–As Economy Rebounds With Triple Effects
IPNEWS: There are so many anticipations ahead of President George Weah’s last State of the Nation Address, next Monday, January 30th, in his first term, before the joint chambers of the Legislature. Importantly this time around, the President is expected to report on the ‘triple rebounds of Liberia’s economy’ before the inception of the government of the Coalition of Democratic Change (CDC), which he now heads.
In 2022, the Liberian government made significant progress in restructuring domestic debts. All legacy debts owed Central Bank of Liberia (CBL), including the debts owed to the former National Bank of Liberia, were bundled into a ‘Restructured and Consolidated Loan’ at the start of the IMF-supported program which lasted for two years. This Restructured Loan totaled $487.5 million U.S. dollars. The Government pays an annual interest of $13.9 million U.S. dollars to the Central Bank of Liberia on this loan while the principal payment is expected to start by 2030.
Last year, the total stock of domestic debts now stands at $660 million U.S. Dollars and the total stock of external debts were at approximately $1.03 billion U.S. dollars for a total public debt stock valued at $1.69 billion U.S. dollars during the previous year of December 31, 2021. This total debt stock grew by 6.29 percent compared to the end-December 2020 debts stock of $1.59 billion U.S. dollars and this growth was from disbursement on both external and domestic loans.
Interestingly, on both domestic and external debts the Government paid the amount of $83.4 million U.S. dollars in debt service. Of this amount, $62.8 million U.S. dollars was paid for domestic debts to the Central Bank of Liberia, to commercial banks for Treasury Bonds, and to other institutions, while $20.6 million U.S. dollars was paid to multilateral and bilateral partners
The Treasury Bonds, which were issued by the previous Government in 2013, are costing the Government more than $6 million U.S. dollars in interest annually, just to roll them over to 2023 even though there was a global pandemic of COVID-19 which caused a drop in the domestic revenue income of the country.
“This is a legacy debt that my Administration inherited. However, in the interest of continuity of Government, it is an obligation that we have to pay. Therefore, I am pleased to inform you that, working with the IMF, we have allocated $35 million U.S. dollars to completely redeem these very expensive Treasury Bonds. This will free up space for investment in education, healthcare, and other important priority areas.” President George Weah told Members of the joint Legislature in 2022.
Additionally, the government continues to implement several reforms on the Central Government payroll and pension schemes, including the placement of Government workers on biometric ID; reduction of the non-contributory pension scheme previously from 17,000 pensioners in 2017 to a lower figure of 6,000 pensioners; expansion social security coverage and increased social security contribution by 167 percent.
At the moment the Government, through the Ministry of Finance and Development Planning, through the joint collaboration of the Civil Service Agency and the National Social Security and Welfare Corporation, has fully reformed the entire process of retiring and paying retirees.
True to his commitments in 2022, the government under the stewardship of President George Weah, has completed its ‘Fourth Review under the IMF External Credit Facility’. The results from this revision process now show strong fiscal and monetary performance for Liberia.
“The [Liberian] economy is on track to rebound strongly next year, following setbacks from the COVID-19 pandemic. The medium-term outlook is favorable and the authorities are committed to the steadfast implementation of their macroeconomic stabilization and structural reform program.” The Executive Directors of the IMF noted this during the review process.
This positive review from the IMF was immediately followed by a disbursement of $23.64 million U.S. dollars to the Central Bank to add to the nation’s reserve stock.
Significant during 2022, was the government of Liberia’s ability to accelerate the independence and autonomy of the Central Bank of Liberia in support of economic reforms for a stable economy through supportive policy implementations from the CBL that have kept the recovery of our economy on course.
Thankfully, despite the challenges of dealing with the COVID-19 pandemic, the economy grew by 3.6 percent from negative 3 percent in 2020, and growth this year is expected to be 4.7 percent, through increased agricultural and public investments in the social compact programs. In nominal value, the Liberian economy expanded by more than US$300 million in 2021. Inflation was reduced to less than 6 percent in November 2021, from 13.1 percent in December 2020.
