World Bank indexes drawbacks to Liberian economy

The headquarters of the Central Bank of Liberia, in Monrovia. Photo : Reuters

Addis Ababa, Ethiopia (ADV) – Multiple shocks are maintaining more than half of the Liberian population in a poverty situation, a World Bank report has said.

The latest World Bank report revealed that the withdrawal of the United Nations peacekeeping forces, and the hallucinating Ebola crisis are still affecting the Liberian economy.

Other shocks that are faltering the Liberian economy include risks associated with the political transition from the Ellen Sirleaf’s 12 year-rule which virtually failed to forestall bad governance especially in the financial domain.

The aftershocks also include the collapse of commodity prices especially iron ore and cash crops like coffee, cocoa and riubber latex which Liberia is a major exporter on the continent.

Further to that is the fact rise in the cost of living and limited employment opportunities continue.

The report released at the weekend said that Liberia’s economy is driven largely by increased production of gold and iron ore, following the upsurge in the prices of gold and iron ore on the international market as non-mining sector Gross Domestic Product (GDP) growth remains very low.

It explained that inflation continued to rise during the year, reaching an all-time high of 24 percent in June 2018 from 10.8 percent, the same period last year, adding that, this is largely due to a sharp drop in foreign exchange supply following the drop in exports and donor inflows.

The fiscal deficit widened to 5.2 percent of the GDP in fiscal year 2018, compared to 4.8 percent of GDP in FY2018, due to a significant shortfall in revenues and higher than anticipated non-discretionary expenditures, the report explained.

Further to that, the report said the shortfall in revenues by 20 percent of the approved budget is due to the slower than anticipated economic activities in line to prolonged period of political uncertainty, tax waiver policies in the run up to the presidential elections.

Added to that also is the unsolved court disputes with respect to the collection of petroleum levy and lower than projected donor grants.

However, the report said that the medium term economic outlook is optimistic despite substantial downside risks, which include a further slump in commodity prices, incomplete structural and institutional reforms, and risky borrowing.

The new administration, the report stated, is expected to mitigate these risks by embarking on policy reforms that will promote economic diversification, improve the investment climate, and promote domestic revenue mobilization and to ensure prudent borrowing strategy.

President George M. Weah has however pledged to alleviate poverty through his Pro-Poor Agenda for Prosperity by reducing the marginalization of the most vulnerable, contribute to the country’s development, among others.

© Bur-csa – A.H – N.A / From our regional correspondent Tamba Jean-Matthew III– African Daily Voice (ADV)