The spending power of the Liberian government will improve over the forecast period as higher exports boost customs duties and the government returns to borrowing on financial markets, albeit in low amounts initially. The government has operated a cash-based balanced budget since the end of the civil war, in line with a policy of implementing strict fiscal discipline, thereby preventing any increase in the public debt. The country reached HIPC completion point in mid-2010. This will be fairly revenue-neutral in the medium term; it will enable the country to borrow from international markets, although no more than 2% of GDP per year, according to an agreement with the IMF. Donors will also offer more concessional financing; however, some of this borrowing will be used for the resumption of debt-servicing from the end of 2011 onwards (net repayments on multilateral debt were zero in recent years as debt relief was being negotiated). Revenue will also be helped by new investment in the mining sector that will result in higher revenue from export tariffs, although tax holidays and lag times before profitability will limit revenue in the early years of these projects. There will be a fall in domestic revenue resulting from a cut in the top corporate and income tax rates from 35% to 25% in January 2011.

On the expenditure front, a large proportion of the budget for 2010/11 is earmarked for restoring and improving public services such as health, education, security and the justice system, which will include increasing salaries and a new minimum wage for civil servants. In addition, civil-service employment will increase by 6,000 as the government employs more teachers and health workers to implement its programmes in these priority sectors. Reconstruction and development programmes will still be funded and managed largely by donors, whose multi-million-dollar budgets dwarf those of the government. The government is expected to maintain a deficit of less than 1% of GDP in 2010/11, before a return to global financial markets in 2011/12, to fund its ambitious reform programme, leads to a larger deficit, financed mostly by concessional external borrowing.