“We were successful in increasing the gross international reserves of our country to more than US$600 million, representing more than 4 months of import of goods and services in compliance with ECOWAS convergence target.” Portion of President Weah’s 2022 Annual Message read.
Furthermore, in an effort to extend the visibility of the Central Bank of Liberia beyond Monrovia, the Bank completed the construction of a modern cash hub in Gbarnga, Bong County, to provide more financial services.
At the height of 2022, the government of Liberia as part of the currency reform process, the Central Bank of Liberia brought in three consignments of banknotes, including the first consignment of banknotes totaling L$4.0 billion Liberian dollars out of the approved L$48.734 billion Liberian dollars in November 2021.
The second consignment is expected in January 2022. The first and second consignments are all denominated in 100 dollars bills, only intended to respond to the liquidity demand in December of last year and to commence the replacement of mutilated banknotes respectively.
The bulk of the new currency will include coins, which arrived in the second half of 2022, while the balance will be coming in 2024. In compliance with the restriction of the Joint Resolution of the National Legislature, the government ensured that there was no printing or delivery of the new currency in 2023, even though the exchange exercise will continue through 2023.
As part of the government’s policy of transparency and credibility, the Central Bank of Liberia in 2022, ensured the inclusiveness of our National Legislature, the media community, the Liberian Marketing Association, the Liberia Business Association, traditional elders and youths, as well as our international partners, including the IMF and Kroll through USAID. Based on the sound management and good performance of our economy, Liberia received $345.3 million US dollars in August 2021 under the general Special Drawing Rights allocation to IMF members.
Liberia’s Economic Outlook
The Liberian economy is experiencing its strongest and most sustained growth since the onset of the Ebola Virus Disease in 2014. According to the IMF, Liberia’s economic growth rose above three percent in 2022 and will exceed five percent in 2023, as the global economy recovers. Moreover, domestic resource mobilization (DRM) from the effective tax administration policies of the Weah Administration has seen the country’s budget increased to nearly 800 million United States dollars in 2022.
Inflation has moderated to single digits, stabilizing the Liberian dollar to US dollar between L$150 to L$160, and improving purchasing power when compared to other countries, including Ghana where the Cedi, that country’s currency, has depreciated by more than 50 percent year on year from 2021 to 2022.
According to a famous Liberian Economist, Samuel P. Jackson, “Lower inflation means goods and services are cheaper than our neighbors.”
Electronic Payment Systems
The country is experiencing a revolution in electronic payment systems with more than 25 percent of GDP being intermediated by banks. That improves the circular flow of money, with producers and consumers using payment systems like mobile money, crand edit cards including Visa and Mastercard. Financial inclusion, the percentage of the population with bank accounts has increased with more than 30 percent of adults using the country’s integrated payment system.
Much of the global economy is still suffering from the negative effects of the Covid-19 Pandemic, which saw a steep decline in economic activities, including reduced income and standards of living. In Liberia, the opposite is true. Liberia was among ten percent of countries on the planet that saw an increase in the human development index (HDI), moving from 480 to 481, a modest increase but nevertheless an increase. This is all due to the sound economic policies of President Weah and his team of economists.
Moreover, the 2022 UNDP Human Development Report also indicates that Liberia has the highest life expectancy in the Mano River Union, with Liberians now expected to live beyond 61 years, and that number is higher at 64 to the World Bank Development Indicators. Liberia was also among only 20 countries on the planet that saw a substantial decrease in multidimensional poverty, according to the United Nations Multidimensional Poverty Report of 2022.
The official development assistance to Liberia has substantially reduced as a percentage of GDP since 2017 due to the United Nations Mission in Liberia’s (UNMIL) drawdown and the country is using its own source revenues for security, police, and the army. Yet, despite the use of own-source revenues, security is improving despite the challenges of logistics to state security.
The prospects for sustained economic growth and development look positive due to projections by Liberian national authorities including the Central Bank, Ministry of Finance and Development Planning, and our international partners, the World Bank and IMF. Accordingly, Liberia should see increasing prosperity with more income and jobs created in the near to midterm, and all this indicates the election of President George Weah, though it will be rough, and tumble appears to be certain.
