In fulfillment of his constitutional mandate to deliver the State of the Nation Address to Members of the National Legislature, President George M. Weah on Monday, January 28, said Liberia’s trade deficit stands at US$561.8 million for the period of January to November 2018.
Although this represents a 17.1 percent improvement, as compared to US$677.3 million for the same period in 2017, it is important to note that the weak performance of the real economy has for so long been characterized by low export earnings as compared to payments for imports, he said.
President Weah said though there has been improvement in the trade balance in 2018, the Liberian dollar still remains under pressure. He explained that performance of two of “our key commodities (iron ore and rubber) showed some level of improvements during the period under review.”
According to him, receipts from iron ore exports almost doubled, from $57.8 million United States dollars, to US$$106.5 million, while rubber exports grew slightly from US$67 million to $68.9, compared to the same period in 2017.
Weah added, “In order to improve the external sector of the economy, there is an urgent need to support domestic production, which requires a major structural transformation of our economy. In this regard, under the Pro-Poor Agenda, agriculture has been considered a matter of priority to achieve this structural reform.”
He told members of the 54th National Legislature that the gross foreign reserves at the end of November 2018 was US$410.2 million, reflecting a slight decline of 1.7 percent compared to the end of December 2017. This slight, according to him, decline in gross foreign reserves can be largely attributed to low export earnings.
Despite the challenges faced in the economy, the banking system remained resilient during the year under review; President Weah said in his annual message that the banking system further experienced improvement in aggregate assets, deposits, loans and capitalization.
However, the stock of non-performing loans remains a major challenge for the banking system. The Central Bank is taking steps, including establishing a robust credit reference system, to address the issue of non-performing loans.
At the same time, Weah noted that his Government is working to improve the legal and policy environment to improve access to credit and to resolve other challenges in the private sector.
Nevertheless, the banking sector continues to play a significant role in providing credit to the economy. Credit to the private sector, which serves as the main engine of growth, rose by over 36.8 percent at the end of October 2018.
In addition, total credit as a percentage of GDP increased from 13.1 percent (2017) to 13.4 percent (2018), largely as a result of growth in loans to all major sectors, especially, the extractive sector, oil & gas sector, and the manufacturing sector.
“We like to assure members of the banking sector that the Government of Liberia is committed to settling Government debt owed to banks from the previous administration,” he added.
Regarding the insurance sector, Weah said the Central Bank of Liberia and the Government remains focused on implementing reform of the sector. The measures taken to bring stability to the sector have led to some improvement in the regulatory landscape and the sector.
He said Liberia has made progress in deepening the financial system through the national payments system and digital financial space. There has been an uptake in the use of mobile money services across the country as well as the automatic tellers’ machines (ATMs), which have helped to increase access to payment.
The Government continues to pay civil servants through this mechanism, and there are efforts underway to use such digital platforms for Government revenue collection. These efforts are part of the Government’s vision to digitize the Liberian economy and transition to cash-less society.