is, therefore, providing 5.4 billion to the Ministry of Social Welfare, Gender and Children Affairs.

Of this, Le 3.2 billion is to support social protection services including programmes for the physically challenged, diet for Approved schools and the Remand homes, grants to welfare institutions and social development programmes.
In addition, Le 1 billion is allocated 34 for child orphans, and Le 554 million is provided to Local Councils for Social Welfare, Gender and Children‟s affairs in local communities.

129.

Under the PIP, Le 300 million I allocated as support to the Reparation Programme and Le 950 million for the Social Action Support Programme.

Security 130.

Mr Speaker, Government recognizes that economic growth and transformation cannot take place in an unstable environment.
Therefore, Government will provide the security services the required support to ensure the protection of life and property.

131.

Government is, therefore, allocating a total of Le 150.4 billion to the security services.
Of this, Le 62.3 billion to Defence, of which, Le 16 billion for rice supplies, Le 58.4 billion to the Sierra Leone Police, of which Le 19.9 billion for rice supplies, Le 15.3 billion to Prisons, of which, Le 8.4 billion for diet, Le 850 million for drugs and Le2.7 billion for rice; Le 5.1 billion to the National Fire Force; Le 3.3 billion to the Office of National Security and Le 1.7 billion to the Immigration Department.

Parliament 132.
Parliament 132.

Mr Speaker, Government is committed to strengthening the capacity of Parliament in carrying out its oversight role to ensure better political and economic governance.

Government is, therefore, allocating Le 10.1 billion to facilitate the activities of this Honourable House, of which, Le 6.5 billion is Constituency Facilitation Allowance.

Governance 133.

Good governance is a precondition for inclusive economic growth.
To this end, Government is allocating Le 3.4 billion to the Audit Service; Le8.6 billion to the National Electoral Commission; Le2.8 billion to the Anti-Corruption Commission; Le 4.6 billion to Statistics Sierra Leone; Le 1.8 billion to the National Public Procurement Authority; Le 960 million to the National Commission for Human Rights; and Le 350 million to the Secretariat of the Extractive Industry Transparency Initiative.

35 Judiciary 134.
35 Judiciary 134.

Government also considers an effective Judiciary as necessary for the delivery of equal justice to all citizens as well as improving the business and investment climate.

In this respect, Government is allocating Le1.5 billion from the recurrent budget to the Judiciary.

In addition, Le 850 million is allocated as counterpart contribution to the DFID-funded Access to Security and Justice Programme, and Le 350 million for the Fast Track Commercial Court project.

Government Buildings 135.


Government is allocating Le 1.2 billion from the recurrent budget for the repair and maintenance of Government Buildings.
In addition, Government is also allocating Le 28.3 billion under the PIP for the construction of Government buildings, including the rehabilitation of State House and the House of Parliament, construction of Office buildings for Audit Service Sierra Leone, the Anti-Corruption Commission, replacement of seven elevators at the Youyi Building and the reconstruction of military, police and prison facilities.

VII.

RISKS TO THE 2013 BUDGET (I) Fluctuations in export commodity prices 136.
Mr. Speaker, the prices of a number of our export commodities are susceptible to large and unexpected fluctuations during the year.

Where these fluctuations are biased downwards, the fiscal impact could be significantly adverse.

For example, any large unanticipated drop in iron ore prices will reduce the royalties and taxes due from iron ore mining activities, thus limiting the fiscal space available for planned expenditures.

(ii) Food and fuel price hikes 137.


As we have witnessed over the past several years, eternal shocks in international food and fuel prices have had disproportionately negative impacts on our people.

In particular, higher international food price worsen food security.

In such instances, Government will resort to using fiscal measures to help those who 36 are most vulnerable, especially in respect of food rice hikes limiting the fiscal space for infrastructure financing.
(iii) Slow growth of the developed world and emerging economies 138.

Mr Speaker, in today‟s globalised world, a small open economy like Sierra Leone inevitably relies on the health of other economies, such as the advanced western economies, China and other emerging economies to stimulate domestic economic activity.

Should these countries‟ economies slow down more than anticipated, our trade prospects, development assistance and the inflow of remittances would worsen.

(iv) External budget support 139.


Budgetary support will continue to be necessary in complementing Government‟s resources to deliver public services.

However, the predictability and timely disbursement of these funds remain a challenge.

With the continuing Eurozone crisis, donor inflows also remain uncertain.

In this regard, donor coordination and close partnership with Government will, as usual, be the catalyst to minimize the associated risks in this area.

VI.

CONCLUSION 140.


Mr Speaker, Honourable Members of Parliament, I would like to take this opportunity to express my sincere thanks to all our development partners who continue to provide us with resources for the implementation of the Agenda for Change and now the Agenda for Prosperity.

We will continue with our regular consultations and bilateral engagements through our Development Partnership Committee (DEPAC) meetings.

