Deputy Minister of Finance Alvin Attah has said that Liberia desperately needs a new development model. The key question, according to him, which should be asked, is whether government should play a role in the economy and if so to what extent should it do so.
He said with the national debt accounting for up to 40 percent of the country’s Gross Domestic Product (GDP) there is a critical need to look more closely at what has worked and has not worked in order to chart a pathway to the future.
Mr. Attah made these remarks recently during a one-day consultative forum on the economy sponsored by the Governance Commission.
His remarks came in the wake of comments by lead presenter J. Yanqui Zaza who singled out the World Bank and the International Monetary Fund(IMF) for criticism.
He described them as profit seeking institutions whose Structural Adjustment policies are adverse to the interests of developing nations seeking to raise the living standards of their people.
He said the World Bank/IMF Structural Adjustment policies that are usually imposed on developing nations tend more to increase poverty rather than fight it as proclaimed in its mantra.
But Minister Attah’s call for a new development model suggests that the current development model based on World Bank/IMF policy prescriptions has not succeeded in lifting the Liberian people out of poverty.
He proposed, as remedial policy options to address the current economic downturn, a slash in recurrent expenditure by reducing employment, cutting public spending, except for health and education, and reducing all extra-budgetary expenditures.
As the way forward for Liberia, Minister Attah singled out Agriculture as the key to the country’s economic revival and development. It remains unclear, though, whether this view is shared by policymakers across the board including the National Legislature since Agriculture, over the last 12 years, has accounted for not more than a mere 2 percent of the country’s annual budget.
In a related development, the Liberia Revenue Authority (LRA) has expressed fears of a budgetary shortfall in view of the National Legislature’s decision to put a halt to the National Road fund tax scheme which had been projected to raise a total of US$11 million to support the country’s budget.
The Government of Liberia had proposed a US$0.25 tax imposition on petroleum imports to be allocated to a road tax fund intended to support the maintenance of the country’s road network. However, the Legislature was of the view that the proposed tax was leading to increased hardships on ordinary Liberians and therefore recommended its immediate suspension.
Since the suspension of the tax scheme, the GOL has faced difficulty in meeting its revenue projections. According to the head of the LRA, Alfreda Stewart Tamba, the forestry sector posed another risk to the budget because of existing and pending MOUs between GOL and actors in this sector waiving taxes deemed payable to Government.
Commissioner Tamba also disclosed that a US$6.1 million waiver on rice imports, considered an essential commodity, has also had a dampening effect on revenue collection. She added that while GOL had a heavy reliance on revenue derived from taxes on imports, she observed that only 35 percent of total imports were commercial as compared to non-commercial, which accounted for 65 percent of total imports.