WASHINGOTN, DC —The international Monetary Fund (IMF) along with several international institutions and business groups say Liberia’s economy is in a dissolute state, and that strong fixes are needed to restart recovery, prevent a looming recession and potential for political uncertainty. The IMF therefore warns that Liberia undertakes strong and progressive policy actions to revitalize the economy.
A top Wall Street’s executive, who preferred to speak on conditions of anonymity as per his firm’s policy, said Liberia currently suffers from internal management and leadership conflicts, an inexperienced public sector workforce, and the lack of infrastructure.
He said the economic tension in Liberia comes primarily from conflicts among the country’s so-called Economic Management Team, which he categorized as grossly incompetent, and lacks visionary political and policy direction.
He said the quality of internet access in Liberian schools and public institutions, for example, has been rated the worst in West Africa. The overall quality of Liberia’s infrastructure is also rated worse than every country reviewed in the West African sub region.
Several New York-based economists say the IMF’s call for ‘Strong Policy Actions’ to fix Liberia’s depreciated exchange rate and inflation problems may not be enough because excessive corruption, bureaucratic incompetence, political hostility as well as business and investment unfriendliness are key factors that deeply affect what is happening in the country.
In its latest report, the International Monetary Fund’s Article IV Mission to Liberia described bleak outlook for the country’s economic prospects.
“Liberia’s economic situation is challenging, and strong policy actions will be required to maintain as favorable an outlook as anticipated at this time last year,” the IMF team noted in its report released on Friday.
The IMF team led by Mika Saito, visited Liberia from February 25 to March 8 this year to discuss the 2019 Article IV Consultation with Liberia as well as hold discussions with President George Manneh Weah, the Speaker of the House of Representatives Bhofal Chambers, Finance Minister Samuel Tweah, Central Bank of Liberia Governor Nathaniel Patray, Commerce Minister Wilson Tarpeh and others.
The IMF said macroeconomic stability in Liberia appears elusive despite improved revenue collection in the first half of FY2019, and that the country’s fiscal stance has loosened significantly.
Economist Josh Raskin told Globe Afrique that Liberia has huge limitations when it comes to having a strong labor market, especially in the private sector.
Adding, “the Liberian government appears to consider employment as finding or giving jobs to people in government. No economy grows with an inflated public sector, over-blown government payroll and wasteful spending on discretionary matters such as unnecessary foreign trips with people that have no reason to be on an official trip in the first place”
Other economists like Raskin say Liberia is generally becoming unfriendly when it comes to doing business, as corruption and ‘pay-to-play’ have taken center stage in the last few months.
Limitations on doing business in Liberia also stem primarily from corruption, security concerns, and politically colorful rhetoric. Some believe the Liberian government, instead of focusing on broader policy issues, appears to be generating self-inflicted wounds by engaging in ill-advised political mechanizations that have nothing to do with
The threat of protests, crime, and violence also pose some of the greatest fear and costs to doing business in Liberia, according to a Washington, D.C.-based think tank expert on emerging markets.
“The Liberian judiciary and the national police force including several other institutions are also rated among the least reliable in the West African sub region. The state of the country’s infrastructure is perhaps even more detrimental to business competitiveness,” said Raskin.
The electrical supply, for example, is plagued with frequent interruptions and voltage fluctuations and is among the least reliable in West Africa, he said.
Some political analysts with interest in Liberia say President Weah and his administration need to address issues of corruption and ensure that economic accountability becomes his top most focus by bringing individuals accused of economic sabotage and corruption to trial in a fair and transparent manner.
“This will bring credibility and trust to his administration,’ Raskin said.
While much of the country’s population remains highly dependent on remittances from abroad, a small segment of Liberia’s population, mainly those in government, utilizes public funds to enrich themselves, one political commentator said.
Other economists say future prosperity for Liberians and in Liberia may be hampered, however, by underdeveloped financial institutions and the lack of jobs and poor health among the country’s residents. Access to financing and the lack of investors’ confidence in the government’s ability to maintain peace and security as well as control corruption are cited as — by far — the most problematic factors for doing business in the country.
Raskin said, “one wonders if Liberia is truly a three-branch of government political system and culture because the country’s legislature appears to be deeply flawed, weak and corrupt.”
To prevent Liberia from sliding deeper into recession and political uncertainty, a combination of factors, including improving business sophistication and institutional frameworks, should be put in place to help the country improve, he added.