IPNEWS: A recent World Bank Economic Update has offered a glimmer of hope for Liberia, revealing a significant reduction in the national poverty rate from 63% in 2020 to 59.7% in 2023.

This marked improvement has been attributed to a gradual recovery in economic activities, despite ongoing global financial challenges.

According to the report, the decrease in poverty is largely due to the resilience of the economy and proactive measures taken by the government to stabilize the nation’s financial environment.

“The reduction in the poverty rate is a testament to the robust economic strategies and interventions that have been implemented over the past three years,” the World Bank report stated.

The report was released today during a launch program at the Monrovia City Hall, inaugurated by World Bank Country Manager, Georgia Wallen.

Despite the reduction in the poverty rate, the report highlighted that food prices continue to be a significant factor affecting poverty levels, with rising costs disproportionately impacting the poorer segments of the population, increasing the risk of deeper poverty and food insecurity.

According to the Economic Update, the global economic outlook remains moderate, with growth expected to slow down in the upcoming years. For 2024, global growth is projected to slightly decrease to 2.4% from 2.6% in 2023, with a slight recovery anticipated in 2025. This global trend is expected to influence Liberia’s economic conditions, particularly impacting commodity prices and export revenues.

“Slowing global demand will ease pressures on commodity prices, with implications for commodity exporters, including Liberia. Further declines in the prices of iron ore and rubber could have implications for growth, fiscal revenues, and export earnings in Liberia; however, easing oil prices could be favorable for Liberia as a net oil importer. Global headline inflation is projected to moderate further over 2024-25, with core inflation slowing and commodity prices declining,” the report notes.

The Liberian economy is projected to grow by 5.3% in 2024, buoyed by renewed investments in mining and ongoing reforms in crucial sectors such as energy, transportation, and financial services.

“The development of mining projects and infrastructure improvements are crucial for boosting investment and productivity across various sectors,” the report states.

In terms of inflation, a gradual decline is expected. The Central Bank of Liberia (CBL) has implemented a firm monetary stance, which is anticipated to reduce headline inflation from 10.1% in 2023 to 7.7% in 2024, and further down to 5.4% by 2026.

Despite the positive trends, Liberia faces challenges in fiscal management, particularly with the delayed approval of the 2024 budget due to the transition to a new administration.

The fiscal deficit is expected to moderate, with total revenue and grants projected to increase, reflecting a boost from the planned introduction of a value-added tax (VAT) in 2025, replacing the current goods and services tax.

“Total revenue and grants are expected to increase in 2024 and beyond, reflecting an anticipated increase in domestic revenue by 1.0 percent of GDP to 15.5 percent in 2024 and an average of 16.5 percent in 2025-26 as the country replaces the current goods and services tax (GST) with a value-added tax (VAT), boosting tax revenues in the coming years,” the report states.

While the medium-term outlook for Liberia shows growth potential, it is not without risks. Rising import prices and fluctuations in global commodity markets could pose threats to economic stability. The government is advised to maintain low and stable inflation, manage debts sustainably, and enhance the business environment to attract more private investments.