Ebola Responsible for Liberia’s Economic Underperformance

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As a result of the Ebola virus disease, Liberia is expected to markedly underperform in its 2014 and 2015 growth projections,” according to Mr. Jefferson Kambo, Officer-in-Charge, Research Department, Central Bank of Liberia.

Mr. Kambo made the disclosure on Thursday, November 13 at the opening of a two-day forum on Economic Recovery from the Impact of the Ebola Epidemic.

The forum was organized by the Consortium of Concerned Businesses in Liberia in collaboration with the United Nations Development Program (UNDP), World Bank, National Investment Commission (NIC) and the Ministry of Commerce and Industry (MoCI). It was held under the theme: “Strengthen Trade and Commerce for Post-Ebola Liberia.”

Mr. Kambo, who proxy for Dr. J. Mills Jones, Governor, CBL, said the Reserved Gross Domestic Product (RDGP) growth in 2014 has reduced from 5.9 percent to 0.4 percent meaning, there is a double-digit inflation.

According to him, the economy is projected to remain stagnant (0.0 percent RGDP growth) in 2015 if the crisis continues.

He said the economy has declined in mining, services and agricultural output that are driving the poor growth performance.

Mr. Kambo further stated that though the international oil prices have been falling, the decline in domestic food production and increased freight and insurance charges on imports have largely led to double-digit inflation since June 2014.

He maintained that coupled with decline in export earning, largely from rubber and iron ore, the recent move by the US Federal Reserve to end expansionary monetary policy (QE) will lead to a stronger US dollar globally, with concerns for stability in the value of the Liberian dollar in the near term.

He also disclosed that the Ebola impact has also affected the domestic banking sector in several ways, including, decline in deposits and assets, especially during the third quarter (July to Sept. 2014).

Despite the negative impacts, the CBL has been resilient and has provided prudent supervisory oversight, which has yielded positive results, said Kambo.

 “All nine banks maintain strong liquidity positions, remaining above the regulatory threshold throughout the crisis, adding that the banking sector continues to maintain strong capital adequacy, with all nine banks remaining well above the regulatory Capital Adequacy Ratio (CAR) of 10.0 percent,” Mr. Kambo stated.

Through CBL’s risk-based supervision and macro-prudential policies, risk management within the sector has improved tremendously over the past few years, he maintained.

Also speaking, Sam P. Jackson, consultant and Economist added that the post Ebola recovery strategy must not be based upon business as usual.

Mr. Jackson said government must change the way it does business and if it wants to change the condition of ordinary Liberians during the post Ebola era.

He said the definition of ‘insanity’ is doing the same things over and over and expecting a different result.

He stressed that the country should create a friendly atmosphere so that doing business can lead to productivity.

The Liberian economist said these are grimed statistics though, but Liberians are not in an entirely hopeless situation.

He believed that the situation can be changed, provided if post recovery strategy is not based on business as usual.

For his part, Dr. Byron Tarr, Director, Center for Policy Studies told the business audience that Ebola is only a manifestation of the collapse of a dysfunctional governance system built around elites since the independence of Liberia.

Foreign Direct Investment, the main source of exclusive growth in the country’s economic history, is not necessarily the best alternative for national development, adding that concessions usually confer the right to exploit resources outside of a concessionaire’s core activities.

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