Liberia's Budget Is Under Pressure — and the Mid-Year Review Will Tell Us How Bad

Liberia's mid-year budget review, scheduled for presentation to the Legislature on April 14, is expected to reveal a revenue shortfall of approximately $35–45 million against the $1.28 billion budget approved for fiscal 2026/27. Three separate analysts consulted by TrueRate — from the Liberia Business Association, the IMF Resident Representative's office, and the local economics faculty of the University of Liberia — all pointed to the same two underperforming revenue lines: customs duties, which are running approximately 12% below target, and personal income tax collections, which are approximately 8% below target.

The customs shortfall has multiple drivers. Mining concession holders are exempt from import duties on equipment and inputs under the terms of their mineral development agreements, and the expansion of mining activity has increased the value of duty-exempt imports. Under-declaration of import values at the Freeport of Monrovia — a known problem that the Liberia Revenue Authority has been attempting to address through post-clearance audit — continues to reduce customs receipts. The LRA has estimated that value under-declaration costs the government approximately $30–40 million annually, but enforcement has been constrained by limited technical capacity and political pressure from major importers.

The personal income tax shortfall reflects the structure of Liberia's labour market more than any compliance failure: approximately 65% of the workforce is in informal employment or subsistence agriculture, and thus outside the formal PAYE system. The formalisation of civil service payroll under the mobile money digitalisation programme should improve PAYE compliance over time, but the gains will be gradual — the first full year of digital payroll operations is too early to show large revenue effects.

The spending lines most at risk in the mid-year review are capital expenditure and transfers to county administrations. These are the two budget categories that have historically been cut when revenue falls short, because recurrent expenditure — principally salaries and wages — is politically and legally difficult to reduce mid-year. The World Bank's latest Liberia Public Expenditure Review noted that this pattern of front-loading recurrent spending and cutting capital spending under fiscal pressure is a structural obstacle to infrastructure development, as projects lose momentum and donor co-funding is forfeited when government counterpart contributions do not materialise.