Economic indicators cited by the World Bank confirm that the economy of the West African nation of Liberia continues to decline.
World Bank Logo
According to its recently published overview of the the economic situation in Liberia, on October 12, 2018, the World Bank states that, “…The fiscal deficit widened to 5.2% of GDP in FY2018 compared to 4.8% of GDP in FY17, due to a significant short-fall in revenues and higher than anticipated non-discretionary expenditures. The shortfall in revenues (20% of the approved budget) is due to the slower than anticipated economic activities due to prolonged period of political uncertainty, tax waiver policies in the run up to the presidential elections, unresolved court dispute with respect to the collection of petroleum levy and lower than projected donor grants. Public sector wage bill as a percent of GDP overshot its target by one percentage point to 9.9% of GDP. Overall, the core non-discretionary expenditures such as the wage bill and interest payments constituted about 75% of domestic revenues…”
President George M. Weah
Since its inauguration in January, 2018, the George M. Weah Administration has been paralyzed by economic headwinds brought on by the global slump in commodity prices, rising global oil prices, withdrawal of the UN Mission in Liberia (UNMIL)in March, the outbreak of the Ebola pandemic between 2014 – 2016, an anemic agricultural sector, drops in donor inflow and diaspora remittances.
The World Bank says the attending consequences of the economic malaise are, “…The resultant rise in the cost of living and limited employment opportunities continue to undermine the welfare of Liberians. According to the 2016 Household Income and Expenditure Survey (HIES), more than half of the population (50.9%) is living in poverty. Poverty is more than two times higher in rural areas (71.6%) than in urban areas (31.5%) and is overall lower in Monrovia than in the rest of the country.
Transfers and remittances have a low impact on poverty in Liberia: for the poorest and most vulnerable households, transfers are neither widely prevalent nor high enough value to address the needs of the poor…”
Although the UN served notice of the eventual drawdown and exit of its mission in Liberia over a period of time, the country developed no strategic plans to sustain the economic shock of the loss of hard currency from the exit of the UN Mission.
Since 2005, UNMIL’s expenses for operations in Liberia amounted to about $7.5 billion USD and was considered as a main source for the availability of much needed hard currency in the country.
The Weah Administration has identified opportunities in road connectivity, energy and ports but investments have been slow to come even after nearly 10 months.
Medium term, the World Bank paints an optimistic outlook for Liberia saying,
“…The new Administration is expected to mitigate these risks by embarking on policy reforms that will promote economic diversification, improve the investment climate, promote domestic revenue mobilization and to ensure prudent borrowing strategy.”
Map of Liberia
In Liberia, the reality of the economic free fall is manifesting itself in increasing and unaffordable prices of basic commodities and resignation of struggling citizens to even harder times. 157 Liberian dollars are currently equivalent to 1 US dollar.
Despite calls to the Weah Administration to show a feasible economic plan and strategy to stem the national economic challenges, Government has remained largely silent.
The opposition Alternative National Congress (ANC) political party recently told Liberians to be truly concerned about the current “direction of the country.“
ANC leader Mr. Alexander B. Cummings strongly criticized the Weah Administration over its lack of organization and planning and refusal to accept recommendations to address its lack of capacity and knowledge about economic and governance matters.
The ANC leader Cummings has said although the opposition has no obligation to assist, “the government is arrogant in reaching out for assistance and the country is in trouble; yet it was the duty of all Liberians to help do what they can even if they, the government, feel that they don’t need help.”
ANC Leader Alexander B. Cummings.
He referenced an ANC economic blueprint which the party offered to the Weah government shortly after it took up governance of the country.
Political observers and diplomatic sources say Liberia offers no real international strategic importance and the refusal of the Weah Administration to implement much needed fiscal reforms and address issues of war and economic crimes are impacting its ability to attract sympathetic donor funding and investments from western countries and long time allies.
The global accountability and justice advocacy group the International Justice Group (IJG), in a statement issued in August on the issue of war and economic crimes, warned that, “…Under international justice, President Weah’s clear refusal poses serious consequences for Liberia’s prosperity in many ways.
From international sanctions to other activities such as travel ban of officials and others in government and the country, the pressure will be brought to bear by the International Justice Group as well as the 76 Group and others…”
Under heavy pressure and declining local favorability, the ruling Congress for Democratic Change Government has undertaken a full court effort to open a corridor to influential United States Congressional leaders for assistance to open the tap of US and international funding for the poor West African nation.
A congressional source on Capitol Hill says any consideration to approve loans to Liberia will have to address outstanding issues of war and economic crimes, corruption and governmental reforms.
Currently, a congressional resolution supporting the implementation of the Final Report of Liberia’s Truth and Reconciliation Commission and supported by the IJG and some international non-governmental organizations is making its way through committee in the US House of Representatives in Washington DC.
The resolution introduced by Republican Dan Donovan Jr. of New York calls for the full implementation of the Truth and Reconciliation Commission’s (TRC) recommendations, including the establishment of an extraordinary criminal tribunal for Liberia.
Liberia’s President George Manneh Weah has so far avoided taking a position on the implementation of the TRC recommendations; although he, at one point, voiced support for the prosecution of warlords in Liberia.
If the resolution passes US House of Representatives plenary, it will add additional pressure on the Weah Administration to directly address past war and economic crimes.
Liberia GDP Trend
According to the Trading Economics website, “External Debt in Liberia increased to 676.40 USD Million in the second quarter of 2018 from 649 USD Million in the first quarter of 2018. External Debt in Liberia averaged 533.56 USD Million from 2009 until 2018, reaching an all time high of 1681.92 USD Million in the third quarter of 2009 and a record low of 222.80 USD Million in the fourth quarter of 2010.“
By Emmanuel Abalo
West African Journal Magazine