Former Finance Minister under the immediate past ruling Unity Party, Amara Konneh, is not too happy with the economic governance of Liberia and therefore has urged the Liberian government to build “the resilience to withstand any future crisis.”
Former Minister Konneh currently serves the World Bank as head of its Fragility, Conflict, Violence and Forced Displacement Hub in Nairobi, Kenya.
He said the inflation numbers in the Central Bank of Liberia’s (CBL) Report released a few days ago are alarming. In its 2018 report, which it subsequently took down, the CBL provided some fiscal and monetary statistics. The highlights of the CBL report are:
Budget shortfall – US$225 million or 7 percent of GDP
Inflation doubles – from 2017 and triples from 2016 to nearly 24%
Liberian Dollar – falls precipitously from 117.2 to 160 against the US Dollar
Personal Inward Remittances drops sharply by US$101.9 million
The CDC-led government takes the public external debt stock to US$987.8 million – up 18% or a whopping 30% of GDP.
In a commentary, dubbed Constructive Engagement, posted on his social media page, the former Finance Minister wrote, “If I had to select one sentence to describe the state of the world tonight, I would say we are living in strange times, broadly speaking. The global economy is growing still with a relatively acceptable GDP growth, 3.1% last year, but slowing down this year, according to projections.
“Everyone following the trend would agree that there are dark clouds on the horizon, and there are risks – trade tensions, creeping higher debts, instability in financial markets and climate change affecting agricultural production and therefore food security.
“When one looks at these risks, there is really an affinity between the intrigues of international relations with progress in the poorest economies,” he noted.
An understanding of macroeconomics, Konneh noted, is fundamental to acting responsibly in business, government, non-governmental organizations and as citizens. “Economics is not poetry; it’s about people, especially the poorest of the poor. Inflation is simply an increase in prices of basic commodities and a decrease in people’s purchasing power,” he said, adding, “The inflation numbers in the CBL Report are alarming! This is the time to build in the resilience to withstand any future global crisis.”
“Trust me, I have been through several crises from food to financial, commodity price decline and Ebola crisis.”
The WB official noted that a vibrant fiscal policy ought to now focus on fiscal consolidation to manage fluctuations in government finances and lubricate the circular flow of the economy, domestic resource mobilization, and debt management.
“The CBL should now focus on reducing inflation to a single digit, stable exchange rate, financial sector liquidity, and the CBL’s credibility, by not compromising its independence and regulations. Get tough! Ensure rule of law and contract enforcement to the letter in order to attract sound investments that bring in hard currencies and jobs,” he admonished.
He added that like in all poor countries, the Liberian government and the citizenry need to work together than ever, saying it is not feasible to successfully transform a national economy recovering from nearly two generations of declines and the largest collapse in growth economics through isolated responses.
“Solutions must be interwoven and need to be inclusive on the national level. Inclusion and nationalism require engaging – not only engagement among those in authority, but also with opposition political parties, the business community, civil society, academia, women, student/youth communities, and development partners/donors. They are all part of the process of analyzing problems, to defining strategies, to establishing policies, and implementing solutions,” he said.
“There is no guarantee that good ideas will always prevail, but you must recognize the challenges, concentrate and leverage your resources, focus and keep trying. The road to success is always under construction,” Mr. Konneh, who during his tenure as Minister was dubbed “Mr. Budget Shortfall” because of his consistent failure to meet the target, said.
Biggest Budget Shortfall Ever?
Meanwhile, a research scientist and development specialist Dr. Joseph Nimene, Sr. has said the government is faced with the country’s highest budget shortfall in history. The government has, however, denied this indicating that what it is rather facing is a budget deficit.
But according to Dr. Nimene, data captured from several sources, including the Ministry of Finance, World Bank IMF and others, showed that the Liberian government’s fiscal operations have “recorded one of the most significant budget shortfalls in Liberia’s history.”
“If Ellen left the Liberian economy in the toilet — let’s just say Weah came in and flushed the damn toilet,” he said in a piece in the Globe Afrique, an online platform.
“For the fiscal year 2016, in light of UNMIL departure and the economic impact of EVD, Ellen Johnson-Sirleaf’s administration instituted austerity measures that curtailed the country’s overall fiscal deficit to 4.2 percent of GDP. Contrast those strategies to the no-strategy CDC-led government of George Weah and Liberia is left with a catastrophic US$225 million budget shortfall or 7.0 percent of GDP,” he said, but the government has categorically debunked this narrative.
Reports informed by data from the Ministry of Finance showed that the Government of Liberia collected far less in revenue – a decline of roughly 13 percent – when compared to 2017 with the total government revenue equaled US$402 million or 12½ percent of nominal GDP.
He said during the state of the nation’s address that the CDC administration grew the country’s revenue base by 5.7 percent or US$480.6 million – an apparent contradiction to data collected from the Ministry of Finance, the World Bank, and the IMF.
However, many feel that the President offered no tangible data to support the statements in his Annual Message that his administration was effective in stabilizing the economy.
Dr. Nimene is engaged in understanding the impact of public policies and development priorities in countries emerging from civil conflict along with the challenges faced by underdeveloped countries in sub-Saharan Africa. He is an advocate on issues relating to press freedom.