Liberian National Rhoda Weeks-Brown Appointed As General Counsel of IMF

IMF Chief Christine Lagarde

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), today announced her intention to appoint Rhoda Weeks-Brown as the IMF’s General Counsel and Director of the Legal Department.

The IMF, in a Press Statement issued Tuesday, says Ms. Weeks-Brown succeeds Mr. Sean Hagan whose retirement was announced previously. She is expected to begin her work in this capacity on September 17, 2018.

“Throughout her 21-year career with the IMF, Ms. Weeks-Brown has contributed to virtually all aspects of the institution’s work. In addition to a sharp legal mind and deep legal experience, she brings a comprehensive perspective on the Fund’s role and the challenges facing our members in today’s rapidly changing economic and financial environment.,” Ms. Lagarde said.

IMF Newly Appointed General Counsel Rhoda Weeks Brown from Liberia.

During her career in the Fund’s Legal Department, Ms. Weeks-Brown worked on a wide range of country and policy issues. She was particularly involved in leading the work related to the revamp of the Fund’s General Resources Account (GRA) lending toolkit and the transformation of the architecture of facilities for low-income countries.

She also contributed to the design of a new income model for the Fund adopted in 2008, the 2008 and 2010 quota and governance reforms, and the articulation of the Fund’s institutional view on capital flows.

IMF Logo

In her role as Deputy General Counsel, she was a key member of the Legal Department’s management team, helping to guide all aspects of the department’s work. Most recently, Ms. Weeks-Brown has served as Deputy Director of the Fund’s Communications Department, where she has played a key role in development of the Fund’s communications strategy and its positioning on key issues, and also had oversight of communications related to Europe, Africa and previously Asia.

A national of Liberia, Ms. Weeks-Brown joined the Fund’s Legal Department in 1997 and rose through the ranks to become Deputy Legal Counsel in 2010.

She then joined the Fund’s Communications Department in 2012 as Deputy Director. Before joining the IMF, Ms. Weeks-Brown was in private practice in the United States.

She received her Juris Doctor from Harvard Law School in 1991, and a Bachelor of Arts in Economics from Howard University. IMF release concluded.

IMF Press Statement

Liberia: An Analysis of $25M USD Emergency Cash Infusion Into The Economy; What’s In it For Liberians?

President George M. Weah
President George M. Weah

The recent pronouncement by President George Weah that his administration will embark on several emergency measures to stabilize the free fall of the Liberian economy needs some intrusive review so that the lay person can grasp some understanding of how this approach will directly impact them.

The pending $25 million USD infusion into the Liberian economy through the Central Bank to buy back the excess Liberia dollar circulating will impact the availability of hard currency on the market. The presumption is that the ordinary Liberian person will now change their preference in the way they split their money between holding cash or making a deposit in any of the commercial banks with the expectation that they can withdraw as much USD as they would like at any given time. As it stands now, the economy is flushed with depressed Liberia dollars including counterfeited currency.

This also pre-supposes that there is a sudden elevation in the confidence of the public in banking institutions. Comparatively, when there is an increase in USD deposits deposits, there will be an increase in the quantity available to banks to service various requests from the ordinary person and businesses. Again it is a presumptuous and naive stance to think along these lines.

The Central Bank of Liberia (CBL), by statute, is the highest monetary monitor of the West African country and plays a pivotal role in money regulation to maintain stability of the currencies value. However, stability of value of currencies, especially the Liberian dollar, is not just the only motive or goal which underlie the monetary policy framed and managed by the CBL. There are various factors like inflationary pressures, status of Liberia’s exports and overall economic development which drive policy measures.

So, to what benefit is the infusion of $25 million USD in a struggling economy? Is government prepared to fully bail out the economy with additional hard currency infusion without a plan, investments or long term positive returns?

Why has there not been a stress test undertaken to test the financial viability of the Central Bank, commercial banks and insurance institutions – all who undertake major financial interactions that impact the ordinary Liberian?

