MONROVIA: Liberia’s Ministry of Finance and Development Planning (MFDP) has requested support from USAID/Liberia to conduct an “Assessment of the Liberian Economy” to determine the issues and challenges impacting the exchange rate. Liberia’s MFDP is seeking immediate help from the U.S. government to provide recommendations which include short-term, medium-term and long-term solutions.
The Government of Liberia Needs Help – Perhaps Liberians Should Stop the Criticisms and Help!
Description of the Issues
According to USAID, Liberia is going through an accelerated depreciation of its currency and has seen significant uptake in inflation. These events are causing concerns amongst many Liberians including the Government of Liberia (GoL) particularly about the rising cost of living and macroeconomic instability. From January 2018 to June 2018, the Liberian dollar has depreciated against the U.S. dollar by about 20% and the rate of inflation has accelerated from single digits late last year to around 21% as of June 2018.
While the previous administration of Madam Ellen Johnson-Sirleaf’s printing of excessive Liberian Dollars isn’t listed as a prominent contributing factor, particularly since most economists will cite a strong correlation between an increase in M1 and inflation, the requests list other factors. The U.S. government stated other contributing factors include the drawdown of UNMIL, which took place in 2017; the fall in global prices of Liberia’s key export commodities, fatigue from international donor agencies, particularly surrounding the uncertainty during the 2017 Presidential elections, and the uncertainty of the new administration.
According to the U.S. Government, the CDC-led government has responded to the rapid macroeconomic fall by using several limited strategies including fiscal and monetary instruments including, auctioning U.S. dollars, paying less than 100% of U.S. dollar remittance transfers in United States dollars and enforcing rules to minimize the participation of unauthorized agents in foreign exchange markets.
While Globe Afrique has notably reported in an article dated July 4, 2018 “Economic Troubles: Why the Liberian Dollar is Depreciating?” , which came out 10 days prior to the U.S. review of the Liberian economy, it is important to note that the U.S. has also agreed that the measures of the GoL have “yielded no significant improvement in Liberia’s macroeconomic situation.”
According to the U.S. Government, the Government of Liberia is under “growing pressure from civil society” organizations to reduce the “high social costs and rising uncertainty in the market.”
Again, on January 2, 2018, in an article on Globe Afrique titled “The Top 4 Issues President-Elect Weah of Liberia Will face” the economy and Liberia’s Debt Crisis are prominently listed as the number 1 issue the new government would face. The article was supported by research into the CBL economic data which showed inflation had spiked to around 13% – (that was a whopping 4 percentage points hike in just three months) around September 2017. Today, the number stands at around 21%.
Here’s what the U.S. Government is seeking
The U.S. Government is looking for technical experts to perform the following tasks:
1. Provide a rapid assessment of the current state of the Liberian macro economy;
2. Examine the factors driving exchange rate depreciation over the last 6-12 months;
3. Consult with the private sector and policymakers about policy options for addressing the
4. Provide key recommendations to the GoL about possible options for intervening based on
the analysis of the problem, consultations and a review of experience from other similar
5. Policy options on stabilizing the exchange rate should be identified in terms of
immediate, short term, medium term;
6. Produce a report and present their findings and recommendations of the analysis and
other related activities
Here are the project deliverables and due dates:
Desk Review and Analysis of Liberia’s recent macroeconomic data conducted – July 31, 2018
Desk review and Analysis of options for responding to foreign exchange crisis over the near and medium term conducted – July 31, 2018
Consultations conducted with the private sector (i.e., banks, merchants, and importers) and institutions of the GOL (i.e., MFDP, CBL and Liberian Revenue Authority (LRA)) – August 1-15, 2018
Draft Report on Findings and Recommendations – August 16-20, 2018
Draft Report Presentation – August 21-31, 2018
Final Report and Presentation – September 10, 2018
USAID estimates that the total level of effort should be no more than a total of 32 days
USAID expects this effort to be undertaken by a senior consultant or team of consultants with significant experience in providing technical assistance (TA) to governments in developing countries to address macroeconomic crises, especially those involving foreign exchange. Each consultant is required to possess a minimum of 10 years of experience in providing such TA and at least a Master’s degree in economics, finance or related fields (Ph.D. in economics is preferred). Consultants resident in Sub-Saharan Africa and familiar with macroeconomic conditions and challenges in import-dependent West African countries with limited foreign exchange reserves are particularly preferred. In the event that the consultant or team of consultants is recruited from outside of Liberia, we require said consultant or team to work with a Liberian who is knowledgeable of the Liberian economy. The Liberian should be recruited at the expense of the consultant.
Anyone interested in helping the Government of Liberia and has the requisite experience should contact the following individuals:
Ms. Mary Chao Mwadine, A&A