Ludovic Ngatsé, Minister Delegate in charge of the Budget to the Minister of Finance, Budget and Public Portfolio, Rigobert Roger Andely, presented on Friday 22 October 2021 to the National Assembly and then to the Senate, the State Finance Bill for the 2022 financial year. The finance bill provides for a budget of 1935.3 billion CFA francs in revenue and 1735 billion CFA francs in expenditure, with a surplus of 200.3 billion CFA francs.
In terms of revenue, this finance bill is designed with cautious assumptions aligned with the projected level of economic activity, on the one hand, on the implementation of reforms and, on the other hand, on the efforts to be made to strengthen the capacity of administrations to mobilise internal resources (...)
The main revenue aggregates
The State's fiscal resources for the 2022 financial year amount to 1935.3 billion CFA francs, compared with 1 671.6 billion CFA francs in 2021, an increase of 263.7 billion CFA francs (+15.8%), broken down by type as follows
-Tax revenue is set at CFAF 701 billion in 2022, as against CFAF 580.5 billion in 2021, an increase of 20.8%, comprising CFAF 577 billion in domestic taxes and duties, as against CFAF 470.5 billion in 2021, an increase of 22.6%, and CFAF 124 billion in taxes and customs duties, as against CFAF 110 billion in 2021, an increase of 12.7%;
- Donations, bequests and assistance funds estimated at CFAF 37 billion, against CFAF 15 billion in 2021, an increase of 146.67%;
- Social contributions to be levied for a total of CFAF 73.8 billion, against CFAF 72 billion in 2021, a slight increase of 2.43%;
- Other revenues, which amount to CFA francs 1,123.5 billion, as against CFA francs 1,004.1 billion in 2021, an increase of 11.9%, cover areas including oil revenues (CFA francs 1,084.5 billion), forestry royalties (CFA francs 8 billion), mining royalties (CFA francs 0.5 billion) and administrative fees and charges (CFA francs 20 billion), as well as dividends (CFA francs 5 billion)
Recommended revenue measures
In order to achieve these quantitative objectives, the measures to be taken relate essentially to broadening the tax base, strengthening the capacity of revenue collection services, improving the tax environment for business, securing domain revenues and reducing tax expenditure.
With regard to tax and customs revenue, without undermining tax discipline, procedures should be simplified to make it easier for taxpayers to declare taxes and encourage those in the informal sector to leave the informal sector. Tax education and assistance mechanisms will be strengthened in order to anticipate the risks of tax evasion. A tax amnesty will be granted, on a case-by-case basis, to economic operators in arrears with their taxes for the years before 2020. Thus, the following actions will be undertaken, namely:
- Taxation of certain income that remains outside the scope of taxation;
- Finalising the implementation of the tax information system to secure revenue
- Strengthening border surveillance activities with modern inspection tools;
- Effective implementation of the one-stop shop project at the Port Authority of Pointe-Noire to secure customs revenue and simplify procedures for clearing goods through customs;
- Strengthening mechanisms to promote tax compliance and the system of penalties for fraud in the declaration and payment of taxes and duties;
- Taxation of the informal sector by promoting modern means of payment
- Strengthening and reorganising tax collection and control services.
With regard to oil revenues, the use of IT tools to ensure the reliability of calculations, the monitoring of the sums recorded and those still to be collected, as well as the relaunch of the process of collecting the outstanding oil revenues due will be required. Particular emphasis will be placed on monitoring and controlling:
- Application of the rules for calculating the oil rights due to the State;
- Oil rights transferred in stock to the State at the various oil terminals
- Quantities of oil marketed on behalf of the State;
- Revenues from production sharing, marketing and other contracts.