141.
141.

I would like to extend my gratitude to all those who contributed to the budget formulation process including the preparation of the estimates and this statement.

I would also like to mention in particular, my predecessor, a man who devoted significant part of his productive life to the economic development of this nation.

I do wish to build on the strong foundation he has put in place for the transformation of the economy.
Permit me, Mr Speaker, Honourable Members, to salute this great 37 man of our time.

I would also like to thank the Chairman and Members of the Parliamentary Finance Committee, Cabinet Colleagues, the Governor, management and staff of the Bank of Sierra Leone, staff of the Law Officers Department, members of the District Budget Oversight Committee, the Deputy Ministers, the Financial Secretary and staff of the Ministry of Finance and Economic Development and staff of other MDAs.
I would also like to recognize the valuable contributions received from private sector institutions, including the Sierra Leone Chambers of Commerce, Industry and Agriculture and the Sierra Leone Association of Manufacturers.

As usual the Government Printer and staff rose to the occasion and printed the Budget statement on time.

142.
142.

Finally, this budget is about discipline and restraint but also about our priorities; ensuring previous funds are re-directed to the purposes and sectors that need them most; invest in productivity and competitiveness by building major improvement in education, health, infrastructure and energy.
This transformation at our doorsteps brings new opportunities – not just in mining, but also in services, manufacturing and prioritises spending to convert a more productive economy into a fairer community as well.

143.

Mr Speaker, Honourable Members, this Government believes that the tremendous opportunities of the mining boom should be shared fairly with all Sierra Leoneans.

That is why this budget supports workers and parents, the youth, the physically challenged and helps business prosper.
I, therefore, commend it to the House.

144.

I wish you a Merry Christmas and a bright and Prosperous 2013.

145.

God bless us all.

Mr Speaker, Honourable Members, I move that the Bill be read for the first time.

God bless us all (Applause).

(Question Proposed, Put and Agreed to) III.

GOVERNMENT MOTION: 38 The Minister of Finance Economic and Development.
DR KAIFALA MARAH (Minister of Finance and Economic Development): Mr Speaker, Honourable Members, be it resolved that pursuant to Section 11(B) of the Constitution of Sierra Leone, Act No.
6 of 1991 this Honourable House authorise the Minister of Finance to withdraw monies from the Consolidated Fund for the purpose of meeting expenditure necessary to carry out the services of the Government and approve the expenditure of the sum of Le 831 billion, 373 million 433 for the period expiring 4 months from the beginning of the Financial Year, 1st of January, 2013 or the coming into operation of the Appropriation Act, 2013 whichever is earlier.
Mr Speaker, Honourable Members, it is really imperative (by virtue of the aspiration that under pin the Agenda for Prosperity) that it favourably considers this motion.

I say so with passion that there are special pillars under the Agenda for Prosperity, particularly the Management of our Natural Resources.

We have to get started so that we invest in investment.
I would also wish this Honourable House to consider the weak in society, particularly for the Reparation Fund, many of whom are fortunate to live in overseas and they may not be able to darken the doorsteps here that we all represent today.

I wish that for the sake of free health care, our mothers and sisters, the youths, kids less than five years and for the sake of school kids who are in far flung areas that are not even motorable you consider this motion.
In that regard, Mr Speaker, Honourable Members, I wish to re-state that in pursuant to Section 113 of the Constitution of Sierra Leone, Act of 1991, this Honourable House authorise the Minister of Finance to withdraw monies from the Consolidated Fund for the purpose of meeting expenditure necessary to carry on the services of the Government and approve the expenditure of the sum of Le 831,373,433,333 for the period expiring four months from the beginning of the Financial Year which is 1st January, 2013 or the coming into operation of the Appropriation Act of 2013 whichever is earlier.
(Question Proposed) 39 HON.

ANSU J. KAIKAI: I thank you Mr Speaker.

Mr Speaker, Honourable Members, I thank the Minister of Finance for having brought up the arrangement that is before us now.

Mr Speaker, Honourable Members, I am completely elated because this is a much tidier way of doing it under Section 113, instead of having to wait later on, only to bring it under Section 114.

I therefore call on my colleagues to totally and immediately support the Warrant that is before us now.

I thank you.
I thank you.

THE SPEAKER: Honourable Member, what is before us is not a Warrant, it is a Motion.

HON.

ANSU J. KAIKAI: I cannot afford to disagree with you Mr Speaker.

(Question Proposed, Put and Agreed) Government Motion by the Minister of Finance and Economic Development has been carried.

MR SPEAKER: On behalf of Members of Parliament, I want to thank you for the brilliant performance you have made today.

I wish you success in your present endeavour.


Adjournments (The House rose at 11.30 a.m., and was adjourned until Thursday, 17th January, 2013, at 10.00 a.m.).

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