According to Trading Economic  website, “Liberia recorded a government debt equivalent to 28.80 percent of the country’s Gross Domestic Product in 2017. Government Debt to GDP in Liberia averaged 224.79 percent from 2004 until 2017, reaching an all time high of 720.73 percent in 2004 and a record low of 17.80 percent in 2014.”

It is evident that the Liberia dollar depreciation is based on local and international supply and demand and a preference for the stable US dollar which is used for imports. The Extractive industry which generates hard currency is under pressure from global factors and Liberia has not re-positioned its expectations and resources to absorb the shock of this loss of much needed hard currency.
There is no national economic innovation or vision from the Executive branch down to the ordinary person  and who, by the way, is dependent on effective government policies.

Money Changers

In a capitalist society as Liberia, the goal is to make a profit off any business endeavor. Money changers play a vital role in foreign exchange monetary transactions.

Money Changer
Money Changer in Liberia

Since the ordinary person or business cannot confidently go to the CBL or most commercial banks and have their requests for foreign exchange adequately serviced, they resort to the informal sector or un-regulated money changers. The risk of investment in the foreign exchange business by individuals means that they see themselves as serving a need that a weak government and Central Bank cannot adequately service; the provision of hard currency. The attending pressure on the Liberian dollar and its free fall against the US dollar is one consequence of the un-regulated regime of doing business as a money changer.

Because of the scarcity of USD, the petty trader and medium-to-big business “buy” US dollars or the equivalent in Liberian dollar for the purchase of goods and services internally and outside the country from the un-regulated money changers and are forced to increase the price of goods in order to recoup their capital and make a small profit for subsistence in the economic theater.

A lot of currencies float outside of the banking system and the domino effect is that “everyone” suffers from the high prices of commodities all around. Since the monetary black market is alive and well, there are suggestions that Government institute some verifiable and licensing for authorized money changers, hotels, RIA, the National Port, etc like they do for Western Union, Money Gram and commercial banks. But the efficacy of licensing money changers is only as good as implementation, incentives to the public and  enforcement and credibility of the CBL and government.

If it is convenient to go to a money changer hidden in the dark economy or black market, then the public will do so; the money changers will thrive and the high rate of the currencies disparity will persist.

Map of Liberia
Map of Liberia

If the Liberian government doesn’t understand the pinch and bind of the ordinary person, it means that they are un-prepared to address the declining state of the economy. and there will be consequences.

What the Liberian government has not fully explained is how the “buy back” of the depressed Liberian dollars will occur. Will the ordinary Liberian or businesses be able to walk into a commercial bank and exchange their Liberian dollars for US Dollars and at what rate? What policies and systems are there to discourage the external and physical flight of US Dollars once they  leave the vaults of the commercial banks and the CBL?

Economic Pressures

In a report issued November, 2017 by the <em>International Monetary Fund (IMF) entitled, Seventh and Eight Reviews Under The Extended Credit Facility Arrangement , And Request for Waiver of Non-Observance Criteria – Debt Sustainability Analysis, the organization concluded that “…Continued debt vulnerabilities call for a prudent debt management policy, a credible path of revenue mobilization and fiscal consolidation, and structural reforms to promote growth and economic diversification. The DSA shows that Liberia’s risk of debt distress remains moderate. The authorities agreed with staff’s assessment and share staff’s concerns about debt vulnerabilities. The authorities emphasize the importance of strengthening much-needed infrastructure while respecting the debt limits under the ECF. To keep the debt distress risk at moderate, they intend to continue prioritizing grants and concessional loans for pro-growth projects. Moreover, to enhance debt management capacity, (i) information flows between thelegislature, the President’s office, and the DMU of MFDP need to improve; and (ii) DMU needs to build capacity to do their own debt sustainability analysis and to update a medium-term debt strategy (MTDS) as needed. As Liberia remains vulnerable to external shocks (e.g., commodity price shocks) as a commodity exporter, the authorities need to be committed to a prudent borrowing strategy, the prioritization of pro-growth projects, and the diversification of the economy to make it more resilient to external shocks. Creating much needed fiscal space to meet social and development needs (one of the main pillars of the ECF-supported program) remains important and efforts on fiscal consolidation and revenue mobilization need to continue. While fiscal consolidation will be needed to keep a sustainable debt trajectory, the nature of the fiscal adjustment should not jeopardize critical spending for poverty reduction and productivity.”

