GOL’s Economic Crisis X-rayed

 –Joins Forces With UNDP & Partners; Host First National Economic Dialogue

 By R. Joyclyn Wea

In the wake of finding solutions to Liberia’s economic crisis, the National Economic Dialogue Secretariat with support from the United Nations Development Program (UNDP) and partners has become a three-day national economic dialogue in the country in order to curb the woes confronting the economy and how national government can response to some of these issues.

The event which is the first in a series, runs from September 4, 2019 to September 6, 2019 under the theme: “National Economic Revival and Growth: Critical Issues, Challenges and way Forward.”

The national economic dialogue is a part of ongoing efforts in support of the Pro-Poor Agenda for Prosperity and Development (PAPD) aimed at addressing critical national issues in order to move the country forward.

It further provides the platform for the people and friends of Liberia to stimulate a broad-based national conversation on the state and fate of the economy, and to collectively come up with ways that would situate Liberia on a path of rapid economic recovery, sustainable inclusive growth, and social transformation.

At the close of the three-day event in Monrovia, a national consensus would evolve on a set of short and medium-term policy measures, strategies, programs and a time-bound road map aimed at enhancing speedy economic recovery and sustained economic growth among other things.

Presenting his goodwill message, Pa Lamin Beyai, UNDP Resident Representative said Liberia’s economy will rapidly recover if everyone works collectively work together.

This is why the national economic dialogue is crucial in understanding the problems and finding way forwards in addressing these issues, he said, he stated.

He expressed his institution’s commitment to build on their support to Liberia’s economy noting that the challenges Liberia’s economy faces cannot be underestimated.

Also presenting the fiscal situation in Liberia, Finance Minister Samuel Tweah explained that the Fiscal Situation comprises several policy reforms to include wage reform as a means of strengthening public financial management; domestic revenue mobilization to improve revenue administration and performance while maximizing government’s tax effort.

“A successful fiscal reforms or adjustment will require: increased revenue collection, including revenues from natural resources and agricultural concessions; systemic improvements in expenditure efficiency and discipline, including the efficient management of the wage bill and external aid and a prudent debt policy and management,” he added

Tweah noted that the absence of progress on key structural reforms including improvements in the domestic revenue mobilization, business climate reforms, and efficiency in public sector investment could undermine medium term growth and economic diversification.

He further bewailed: “we have also reviewed and improved the expenditure system and processing. We have harmonized the wage bill and transitioned to an automated system which will ease the payment of salary and wages making it more effective and efficient across government ministries and agencies.”

As part of efforts in strengthening transparency and accountability in the Government of Liberia’s fiscal management processes and enhancing budget execution, the Finance Minister said they have designed expenditure control mechanism by expending using a cash plan system which enables government to spend base on priorities and cash availability instead of the cash rationing as was previously done.

In furtherance, Central Bank Governor, Nathaniel Patray said the Liberian economy recorded an average growth rate of 8.0 percent under an environment of relatively stable inflation and exchange rate from 2006 to 2013.

According to him, there were massive external assistance, including UNMIL’s presence in the economy with average annual inflows of about five hundred million United States dollars in foreign exchange, from 2003-2018 something that increases donor’s inflows of more than US$2 billion dollars for capital and other investments over the period.

“These inflows largely explained the moderate pressure in the macroeconomic developments, translated into moderate inflationary pressures and low exchange rate volatility.”

Governor Patery claimed more sustained efforts have been slow in promoting economic activities in manufacturing and agriculture, as well as reducing the importation of basic consumables that the country can or has the capacity to produce. Productivity has been low in agriculture and manufacturing, reflecting less than 3.0 percent growth on average from 2006 to 2014.

Economic activity remains significantly concentrated around the enclave sector with limited linkages between the concession sector and the downstream economic activities for the enhancement of value chain production and job creation, he mentioned.

“The vulnerabilities of the Liberian economy became evident by the drastic decline in economic activities as a result of the effects of the Ebola health crisis and the global commodity price slump and exacerbated by the departure of UNMIL. From 2014-2016, investments and other economic activities were subdued with economic growth recording a contraction, from the seemingly impressive growth trajectory of 8.0 percent to negative 0.3 percent,” he claimed.

The CBL boss maintained that the current pressures on the domestic currency is accentuated with the departure of UNMIL and slow recovery in commodity prices as well as slowdown in donor assistance.

Governor Patray asserted that the situation has exerted significant stress on the economy, which grew by an estimated 1.2 percent in 2018, from a revised growth of 3.2 percent, and is expected to further slowdown to 0.4 percent in this year, partly explained by the lukewarm policy response to address the hidden pre-Ebola vulnerabilities.