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Weah’s Government Reports Largest Budget Shortfall in Liberia’s History

‘If Ellen left the Liberian economy in the toilet – let’s just say Weah came in and flushed the damn toilet.’

Sources: Ministry of Finance Development Planning, World Bank, IMF, AFDB, and the Central Bank of Liberia.

UPDATE:

In what could only be considered as a cowardly assault on transparency by the Government of Liberia, the 2018 Central Bank of Liberia’s Annual Report was removed from the CBL’s website by order of the Ministry of Finance and President George M. Weah.

Still, Globe Afrique has a complete replica of the Central Bank of Liberia’s Website and all of its public data.

We encourage Liberians and our friends in the U.K to download a copy of the 2018 CBL report – a report card on President Weah’s first year in office.

DOWNLOAD A COPY OF THE 2018 CBL REPORT

Key headlines:

  1. Budget shortfall – USD$225 million or 7 percent of GDP
  2. Inflation doubles – from 2017 and triples from 2016 to nearly 24%
  3. Liberian Dollar – falls precipitously from 117.2 to 160 against the US Dollar
  4. Personal Inward Remittances drops sharply by USD$101.9 million
  5. The Weah-led government takes the public external debt stock to USD$987.8 million – up 18% or a whopping 30% of GDP.

Liberia has more diamonds, gold, iron ore, and rubber than most sub-Saharan African countries and more poverty than 70 percent of all African countries. Under President Weah, Liberia has fallen three notches on the Human Development Index and show no signs of recovering.

Once one of Africa’s fastest-growing economies, Liberia is now plagued with extreme poverty, a failing education system, poor healthcare and according to the World Food Programme, nearly 51 percent of the population is food insecure, and 83 percent live on less than US$1.25 a day.

With iron ore prices showing an overall decline of 4.29 percent in 2018, the economic management team at the Ministry of Finance Development Planning under Samuel Tweah is scrambling for answers on how to jump-start the economy.

Facing fierce criticism at home and abroad, President George Weah stated in his Annual Message that he took an oath before the people of Liberia and God to revitalize the Liberian economy, rebuild the infrastructures and ensure respect for the rule of law.

Weah went on to say, “I must be honest to admit that during the year 2018, our democracy, society, and economy were tested but our leadership rose above these challenges.”

President Weah added, “We stabilized our economy, protected the fundamental rights of our citizens and preserved our peace.” However, reports from various Government of Liberia sources obtained by Globe Afrique shows the social experiment of electing a playboy footballer turned politician – George Weah – has been exposed by one of the country’s worst economic performance since the end of Liberia’s civil wars.

It appears President Weah’s Annual Message was deceptive in portraying the economy and state of affairs in Liberia as being robust and meeting the challenges of a nation in dire need of sustainable development.

Budget Shortfall

Data captured from several sources, including Liberia’s Ministry of Finance, shows the Government of Liberia fiscal operations have recorded one of the most significant budget shortfalls in Liberia’s history.

For the fiscal year 2016, in light of UNMIL’s drawdown and the economic impact of EVD, Ellen Johnson-Sirleaf’s administration instituted austerity measures that curtailed the country’s overall fiscal deficit to 4.2 percent of GDP. Contrast those strategies to the no-strategy CDC-led government of George Weah and Liberia is left with a catastrophic USD$225 million budget shortfall or 7.0 percent of GDP.

Data from the Ministry of Finance shows the government of Liberia collected far less in revenue – a decline of roughly 13 percent – when compared to 2017. Total government revenue equaled USD$402 million or 12½ percent of nominal GDP.  Still, President Weah offers no tangible data to support the statements in his Annual message that his administration was effective at stabilizing the economy.

President Weah declared in his Annual Message that his administration grew Liberia’s revenue base by 5.7 percent or US$480.6 million – an apparent contradiction to data collected from the Ministry of Finance, the World Bank, and the IMF.

The President touted a 2018 ending agreement with the Fouta Corporation of US$25 million as “Foreign Direct Investment.” The President went on to say that his administration inherited a broken economy from Madam Ellen Johnson-Sirleaf and he resorted to blaming the Ebola epidemic of 2014 for the sluggish economy in 2018.

Since President Weah was elected to fix the economy – he’s offered no logical reason why his administration has further damaged the “broken economy.” Additionally, in his annual message, President George Weah thanked foreign businesses operating in Liberia for their contributions to the Liberian economy but failed to offer thanks to Liberian enterprises supporting the country’s tax base – contrary to being spectators in their economy.

The Poor Man or Woman Tax (Inflation)

In Liberia, for 25 percent of the population, food accounts for over 65 percent of total family expenses. Imagine if you are spending over half of your income on food and something causes the price of food to increase by 25 percent suddenly – for the poor, this rise in price or inflation is devasting.

According to data collected by Globe Afrique, average inflation for 2018 increased by nearly 24 percent – doubling what it was before Weah took office at the beginning of 2018 and three times what it was in 2016.

The Liberian Dollar

There is a strong correlation between money supply and inflation. The 39.3 percent increase in Liberian Dollar in circulation from L$53,784.2 million to L$74,931.2 million had a direct impact in the devaluation of the local currency. It appears President Weah’s mopping exercise to reduce the high-number of Liberian Dollar in the market have failed miserably.

Personal Remittances

“Remittances are an important source of income for millions of families in developing countries. As such, a weakening of remittance flows can have a serious impact on the ability of families to get proper nutrition.” Rita Ramalho, Acting Director of the World Bank’s Global Indicators Group

Remittances flowing into Liberia – the lifeblood of the Liberian economy – fell by a whopping US$102 million or 28 percent. While major developed countries are showing strong economic growth, the sharp decline in remittances to Liberia reflects a certain disenchantment with the CDC-led Administration.

Liberia’s Debt Stock

According to data from the World Bank and IMF, Liberia’s public debt stock swelled to US$987.8 million under President Weah – showing a 13 percent increase in 2018. As it stands, Liberia is rapidly spiraling downward into a heavily indebted abyss with a total public debt of 31 percent of nominal GDP.

Some members of the Liberian legislature are quietly asking, imagine if President Weah’s ratified Eton and Ebomaf deals had been funded, Liberia would have an external debt stock of over US$2 billion – an increase of 200 percent in Weah’s first year as President.

Liberia is at the precipice of a complete economic meltdown. Globe Afrique’s Sources in Washington, D.C. indicates the Trump-led administration is leaning towards offering strategic and financial support to the CDC-led government in Liberia – Globe Afrique learned that an economic management team is being convened to assist President Weah. Still, the social experiment of believing that education is not a factor in development has been proven wrong by George Weah’s obliteration of the Liberian economy.

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Dr. Joseph Nimene, Sr.

Dr. Nimene is a research scientist and development specialist at a global development organization in West Africa. He is engaged in understanding the impact of public policies and development priorities in countries emerging from civil conflict along with the challenges faced by underdeveloped countries in sub-Saharan Africa. Dr. Nimene is a staunch advocate on issues relating to press freedom, and he supports the efforts of Globe Afrique where the voices of the citizens are heard.

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