MicroFinance Unit -CBL
MicroFinance Unit -CBL

The IMF’s signal to Liberia in that report, and in effect to the Weah Administration, is that no new loans would be forthcoming due to the risk of some potential debt distress. Liberia needs a serious approach to international borrowing and management of its resources.

Credit Rating Impact

Major investors, credit rating agencies and sovereign wealth funds, as part of their best practices and due diligence, undertake the review and use of credit ratings; Liberia being no exception. The credit rating of the country has a huge impact on its borrowing facilities and costs. Sadly, Liberia’s credit rating as cited by Standard & Poor, Moody’s, Fitch and DBRS is at 15; between 100 (riskless) and 0 (likely to default).

The rating is described as “speculative”. This designation is a red flag for investors and international borrowing facilities. The direct impact of a “speculative” designation is impacting the cost of food in Liberia.

According to website Trading Economics, “the cost of food in Liberia increased 20.10 percent in April of 2018 over the same month in the previous year. Food Inflation in Liberia averaged 10.97 percent from 2007 until 2018, reaching an all time high of 39.24 percent in August of 2008 and a record low of -4.24 percent in August of 2009”.

The CBL in its 2017 Annual Report admitted that “…the accompanying increase in the prices of petroleum products and food (rice) are likely to increase payments towards imports, possibly outweighing the increase in export prices, and inducing biflationary pressure…”

Gov. Weeks welcoming new Acting CBL Board Governor, Nathaniel Patray as Deputy Governor Sirleaf looks on
Former Gov. Weeks welcoming new Acting CBL Board Governor Nathaniel Patray

Other factors which impact the ability of Liberia to attract serious notice include the prevalence of graft in all sectors of society, a weak judiciary system, lack of major and reliable economic infrastructures, lack of technical and human capacity and poor financial structures and policies.

These complex and relative issues discussed mean little for the ordinary Liberian except what he/she wants change to happen quickly; economic change that puts food on the table and supports thrivability in tough economic times.

But The “Weah Economic Team” has not successfully communicated in lay terms what these challenges are nor do they have a rough blue-print on how the lay person will make it through the end of this week.

By Emmanuel Abalo

West African Journal Magazine

Press Statement: IMF Executive Board Concludes 2018 Article IV Consultation with Liberia

On June 8, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Liberia.

A new government is in place, with a mandate to achieve ambitious development objectives. Liberia’s economy appears poised for recovery, as growth bottomed out in 2016 and edged to 2.5 percent in 2017.

However, Liberia remains fragile with poor living conditions for the majority of the population. Moreover, a decline in aid inflows, which were elevated during 2014–16, has put pressure on the exchange rate and fiscal resources.

The government is thus facing the daunting task of pursuing a demanding development agenda in the face of high expectations, while also managing near-term adjustments and safeguarding macroeconomic stability.

Liberia Fiancé and Planning Minister Samuel Tweah

All the elements of the government’s medium-term development agenda have not been fully outline. The baseline scenario presented in this Article IV consultation is staff’s interpretation of the authorities’ stated policies as articulated at the time of the March 2018 mission.

The resulting analysis yielded insights into various sustainability issues. However, assuming the implementation of sound policies, the medium-term outlook appears favorable. The main upside risk is an increase in commodity prices and output, while downside risks include difficulties in mobilizing resources to fill the financing gap and in pursuing structural and institutional reforms.

Executive Board Assessment

Executive Directors noted that Liberia’s economy appears poised for recovery, but that significant fragilities remain, as reflected in the pressure on the exchange rate and on fiscal resources resulting from declining aid inflows.

