Liberia’s Infrastructure Among Lowest Quality Worldwide

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The International Monetary Fund (IMF) 2016 Report on Liberia show that Liberia’s scores on the perceived quality of capital infrastructure, including social infrastructure are below the average of ECOWAS member countries.

The report, which was released in December 22, volume 16/393 survey results implied that the quality of infrastructure in the health and education sectors, in which there had been little recent investment, was low.

IMF report further said that the quality of road infrastructure also perceived as much worse than the average of ECOWAS member countries, and is ranked as one of the lowest in the world.

Measures of the quality of infrastructure indicators were derived from the indices included in the annual Global Competitiveness Reports published by the WEF.

These indices were based on the World Economic forum’s (WEF) Executive Opinion Survey which was a survey of a representative sample of business leaders in various countries.

The report also indicated that Liberia’s public capital per capita was still the lowest in the region, despite much investment in public spending through donor-funding.

Though the capital stock as a ratio of Gross Domestic Product (GDP) now approximates the average of Sub-Saharan Africa countries, the country’s per capita stock remained the lowest among the ECOWAS member countries.

This calculation, according to the IMF, reinforces the country’s need for increasing public investment efficiency in order to improve the delivery of key public services and achieve the country’s medium- and long-term development goals and sustained economic growth.

According to the report, limited fiscal space for capital spending was a constraint on efforts to increase the stock of infrastructure and other productive investment.

When Liberia reached the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative in June 2010, according to the report, the gross debt of the general government had been reduced to 30 percent of GDP, but the widened fiscal deficit during the Ebola outbreak increased public debt to 36 percent of GDP in FY2015.

There was also a large stock of proposals for external loans on which negotiations between the Government of Liberia and the donors had not yet been completed.

If approved and fully disbursed, these loans could potentially create additional public debt up to 40 percent of GDP.

The report: “High levels of recurrent spending in the budget limits the amount of fiscal space that is available for public investment.

The ratio of recurrent spending to total central government expenditure is estimated at 82 percent in FY2016, higher than peer countries (for example, around 75 percent in Ghana and 65 percent in Sierra Leone), and among the highest in Sub-Saharan Africa.

“Public investment through the budget is also highly volatile.”

Over the last three years, the execution rates for GoL funded capital expenditure has varied widely, ranging from 41 percent to 102 percent of the original budget, partly because appropriations for Public Sector Investment Program capital projects are often revised significantly during the fiscal year.

As a result, Liberia’s public investment financed through the budget has been more volatile than in peer countries in recent years, and budget allocations for public investment have been unpredictable and uncertain.

In addition, the actual disbursements to externally-financed public investment projects are only around 40 percent of the projected level.

This large deviation further contributes to the uncertainty of resources available for capital spending.”

The IMF report further indicated that about 80 percent of public investment was financed through external sources that were not appropriated in the budget.

This pattern, according to the report, had not changed since the formation of the current government. Over the last three years, public investment financed by external loans represented about 22 percent of total investment.

“All outstanding external loans are concessional and provided by multilateral and bilateral donors.

The share of externally financed public investment is higher than in peer countries (for example, around 50 percent in Ghana and 60 percent in Sierra Leone in recent years).

The functional allocation of public investment in Liberia had focused on economic infrastructure in recent years, as planned in the Agenda for Transformation.

“Between FY2014 and FY2016, the share of capital investment in such infrastructure was substantially higher than in other Sub-Saharan African countries.

Investment in economic infrastructure mainly comprises energy and road projects implemented by the Ministry of Lands, Mines, and Energy (MLME), the MPW, and the Liberia Electricity Corporation (LEC), in order to address the significant infrastructure gap in these sectors.”

In contrast, capital investment in social projects, in particular the health and education sectors, was considerably lower than in other Sub-Saharan African countries.

At the same time, a majority of non-capital externally-financed projects were allocated to the health and education sectors.

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