IMF Cuts Liberia growth
The International Monetary Fund has cut down on Liberia’s 2019 growth outlook as inflation erode gains made in revenue collection.
Liberia is one of the poorest countries in the world, and its economy is extremely underdeveloped, largely due to the First Liberian Civil War in 1989-96. The civil war destroyed much of Liberia's economy, especially the infrastructure in and around Monrovia. The war also caused a brain drain and the loss of capital, as the civil war involved overthrowing the Americo-Liberian minority that ruled the country.
Liberia has relied heavily on vast amounts of foreign assistance, particularly from the United States, Sweden, Britain, France, Italy, Germany, the People's Republic of China, and Romania. But because of the Liberian Government's perceived disregard for human rights, foreign assistance to Liberia has declined drastically.
In a report published on its website, the International Monetary Fund said growth for Liberia is now estimated at 1.2 percent lower than 2.5 percent in 2017. It also said the forecast for 2019 on current policies has been reviewed down to 0.4 percent from 4.7 percent.
According to the IMF, Liberia’s inflation jumped to 28 percent in December. It said revenue reforms hold considerable potential to directly expand the resource envelop and enhance a needed rise in social spending.
The IMF staff in Liberia recommends significant action to improve the business climate while removing administrative constraints on imports and prices to boost competition.
Richly endowed with water, mineral resources, forests, and a climate favorable to agriculture, but poor in human capital, infrastructure, and stability, Liberia has a fairly typical profile for Sub-Saharan African economies – the majority of the population is reliant on subsistence agriculture, while exports are dominated by raw commodities such as rubber and iron ore.
Our assessment is that Liberia’s long march of reconstruction is being hindered by an inflationary trend in the economy without a corresponding social security spending program. We believe that Liberia should cut down on excessive regulations in the economy to boost competitiveness and operational efficiency.
Image Courtesy: John Atherton
(https://commons.wikimedia.org/wiki/File:Young_boy_grinding_sugar_cane_in_Liberia.jpg), „Young boy grinding sugar cane in Liberia“, https://creativecommons.org/licenses/by-sa/2.0/legalcode