Map of Liberia

Assuming sound policies, Directors agreed that the medium‑term outlook is favorable, albeit with risks. Directors welcomed the authorities’ pro‑poor agenda and noted that macroeconomic stability is essential for advancing this agenda. They stressed the critical need to mobilize resources, ensure debt sustainability, and pursue structural and institutional reforms to achieve higher growth and reduce poverty.

Directors underscored the need to anchor fiscal policy with the goal of ensuring debt sustainability over the medium term. Directors urged the authorities to increase efforts to mobilize additional domestic resources, including by enhancing the IT system of the revenue authority to improve tax compliance and efficiency.

They also emphasized that improved governance, and greater fiscal transparency and accountability are key to improving spending efficiency. Directors welcomed the authorities’ efforts to contain the public wage bill and encouraged redirection of budgetary expenditures to capital spending, especially for rebuilding infrastructure.

Central Bank of Liberia logo

Directors emphasized that future debt obligations should be undertaken transparently, limiting new debt to concessional terms, with effective implementation of infrastructure projects.

Directors underscored that maintaining macroeconomic stability will also hinge on effective implementation of monetary policy. To equip the Central Bank of Liberia (CBL) with effective operational tools, its recapitalization would be necessary. Directors also stressed the need to safeguard international reserves, and preserve governance principles and central bank independence.

Directors highlighted the need to strengthen the external position by allowing greater exchange rate flexibility, while maintaining price stability, instituting structural reforms to improve productivity and competitiveness, and by reducing the public saving‑investment gap.

Directors underscored the need to reduce risk in the banking sector. This would entail actions to reduce nonperforming loans, including by clearing government obligations to the banks, and completion of the implementation of the CBL’s Action Plan of reform.

Directors noted that the remittance surrender requirement, while currently appropriate, should be lifted when foreign exchange market conditions allow.

Flag of Liberia

Directors acknowledged that while there has been a recent improvement in trade and aid data, serious data shortcomings still need to be addressed. They urged continued enhancement of data quality, especially in national accounts and external data.

Directors also underscored the key role of capacity development and technical assistance for Liberia.

IMF Press Statement

Sierra Leone: 16 Candidates To Contest Presidential Elections on March 7th

In the lead up to its fourth democratic elections, the West African country of Sierra Leone’s electoral body, the National Electoral Commission (NEC) has released the provisional list of nominated candidates for the March 7th Presidential Election.

Sierra Leone National Election Commissioner Mohamed Nfah Alie Conteh
Sierra Leone National Election Commissioner Mohamed Nfah Alie Conteh

In a release signed by Chairman Mohamed Nfah Alie Conteh and issued on Monday in the capital Freetown, the NEC announced a a final list of 16 political parties cleared to contest and include:

Samura Kamara (APC),

Mohamed Kamaraimba Mansaray (ADP)

Samuel Sam-Sumana (C4C)

Alhaji Musa Tarawallie (CDP)

Mohamed C. Bah (NDA)

Dr. Kandeh K. Yumkella (NGC)

Patrick John O’Dwyer (NPD),

Jonathan Patrick Sandy (NURP)

Kandeh Baba Conteh (PLP)

Charles Francis Margai (PMDC)

Beresford Victor Williams (RNIP)

Gbandi Jemba Ngobeh (RUFP)

Rtd Brigadier Julius Maada Bio (SLPP)

Mohamed Turay Sowa (UDM)

Henry saa Kubata (UNPP) and

Josephine O. Claudius-Cole (UP)

APC Candidate Dr Samura Kamara
APC Candidate Dr Samura Kamara

The two major political parties are the ruling All People’s Congress (APC) which was founded in 1951 and now led by incumbent President Ernest Bai Koroma and the current opposition Sierra Leone People’s Party (SLPP) which was also founded during the colonial era in 1948. President Koroma is constitutionally ineligible to stand for re-election after serving 2 five-year terms since 2007.

