-LBDI President John Davies
The growing liquidity crisis currently faced by the Government of Liberia(GOL) is being most acutely felt by ordinary Liberians as they struggle daily to cope with rising costs of goods and services.
It is abundantly clear that with such a limited time left to the end of tenure of this government, it appears most improbable that the current liquidity crisis will be resolved soon, at least not before the end of President Sirleaf’s tenure.
The new incoming government will therefore face tough and trying economic conditions, the solution to which will require the making of tough choices and decisions in order to bring the situation under control.
According to the President of the Liberia Bank for Development and Investment (LBDI), John B. S. Davies, who spoke recently at a one-day economic forum hosted by the Governance Commission, Liberia is facing a serious problem of negative balance of payment, and the GOL is experiencing considerable difficulty generating foreign exchange.
This is because the country is importing more than it exports.
He attributes the current fiscal deficit to what he calls, “The lack of proper management of our expectations.”
He said growth in the Liberian economy relies heavily on the extractive sector and remittances from the Diaspora.
Against the backdrop of falling commodity prices, coupled with the fact there is little or no value added to major exports such as rubber, iron ore, gold, diamonds, timber, etc., there is a need to pay closer attention to remittances from the Diaspora.
The LBDI President stressed that the incoming government will have to look at what has worked and has not worked, with a keen focus on what has not worked, in order to derive a workable solution to Liberia’s current economic woes.
He said it is possible to raise the country’s Gross Domestic Product from its current level of US$2.101 billion to US$4 billion, citing real estate as one area of focus whose full potential to generate revenue remains relatively untapped.
Additionally, he said, there is a need to restore trust to the banking sector wherein individuals can take a GOL contract to the bank for financing and expect fruitful results rather than the en vogue knee-jerk “NEXT”reaction to prospective clients seeking bank financing for projects, business ventures, etc.
Although not explicitly stated, his comments implied the imperative for a new look at Liberia’s development model, a view echoed by Deputy Finance Minister Alvin Attah, who also presented at the forum.
Currently, Liberia is one of the poorest countries in Africa, with a population of 4 million, per-capita income of US$410, and about 60 percent of the population living below the poverty line.
According to official statistics, about 28 percent of the country’s population lives in the capital city of Monrovia.