The Central Bank of Liberia (CBL) has suggested that the Government redouble its efforts aimed at building a vibrant private sector through, among others, the provision of strong credit support, especially to the agriculture, services and manufacturing sectors in order to ensure a better growth performance and stronger support for Liberian entrepreneurship.
“It would accelerate job creation and the realization of Liberia becoming a middle income country in line with the Government’s Agenda for Transformation (AfT),” said CBL its 2015 policy statement, released earlier this week.
“We also intervened in the real sector through credit easing and credit guarantee, especially for the rubber and housing sectors; and rolling over microfinance payments under the credit unions and village savings and loan associations operating in rural Liberia, affected by the Ebola crisis,” the statement noted.
Credit easing is a policy tool used by central banks to make credit more readily available in the event of a financial crisis. Credit guarantee, however, is the guarantee that often provides for a specific remedy to creditor if debtor does not return the debt.
According to the report, they (CBL) have observed that the just ended Ebola outbreak, which plagued the country, last year exposed the structural weaknesses of the Liberian economy; highlighting the compelling need for a more concerted effort to restructure the economy.
The statement places greater emphasis on value-addition mode of domestic production, especially in the agriculture and manufacturing sectors.
“It is important to note that the economy is estimated to grow under one percent for 2014 and 2015, and although projected to rebound and average around 5.0 percent growth in the medium term (2014-2020), it is by far lower than the pre-Ebola (2006-2013) growth of about 8.0 percent,” the CBL explained.
The statement noted further that such growth trend is inadequate to create significant employment and make a positive change in poverty reductions.
Accordingly, “there is a need for appropriate macroeconomic management tools to promote diversification for more inclusive growth and development in the country,” the CBL said.
Mr. Jefferson Kambo, Officer-in-Charge of Research at the CBL, explained to the Daily Observer via phone that if iron ore and rubber can be processed into steel and tires (respectively) in Liberia, this would help to “modify our growth so that the growth would be sustainable.”
According to him, Liberia has good soil, yet, “We are still importing rice. We need to put our efforts together to transform our economy by producing our own product here.”
Also, the CBL’s eight-page policy statement discloses that the Bank is working to develop an appropriate framework that involves private investors to finance agriculture and housing.