CAPITOL HILL, Monrovia — The Liberian government has proposed a record-breaking US$1.211 billion national budget for 2026, signaling a major policy shift from fiscal austerity to infrastructure-led growth. The draft, presented to House Speaker Richard Nagbe Koon on Friday by Finance and Development Planning Minister Augustine Kpehe Ngafuan, significantly increases capital spending by allocating the entire US$200 million ArcelorMittal signature bonus toward development projects.
The ambitious resource envelope reflects a substantial 37.5 percent increase over the approved 2025 budget, primarily driven by higher domestic collections and the one-time concession inflow. Domestic sources are projected to account for 94.1 percent of all revenues. However, the plan is shadowed by a rapidly tightening fiscal situation, with debt service costs forecasting a rise of over 50 percent year-over-year.
The Boakai administration is defining the draft through two structural choices aimed at boosting investment and transparency.
First, the expenditure framework divides the plan into recurrent operations and a dramatically strengthened Public Sector Investment Plan (PSIP), which becomes the central mechanism for infrastructure-led growth. Second, the administration proposes reclassifying certain appropriations, moving them from supervising agencies into a new “General Government Expenditure” category to improve oversight of cross-government items.
Recurrent spending—covering payroll, goods and services, and protected categories like medical consumables—is estimated at approximately US$929.6 million, making up roughly three-quarters of the budget. In a major step-up, the PSIP is set to rise to approximately US$281.5 million, representing a massive 154.8 percent increase compared to 2025. Every dollar of the US$200 million ArcelorMittal signature bonus is allocated directly to the PSIP to ensure maximum impact on visible projects.
Education sees a published ceiling rise to roughly US$132.98 million (including payroll and PSIP lines), reflecting commitments to boost allotments for key institutions such as the University of Liberia and vocational schools.
Infrastructure and Basic Services show the strongest proportional step-up, with the Ministry of Public Works commanding the largest share, signaling an urgent focus on addressing years of deferred maintenance on roads and bridges.
To support this buildout, the budget relies on tax policy adjustments aimed at broadening the revenue base. Key proposals include:
- Goods and Services Tax (GST) Increase: Rising from 12 percent to 13 percent, positioning Liberia for a gradual shift toward a modern value-added tax (VAT) system.
- Presumptive Corporate Income Tax: A 2 percent levy applied to major concession agreements to ensure large operators contribute a minimum share annually.
- Digital Commerce Tax: New enforcement mechanisms for taxing cross-border digital commerce.
Despite securing a significant donor partnership, projected at around US$312.84 million (with US$72 million flowing directly through the budget), the plan recognizes a serious debt challenge.
Liberia’s public debt stood at approximately US$2.70 billion (56.6 percent of nominal GDP) at the end of September 2025. The draft forecasts debt service at a colossal US$230 million in 2026—a 50.3 percent spike from the estimated US$153 million in 2025. The vast majority of this payment, roughly US$159.04 million, is due on domestic liabilities, mainly owed to the Central Bank of Liberia and commercial banks.
To safeguard the increased spending, the budget incorporates measures to strengthen audit and anti-money-laundering agencies, with sector pages showing higher allocations for the General Auditing Commission (GAC) and the Financial Intelligence Agency (FIA).
The ministry also pairs the plan with stringent new execution rules. Entities are required to fully disclose and incorporate internally generated revenues. Critically, starting January 2025, ministries, agencies, and State-Owned Enterprises (SOEs) must now negotiate and settle utility payments directly, rather than relying on the Ministry of Finance to clear arrears.
While the plan highlights operational improvements at key SOEs, such as the Liberia Electricity Corporation (LEC), anticipating a small operating surplus in 2026, the reliance on the US$200 million ArcelorMittal bonus and the sheer pressure from the US$230 million debt service ensure that budget execution will be under intense scrutiny throughout the fiscal year.