State of the Economy

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President Ellen Johnson Sirleaf today faces a joint session of the 53rd Legislature to deliver her State of the Nation Address.

The President’s address to focus mainly on the economy as the country experiences not only depreciation of its currency to the US dollar, rising (youth) unemployment, structural issues and the need to raise more money to finance government’s development projects.

The joint session is the highest forum provided by law for the President to brief the lawmakers about happenings in the country including national security, governance and rule of law, foreign affairs and, of course, the state of the country’s economy, amongst others .

From the perspective of the economy, the Observer’s Business Desk analyzes what Liberians expect to hear from their President as she delivers her 2014 Annual Message to the legislature on Capitol Hill and projects the government’s strategy for 2014 taking clue from her last year’s message. The economy, of course, is everybody’s interest.

In 2011, just as the Eurozone debt and unemployment crises were climaxing, the Liberian economy was concomitantly easing out of near recession.

That Eurozone crisis came just as the global food and fuel crises, which created both structural and financial downtrends in the United States and Europe, was easing. That crisis definitely inflicted serious side effects to Liberia’s post-conflict economic growth.

Remittances inflow was hit amid the government’s challenging debt relief campaign under the Heavily Indebted Poor Country (HIPC) program, which restricted the government from borrowing.

Liberia’s key creditors such as the International Monetary Fund (IMF), World Bank, the Paris Club, the United States and other bilateral creditors were knocking at the country’s doors asking it to adhere to the terms of the HIPC Agreement.

In her Annual Message to the legislature in January, 2013, President Sirleaf explained how 2012 was challenging for the world economy particularly, the Eurozone debt crisis, which slowed recovery in major economies, fluctuated international commodity prices and climate change.

She told the legislators that these factors represented major risks to Liberia’s growth and development, but projected that with the easing of the Eurozone crisis, Liberia was able to withstand the challenge.

With inflation in single digit at about 7% in 2013, Liberians expect their President’s report that inflation remained in a single digit in 2014.

Exchange Rate

With the rising depreciation of the exchange rate between the United States and the Liberian dollars, Liberians strongly expect President Sirleaf to make serious policy statement.

The Liberian dollar depreciated against the US dollar during the last five months of 2013 and entered into 2014, exchanging at L$88 to US$1.

Though the rate has artificially dropped to L$79 to US$1.00 over the last five days, Liberians expect their President to announce policy measures that would curtail instability on the exchange market.

This is because most Liberians earn their living on the Liberian dollar. In 2013 when President Sirleaf delivered her Annual Message, the exchange rate between the two legal tenders was L$72 to US$1.

The people want to hear that exchange rate has dropped below L$70 because they know that with a lower exchange rate, their purchasing power will increase since they widely use the domestic currency.

Efficient Budget Management

President will be expected to talk about strong budget management and reforms that will highlight a well-organized budget management, tackle corruption and ensure inclusive growth.

The growing news about revenue shortfalls to finance the budget sounds uncomfortable for the public particularly, when they have been informed by the government that the 2013/14 fiscal envelop is core revenue.

Now, they expect the President to talk about this issue including inclusive growth practical term and how said growth can actually affect their lives in terms of what they put on their table. They don’t want to hear rhetoric from their President about how her Administration managed the National Budget with efficiency “while consolidating existing and instituting new reforms.”

The people will get bore if the President presents huge financial figures to them without naming tangible achievements that affect their lives such as road and other government-funded projects that were completed in 2013. The President, as they expect, will be talking about progress on the Monrovia-Ganta Road project and other projects.

GOL’s Fiscal Rules

The people will want to know in clear and practical terms, GOL’s fiscal rules put into place for borrowing. They will also want to know the country’s debt stock both domestic and foreign including a clear picture on how the debts are being accrued and repayment strategies.

They would want to know the government’s guidelines for government guarantees for state own enterprises (SOE) borrowing, which we are told, requires a case-by-case financial assessment by the Debt Management Committee.

Money Borrowed

The public will also be interested to knowing from their President some of the projects being implemented by monies borrowed in their names. They would want to clearly know the status of those projects—whether they are completed or not.

Mount Coffee Hydro Power Plant

The public also has interest in knowing clearly, the status of the Mount Coffee Hydroelectric Plant—when will the project commence and when will it be completed. The President is expected to speak to the progress of the state of the country’s energy need and progress being made to address them.

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