More Liberians to Slip into Poverty

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One of several markets in Paynesville City, where vendors sell food items near piles of uncollected garbage.

— Says World Bank

The World Bank (WB) has projected that an additional 335,000 to 526,000 Liberians are now at risk of falling below the poverty line in 2020. This disclosure is contained in the Bank’s updated report on the country’s economy. The report was launched on Thursday, 30 July 2020, at midday.

The report notes that the share of households living below the national poverty line is projected to rise to 65.2 percent in 2020 under the baseline scenario and to 68.9 percent under the (moderate) downside scenario.

The World Bank captured that Liberia’s fiscal deficit widened from 4.8 percent of GDP in FY2018 to 6.2 percent in FY2019; domestic revenue mobilization remained low and non-discretionary expenditures accounted for almost 80 percent of domestic revenues in FY2019. Approval of FY2020 budget was a critical step towards fiscal consolidation.

Liberia faces a high current account deficit, low reserves and an elevated financial sector vulnerability.

The Bank projected that the path to Liberia’s economic recovery will be especially challenging due to the country’s vulnerable public health and economic impacts of COVID-19 and being that the country’s range of potential policy responses is narrow.

Large macroeconomic imbalances, low fiscal reserves, and forex buffers limit the government’s options for addressing COVID-19 crisis, the economic updated report stated.

Potential policy response for the repair of the economy is also complicated and exposed to shocks, given the fact that an estimated 80 percent of total employment in the country is on the payroll of the government.

As the current outlook is highly uncertain, with risks tilted heavily to the downside, real GDP is projected to contract by 2.6 percent in 2020, down 3.2 percentage points from the pre-COVID baseline projection in January 2020. Under the moderate downside scenario, real GDP could contract by an additional percentage point to 3.6 percent in 2020 and recover more slowly.

According to the World Bank, COVID-19 has thrown the world in the worst economic crisis since the Great Depression. The COVID-19 pandemic poses an unprecedented negative shock to the Liberian economy, affecting people’s lives and livelihoods, but also delaying implementation of the government’s Pro-poor Agenda for Prosperity and Development.

The near-term outlook is uncertain and the risks are tilted to the downside. The economy is projected to contract in 2020, and poverty rates are projected to increase. Given limited domestic resources, timely support from Liberia’s development partners will be vital to funding social protection policies to safeguard household welfare and prevent the erosion of human capital during the crisis.

There is cause for cautious optimism. A continued focus on macroeconomic stability and structural reforms to promote productivity-driven growth and economic diversification while coordinating an effective response could build resilience and spur a robust recovery over the medium-term.

As the current outlook is highly uncertain, with risks tilted heavily to the downside, real GDP is projected to contract by 2.6 percent in 2020, down 3.2 percentage points from the pre-COVID baseline projection in January 2020. Under the moderate downside scenario, real GDP could contract by an additional percentage point to 3.6 percent in 2020 and recover more slowly.

Actions Needed for Recovery

The report noted that productivity-driven growth and diversification will be central to Liberia’s post-pandemic recovery and continued development. This will require: (i) upgrading the country’s existing production and export base; and (ii) building institutions to broaden the country’s endowments, strengthen competitiveness, and expand opportunities for productivity-driven private-sector growth.

To accelerate progress on economic diversification, build on the institutional and structural reforms initiated prior to COVID-19 crisis. For example, structural reforms supported by the programmatic Inclusive Growth DPO will alleviate constraints on productivity and facilitate economic diversification; and the series encompasses measures targeting agriculture, energy, trade, tax administration, SOE oversight, and debt management. The series also supports reforms to promote economic and social inclusion by facilitating access to digital financial services and building a viable national social safety-net system, with a special focus on women and girls. Accelerating the development of special economic zones (SEZs) could address key policy and infrastructure constraints.

Macroeconomic stabilization will be vital to support improvements in productivity and competitiveness. Key fiscal policy reforms include: (i) increased revenue collection, including revenues from natural resources and agricultural concessions; (ii) systemic improvements in expenditure efficiency, including the efficiency of external aid; (iii) a prudent debt-management policy; and (iv) structural reforms to promote growth and encourage economic diversification.

