Ebola Effects: Price Hikes, Low Supply

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The outbreak of the deadly Ebola virus disease (EVD) has posed serious threats to Liberia’s post-war economic recovery process, the country’s financial experts have observed. The EVD, according to the World Health Organization (WHO), has killed over 1,200 people in Liberia alone and infected over 1,000 people. Many foreign concessions have scaled down operations and evacuated their expatriate staff to escape being infected.

 There is report of huge increases in the number of Ebola-related new cases in Liberia over the last few days creating the need for urgent and affirmative international response.

 On the economic front, the government is reporting a breakdown in key sectors of the economy including the hospitality, extractive and even the agriculture sectors, where productivity is at low ebb as workers are told to ‘wait and see.’

 Many contractors for foreign companies have declared force majeure and left the country.

 “Public and private institutions have also scaled down operations in order to maintain lowest possible head count of staff and thereby avoid close contact in work place,” Mr. Amara Konneh, Liberia’s Acting Minister of Finance and Development Planning said.

 According to Mr. Konneh, productivity in various sectors of the economy is being adversely affected as a result of the slowdown of operations by businesses and public entities. Preliminary estimates of the economy showed declined in projected GDP.

 It indicates that real gross domestic product (GDP) for 2014 is projected to decline by about 3.4 percent to about 2.5 percent, from the original 5.9 percent growth estimate earlier projected by the International Monetary Fund (IMF).

 The Acting Finance Minister also disclosed that increase in government spending amidst dwindling revenues announcing that the total impact of the Ebola crisis to the economy would be in the range of over US$120 million.  He announced public recurrent spending cuts and urged officials to accept and live by the decision.

 Minister Konneh’s announcement comes just in time when the government of Liberia is holding series of meetings with its bilateral and multilateral partners seeking grants and loans to repair the economy and restore it to the pre-Ebola era.

 There is also report suggesting the government is realigning the current 2013/2014 fiscal budget to redirect public revenue to address some of the challenges the Ebola virus outbreak is causing the economy. Liberia’s current fiscal budget is to the tune of about US$590 million.

 But the budget performance has been undermined by huge decline in revenue generation. Cross border trade is at standstill and the country’s main airport is reportedly losing over US$1.6 million monthly as leading airlines has suspended flights to Monrovia due to the Ebola outbreak.

 Many small businesses are also hit as demand has dropped drastically. However, there are shortages of detergent and bleach products being used to reduce germs and fight Ebola in the country.

 The prices of detergents, chloral, and chlorine and hand sanitizer have nearly double compared to their pre-Ebola prices, creating further affordability fear by ordinary people. For example, the small bottle of chlorine sold at L$150 prior to the Ebola crisis is sold for US$10.00 or L$840.00.

 The shortages of bleach products and some food items is getting vivid at leading shopping centers and supermarkets in Monrovia signaling the extent at which the economic is heading [for a catastrophic moment] if invention by the international community is further delayed.

 The production and supply of locally produced detergents and bleach products is low amidst high demand. Several containers of hand sanitizer and sanitation products are blocked in Guinea as the borders remain closed said an importer.

 “I don’t want my name mentioned in your story, but this Ebola crisis has thrown everything backward,” said this Liberian importer. “I am trying to convince the government to allow me to import my 40ft container containing the best detergents and hand sanitizer from Guinea.”

 The white alcohol is also short on the local. A tour of many drugstores, shops and pharmacies by our business desk last week showed that only the green alcohol was available. Store owners told our reporter that they had put in for new orders, but delivery was taking so long.

 A supermarket owner in Monrovia told our reporter that goods are getting short on the shelves because vessels are not coming to Liberia as it was prior to the Ebola virus outbreak. “No ship coming now until after nine months,” said this Indian businessman on condition of anonymity.

 “Can’t you that ship owners are afraid to come to Liberia, Guinea and Sierra Leone,” he asked. Few weeks ago, the port authority of Monrovia dismissed speculation that ships were not coming to Monrovia.

 The port authority’s deputy managing director Mr. Nyekeh Forkpa announced that 10 ships were expected to birth at the Freeport of Monrovia in the first week of September, 2014.

 The public is now expecting the government to step in through the Ministry of Commerce and Industry to ensure that importers and wholesalers don’t hoard goods to create artificial shortage on the market to maximize profit.

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