Commerce Minister Axel Addy has said the country’s debt has increased to US$948 million or 45% of Gross Domestic Product (GDP) as the Government tackles investment in road construction, energy and port infrastructures.
The Minister said following the country’s qualification for debt relief in 2008, under the scheme of the Highly Indebted Poor Countries (HIPC), when Liberia gross debt was reduced from US$4.5 billion to US$432 million, “Our debt GDP ratio also collapsed to 33 %.”
At the same time, Minister Addy told journalists that the country’s trade deficit has progressively reduced as imports boomed from 11% of GDP in 2006 to 39%, or US$800 million, in 2015. Again, “we know that this is sustainable.”
Over the past 10 years, he said, Government development partners have supported the country’s development agenda by providing grants of US$471 million in 2013/2014 and US$553.5 million in 2014 to 2015.
“At 27% of GDP – one of the highest rates of aid in the world — we also know that this level of aid is not sustainable,” Addy said.
“To address this,” he continued, “we have increasingly taken on this role, with government revenues rising from just 11% of GDP in 2005 to 33% of GDP in 2015, and government expenditures rising from 11% of GDP in 2005 to 45% of GDP in 2015. Such rapid rises in Government revenues and expenditures reflect the progress that has been made, but also suggest that such a rapid rise in revenue collection is also unsustainable without a parallel rapid rise in GDP.
“Yet we also know that our GDP growth since 2006 has been driven by extractives, mainly iron ore and natural rubber,” said Addy.
Speaking to journalists at the Information Ministry regular press briefing yesterday, the Commerce Minister said the vulnerability of these two commodities to the global commodity price slump and the lack of jobs, economic spillovers and inclusiveness created by these commodities have made it clear that the country’s primary focus must now be to restructure the economy, through diversification toward inclusive sectors.
“Today, we see major investments in energy, roads and port infrastructure including the planned reopening of Liberia’s Mt. Coffee Hydro power plant at the end of this year and the completion of the highway from Monrovia to Bong and Nimba counties, Liberia’s agricultural heartland—we see the value economic diversification through agriculture, agro-processing and manufacturing as key to creating sustainable and equitable employment for our people,” he said.
He said further that, to achieve economic diversification, large-scale job creation and economic spillovers, we must focus on a mix of trade facilitation, particularly for local value addition businesses.
“We also need to improve the investment climate; and focusing on the targeted development of sectors in which we know we have a comparative advantage in an increasingly globalized economy,” Minister Addy Urged.
In addition, Minister Addy said in keeping with Executive Order 74, the World Trade Organization (WTO) Liberia Post Accession Plan (LPAP) has been developed with a structure of coordination in place.
He said Government has already identified a number of critical trade facilitation reform projects, such as the adoption of the ECOWAS Common External Tariff, a single window platform for the automation of trade transactions at the ports, a trade information portal, pre-arrival processing, and improved risk management by the Automated System for Customs Data (ASYCUDA).
According to him, under the LPAP, Government will improve cross border management, simplification of customs procedures, electronic business registration, automation of tax procedures, security screening and visas on arrival, a streamlined work permit system, the establishment of sanitary and phytosanitary framework and the planned accreditation of the National Standards Laboratory.
Minister Addy said in order to carry on these developments in the country, support is now needed by everyone in taking these programs forward.