Macroeconomic stabilization measures should be accompanied by reforms to strengthen institutions, improve the business environment, and enhance the provision of basic services and infrastructure which include:

  • Accelerating the development of special economic zones (SEZs) could address key policy and infrastructure constraints.
  • Introducing a National Single Window for trade would lower the cost of importing and exporting and curb opportunities for corruption.
  • Improving the PPP framework could mobilize additional sources of funding and financing for infrastructure. Accelerating the development of financial infrastructure to support a more robust and equitable recovery.
  • Leveraging the digital economy to accelerate job creation, promote inclusive growth, boost productivity and competitiveness, and enhance governmental efficiency at a modest fiscal cost.
  • Implementing a mix of health, education, worker training, and social protection policies to improve productivity and enhance the employment prospects of working-age Liberians.
  • Strengthening the social protection system’s resilience to shocks and improving job quality in the informal sector to promote the welfare of poor households.
  • Building statistical capacity and monitoring the impacts of COVID-19.

4 COMMENTS

  1. Amid all the dire warnings and predictions about the bleak economic picture, who in the administration is able to harness the information in this very informative piece to Weah’s advantage?

    Where are the economic and strategic planners? Now is the time for all the knowledgeable bigwigs, who are benefitting from Weah’s state largesse, to hurry in behest of the nation and use their skills to parlay the crisis before it worsens even further.

  2. The World Bank has again just preached in the desert!
    Weah is not interested in any of the recommendations made above. He is rather interested in intimidating opposition through his thugs and bandits. He is worried to lose the upcoming elections and so he cares less about all the big big book you have written here.

    Long live King George Weah, the Emperor of the Black Republic of Liberia!

  3. Well, the past offered from the ANC still stands about creating one hundred thousand jobs in 90 to 120 days. To the credit of the voters and their desire to see an inspirational and recognizable figure with world appeals, and to satisfy their political desires, perhaps one of their very own from rags to riches, it was fair for them to give him a chance. Now that their political and economical desires about George have been satisfied, perhaps it time to give the other person a chance who said that he could create one hundred thousand jobs in 90 days if elected. The other candidate first issued was about the economy as it relates to the bread and butter issues of jobs creation and employment. Which is really in need right now in that country. One thing about that kind of promised, it was very vague with less explanation about the “hows” and the “implementations” to pull it off in 90 days or 120 days. But it can happen. One taking in consideration the study and planning with all stakeholders as partners of the country. But it can happen, perhaps not right after the elections, but it can actually be achieved. That country is without factories. But it is not in the wilderness without areas to invest. The country has many many potential economic areas to invest in. Only if the regime will invest in those areas and the country. It is not the kind of personal properties investment that is being carried out in the past and present. With the kind of mindset that at least George is not taking out the money front the country, he is developing the country by developing his personal properties. That’s not developments ! Or real developments for jobs creation and for sustainable economic growth . To achieve that 90 days jobs or employments , the regime of the ANC must invest in the country, and assist those who can produce to produce. A well thought of plan that is capable of attracting the attention of that country’s development partners can make what seemed impossible possible. For the very first time in that country’s history, a political candidate is putting people first, through job creations . Making it a political mandate of his regime. First time before taking the oath of office. What was only missing in his self proposed mandate were the ” hows” explanations. Now, for reality check, let ask the question to the Agriculture Minister appointed by George to help his regime in the agriculture fields, and see how much jobs or employments can be created, taking in to consideration all others factors in the agriculture fields. Opening up the fishing industry, how many jobs can be created ? Working along with the local rubber and timbers or logging areas, how many jobs can be created for employment. The country is not in the wilderness, it has vast potential, but needs someone with investment ideas and knowledge and experiences. Someone who can tap into that. Used the first 90 days for planning and used the rest of the year, while working alongside the country’s development partners and see what is possible. But to achieve that 90 days jobs or employments, that leadership has to be into it. Not the kind of personal achievements as developmental investment going on in that country. Most politicians as rulers of the country have their personal farms, referring to their farms as national investment. While leaving the nation without a national agriculture policy for growth. Yes, 90 days jobs creation can happen, if the leadership commits itself. George could as well have done the same, if he was not self centered. When watching the football games around the world, just take a look at the many companies spending and sponsoring the games. As a International sports legend, how many has George spoken to concerning what can they do for his country in terms of investment ? None !!!! Invest in the country and its economy, jobs will be created. Open up the political system supported by the rules of law stability, investment is possible. They both compliment each others.

  4. Minister of Finance Tweah is preaching “VOODOO ECONOMICS” He is expecting a witch to suddenly change the specter of the economy of Liberia Mr Samuel Tweah, it takes comprehensive planning and not “VODOO ECONOMICS

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