In terms of expenditure, the main assumptions include the following:
- Financial charges that take into account the schedules agreed with the various creditors and the interest on the treasury bonds to be issued during 2022 and the effects of negotiations affecting the interest on the external debt;
- The projected level of personnel expenditure in the light of retirements, the strengthening of staffing levels in the social sectors, the rigorous control of remuneration elements and the monitoring of the downward trajectory of the wage bill recommended for the medium term;
- Control of the State's lifestyle, which will be based on the rationalisation of public administration expenditure. At this level, the choices concern the administration's absolute priorities. Expenses related to the missions of State employees abroad, seminars and meetings will be limited, with priority given to teleworking;
- State transfers will increase to take account of local and senatorial elections. However, those directed towards public entities will undergo some changes so that they all participate in the adjustment effort that the Government is seeking.
Budgetary expenditure stands at CFAF 1,735 billion against CFAF 1,522.5 billion in 2021, an increase of CFAF 212.5 billion or 13.95%. They are broken down by nature, among others, as follows:
- Personnel expenditure, set at CFAF 379 billion against CFAF 370 billion in 2021, an increase of 2.43%;
- Goods and services, set at CFAF 187 billion against CFAF 143.1 billion in 2021, an increase of 30.68%;
- State transfers and interventions, estimated at 487.1 billion CFA francs against 432.1 billion CFA francs in 2021, an increase of 12.74% (...)
In order to achieve the various quantitative targets for expenditure, the following measures are recommended, among other:
- Regular monitoring of internal budgetary risk factors through the setting up of an inter-ministerial committee to monitor budgetary risks
- Strengthening control over the imprest and petty expenditure funds;
- Introducing biometric cards for all civil servants and contractual state employees;
- Systematically send agents who have reached the end of their administrative career into retirement;
- Limiting State missions abroad by favouring teleworking;
- Disseminating the guides for the execution of state expenditure to all ministries and institutions;
- Imposing the bank transfer of salaries for all public employees dependent on the treasury, from the account of the Paymaster General;
- Strengthening the workforce by recruiting teachers and health personnel within the limit of one third of the cost of output.
In sum, the draft finance law for the year 2022 includes a state budget with revenue of CFA francs 1935.3 billion and expenditure of CFA francs 1735 billion, with an overall surplus of CFA francs 200.3 billion.
Budget policy and main fiscal balances
The indicators for monitoring fiscal policy, notably the overall budget balance, the basic budget balance and the non-oil primary balance, in relation to non-oil GDP, will improve significantly to stand at 4.3%, 7.93% and -15.38% respectively, as against 3.41%, 6.26% and -15.80% in 2021.
The non-oil primary balance reveals, if need be, the vulnerability and low resilience of our country's public finances to exogenous shocks. Hence the urgent need to diversify our economy, in accordance with the President of the Republic's social project, “Let's continue the march together”.
The government plans to draw down 131 billion in project loans and 119 billion in SDRs under the special allocation decided by the IMF to support the economies within the framework of COVID. It should be noted that debt repayment remains the thorny problem in financing, as it represents 100% of cash expenses, i.e. CFA francs 857.9 billion.
In a nutshell, with an overall budget surplus of CFA francs 200.3 billion and a financing requirement of CFA 607.9 billion, there is a residual financing requirement or gap of CFA francs 407.6 billion in 2022, compared with CFA francs 393.7 billion in 2021. Its resolution requires an effective strategy that includes the results of negotiations with the Congo's various creditors, with an appropriate financing plan.
The closing of this residual financing need should be based on:
- The assumption that the government will relaunch cooperation with development partners, leading to the conclusion of a programme with the International Monetary Fund. The Congo should benefit from facilities likely to provide some solutions to its external debt problems;
- The assumption that the Congo should receive budgetary support as part of the facilities to be granted to a country under an economic and financial programme agreement with the IMF
- The continuation of negotiations with the London Club in order to bring certain creditors to a firm agreement with the Congo
- The use of financing from technical and financial partners on concessional terms
- The relaunch of negotiations with all bilateral creditors;
- Recourse to the sub-regional financial market;
- And finally, the rigorous monitoring and firm respect of the Congo's commitments to its various partners.
In addition to this strategy focused on external partners, there are measures designed to strengthen the monitoring of budgetary policy indicators, particularly through the necessary effort to mobilise internal budgetary resources, hence the urgent need to speed up the reforms underway.
The Press Office of the Ministry of Finance