SLPP Candidate Julius Maada Bio
SLPP Candidate Julius Maada Bio

The ruling APC’s candidate is Dr. Samura Kamara, a former foreign minister while the SLPP’s Presidential candidate is a retired military officer Mr. Julius Maada Bio. The much lesser known and smaller political parties are seeking to make strong parliamentary gains in order to establish leverage when the political horse-trading and negotiation kick in for support from the two major parties. Supporters of the ruling APC party candidate says Mr. Kamara is better suited to lead the country given his international diplomatic experience while supporters of the opposition SLPP candidate – the retired military officer say he is disciplined and best positioned to lead.

Last December, the Koroma Administration intervened to subsidize the nomination fees for elective offices of President, Members of Parliament, Mayor and Local Council. The NEC at the time announced that, ” … as a result of the intervention of the Chairman of the Political Parties Registration Commission (PPRC) through a letter dated 5th December, 2017, to the President of the Republic of Sierra Leone, His Excellency, the President has approved rthat the Government will absorb the difference in costs between the proposed revised fees outlined in the signed political parties resolution and the current fee contained in the Statutory Instrument No. 13 of 2012…”

Meantime, the US. Embassy in Sierra Leone has warned against growing election violence following a recent rampage by supporters of the ruling APC. One person was reportedly killed. According to a statement issued by the American diplomatic mission in Freetown, it said, “The U.S. Embassy is concerned about recent reports of violence and loss of life.  We extend deepest condolences to the victims and their families.  We appeal to all Sierra Leoneans to remain peaceful and respect the democratic process. While this is a time to engage in political activity, exchanges should be civil, and take place in an atmosphere of tolerance and respect…”

The statement further said,”…The U.S. Embassy urges all parties and candidates to reiterate to their constituents their commitment to a non-violent, law abiding and peaceful democratic process.”

Amnesty
Amnesty International

In adding its voice to the call for a peaceful election, Amnesty International (AI) on Friday, said, “Next month’s elections in Sierra Leone are another landmark moment, as the country recovers from the devastating Ebola outbreak, and there is no doubt that there will be vibrant rallies and passionate debate.”

Amnesty further noted that, “there is an essential role for the authorities to play in ensuring that every Sierra Leonean can participate in these elections, speaking out freely and assembling peacefully, in full safety.”

According to the NEC calendar, political campaigning starts on February 4 – March 5. There is a one day cooling off period on March 6th with no campaigning and polling date is March 7th. If no candidate wins outright, a run off poll will be conducted between March 24th – 28th between the two candidates with the highest votes.

Map of the Republic of Sierra Leone
Map of the Republic of Sierra Leone

In a separate development, the International Monetary Fund (IMF) says it is suspending financing to the Sierra Leone government for its failure to meet key budget outlook and growth targets. Following a development economic performance review last September in Freetown, the IMF concluded that it is “…currently working with the government to identify appropriate corrective measures that can be taken and when.”

Sierra Leone’s electoral body says there are about 3.1 million registered voters out of a population of a little over 7 million.

By Emmanuel Abalo 

West African Journal Magazine

 

Mauritania Receives IMF Grant for Economic Reforms

The International Monetary Fund, IMF has announced that the government of the West African nation of Mauritania is expected to receive a grant of $163 million assistance package to undertake economic reforms.  

Map of Mauritania
Map of Mauritania

According to the IMF, initial draft approval has been obtained and a final approval by the board of directors is expected in December, reports say. The conditional approval was made after the visit of an IMF delegation to Mauritania between September 25 – October 6.

 

IMF
IMF Logo

The IMF expects Mauritania to undertake reforms which address and foster inclusive and diversified growth, maintain the macro-economic stability, restore debt sustainability and reduce poverty.
The IMF also expects Nouakchott to improve banking supervision, improve business climate and develop the social security scheme, Jeune Afrique reports.

 The multi million dollar credit facility will assist with establishing a competitive exchange market and a modernized monetary policy framework. More credit facilities will be open to the country for the next few years.

The arrangement makes the Mauritania eligible for the credit over three years.

West African Journal Magazine