Is GOL’s Economic Plan Feasible?

0
779
Untitled-1.jpg

President Ellen Johnson Sirleaf signed the fiscal budget into law last week vetoing a US$25 million budget line item included in the approved budget by members of the legislature during the budget hearing. According to some of the legislators, the US$25 million is realizable for the fact that the government is expected to sign and receive a lump sum US$120 million signature fees from the sales of the remaining oil blocks LB-6, LB-7, LB-16 and LB-17 during the course of next year.

 For the fact that Liberian businessman and financial expert Harry A. Greaves, Jr. had a writ of injunction on the opening of the bid for the remaining oil blocks defeated last week, sends strong signal the government would receive an estimated US$25 million signature fee from each of the remaining blocks.

 With the Ebola crisis having inflicted serious setback to the economy, many people are worried as to whether the government’s new economic plan announced recently is achievable. Finance Minister Amara M. Konneh announced the Economic Stabilization and Recovery Plan (ERSP) recently singling out targeted sectors of the economy for public investment beginning January, 2015.

 “Our strategy is to invest the US$174.0 million in activities that restore the provision of basic services currently suspended or limited as a result of the crisis, as well as provide avenues for the increase of the formerly vibrant economic activity,” Konneh said. But with plans by the government to dish out US$35 million to smallholder farmers as loan through the banks, many people believe that project is bound to fail.

 “Giving cash to farmers to make farms is not bad, but will they produce enough to make the country self-sufficient,” wondered a local bank executive on condition of anonymity. Many people want the fiscal arm of government [Ministry of Finance and Development Planning] to avoid lending money to smallholder subsistence farmers and engage now in supporting mechanized farming to increase productivity and yields to feed the people of Liberia and even export.

 “The Central Bank of Liberia (CBL), am aware, has a program with Afriland Bank where smallholder farmers are having access to funds directly for the agriculture sector,” said Mr. David James, a local farmer who says he wants the government to support mechanize farming. “We have engaged in subsistence farming for over a century, but yet, we can’t still feed ourselves as a country.”

 Mr. James wants the government [invisible hand] to now come out and take the lead warning “if this is not done we will still be here.” The government has announced it will be investing US$35 million to the agriculture sector, which it says is the lowest hanging fruit to the economic growth and development, to enhance food security and create jobs. It will also US$60 million in revitalizing the health sector and improving basic health service delivery throughout the country, in addition to ongoing support to the sector to eradicate Ebola and US$30 million in support of the educational sector, to reduce the illiteracy rate and enhance national human capacity development efforts – a necessary recipe for poverty reduction.

 The government also declared that it will invest US$25 million towards conditional cash transfers, to provide a social safety net for the significant portion of our populace affected by the Ebola virus disease crisis and US$10 million into the activities of the domestic private sector, considered by the government as the engine of growth, to reverse the slowdown in economic activity and create jobs, amongst others.

 The lack of proper account is a challenge that belies the implementation of this plan. With the bad credit of many Liberians, some skeptics and critics of ERSP warned there must be a better process to implement.

 “I think that we should utilize our strong relationship with the Chinese and urge for their support in the agriculture sector so that we can engage in mechanize farming. We need to tell the Chinese to help us with train mechanize farmers and equipment and then the government provides the manpower so that we can take over the abandoned concession awarded to ADA/LAP in Lofa County and restart the project,” said Mr. James. Liberia is an import-dependent country.

 The country imports about 85 percent of the commodities it consumes. Some economists including Central Bank Government Joseph Mills Jones believe that this trend must change. “We must think outside the box because we have not succeeded in the way we have been doing things,” said Governor Jones in a speech he delivered in last January.

 “We have been working with our colleagues in government and our development partners to address some of the vexing issues undermining our trade position and our overall economic strength. The result is the development of an Economic Stabilization and Recovery Plan, designed to mitigate the effects of the slump in economic activities in the short term, and institute measures to restore the economy to its former trajectory of sustained, rapid growth, consistent with our medium and long term development goals,” Finance Minister Konneh said. Konneh assured the public the government is fully committed to investing its meager resource envelope, to demonstrate ownership of the plan, while engaging development partners to support it directly through the national budget.

Authors

LEAVE A REPLY

Please enter your comment!
Please enter your name here