The exegesis of Budget shortfall; the politics of bendwagon effect

According to Harvard school of business, bandwagon effect  is a psychological theory where individuals will do or follow something primarily because other individuals are doing it, regardless of their understanding of the subject matter which they would ignore. Now, in perspective of the above mentioned definition , bandwagon effect has the capability to produce widespread implications but its most often seen in areas of politics as in the case of the chain of ignorance that engulfed the understanding of budget shortfall in our current body politics.

Here are the facts:

Firstly, what is a budget? There are many scholarly definitions of budget. But in the context of our economy, I would say a budget is a financial representation of government spending priorities through revenue projection. In the case of Liberia’s bandwagon scanerio, there’s this widespread and erroneous believe that budget is a money already sitting in the bank ready to be expended. And this gloomy perception is far contrary to the practical knowhow of the subject matter.

Now, the case of Budget shortfall.

A budget Shortfall is a reduction in a projected budget due to decline or fall in income sources. Like I mentioned In previous paragraphs, this issue has to be re-emphasized because this is where the popular myth of a budget and budget shortfall are being marketed. A budget is not a cash or money sitting there in the vault as many others perceived from a bandwagon standpoint. A budget It is a projection of what government thinks she can collect from possible income sources . This projected image is later used to finance national development. See elementary scanerio under review for an inclusive insight of the subject matter. For example, Government projects a national budget of 35 dollars to finance national development.  Let’s assume that government projects to collect $ 15.00 dollars from business in Large tax, 10.00 dollars from business in Medium tax, 5.00 dollars from business in small tax. That’s 30 dollars. We later assume donor supports to the budget as 5 dollars. Making domestic resources 30 dollars plus donor support 5 dollars hence, total budget envelope is now 35 dollars.

The shortfall challenge in summary:

Instead of donors giving 5 dollars, they sent 2.5 dollar meaning, that’s a short fall of 2.5 dollars. Instead of tax payers in large tax category paying 15 dollars as projected, government was able to collect 10 dollars, hence a shortfall of 5 dollars, then for the medium and small tax categories,  government also collected 5 & 3 dollars instead of ( 10 & 5 dollars). That’s a respective fall of 5 &2 dollars.

Now, total shortfall under review :

2.5 donors never commit to pay, 5 dollars that was not collected from large tax, 5 dollars that was not collected from medium tax, and 2 dollars was not collected from small tax. Total shortfall is 14.5 dollars! Our total budget projected was 35 dollars but we experience a fall in revenue generation which is 14.5 dollars. Now, if you do the math, the total revenue on hand for government spending on national development projects is 20.5 dollars instead of 35 dollars as it was previously projected. In other words government has a budget constraint in revenue collection due to fall in possible income sources as explained above. Very simple, clearcut and unambiguous explanation in understanding budget and budget shortfall. These are naturally made economic phenomenon that are compound-complex quantitative, that is more of a systemic issue which cannot be attributed to individual(s) as in the case of Liberia’s former Finance and Development Planning Minister.

Before I conclude, permit me to air that Budget shortfall on the other hand is also a shared responsibility of Government, the citizens, and sometimes donor fatigue . The citizens are not good tax payers. How many of us have our cars regularly registered and these are taxes that should be going to government? How many of us in stores, with small and registered businesses pay taxes to government? How many of us Liberians are sincere, to give local and foreign businesses their real bills without any reduction in return to pocket money for personal gains when these are real taxes that should be going in government revenue?

As I conclude, agreed, we have political economics. But economics is more compound-complex and quantitative then just political. It is perhaps the political angles of this subject that people can see through but with serious mis-steps in getting right the quantitative approach on the subject matter. No one person or individual is responsible for economic crisis, hazard, especially in the context of shortfall or recession. SHORTFALLS OR RECESSIONS are naturally made economic phenomenon that are sometimes inevitable. When they occurred, no one, not even the best economists can prevent it; but yet, can be managed through the employ of economic variables to help minimize the effect from being aggressive to moderate.

When the 2008 Global Financial Crisis occurred where many economists considered to be the worst economic crisis since the great depression of 1930s, America with all the best and acclaimed economists, she could not prevent it though it was projected long before it occurred. The New York Stock Exchange with all the renowned economists/econometricians, went into ruins. During those era of economic decadence, they weren’t calling names neither were they blaming it to individuals but rather discussed options and workable alternatives to address those crises to put the economy back to work. In honest admittance on the side of the government in our own case, corruption was endemic! I can finally conclude that shortfall maybe mitigated when responsible citizens pay their taxes, donors commit to their promises, and government control and proper accountability of tax payers money. And I hope this resonate to the consciences of our people that budget shortfall/recession is not attributable to the making of a person but rather the system.

About the Author:

Mohammed Z Fofana is a Global Shaper of the World Economic Forum. He has attended series of conferences and spoke on a number of contemporary issue-driven topics on socio-economic and political matters in Capetown, South Africa and in Geneva, Switzerland. He is also a 2017 Youth Observer at the UN Youth Assembly in New York.  He holds a BBA degree in Public Administration and Economics and other professional certificates. Fofana is a socio-political activist and columist. He can be reached at

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