Monrovia – A team from the International Monetary Fund (IMF) on Tuesday, 20 March, concluded a two-week visit to Liberia, recommending to the Liberian government measures to fix the country’s troubling economy.
Report by Webster J. H. Webster Clayeh, [email protected]
The IMF team met with President George Weah, Speaker Bhofal Chambers, Senate Pro-Tempore Albert Chie, Minister of Finance and Development Planning, Samuel Tweah and the Executive Governor of the Central Banks of Liberia, Milton A. Weeks.
Other Ministers were Minister of Commerce and Industry Wilson Tarpeh, Minister of Public Works Mobutu Nyepan Sr., and Minister of Lands, Mines and Energy, Gesler E. Murray amongst others.
The IMF team after conducting discussions for the 2018 Article IV Consultation with Liberia stressed that the country’s economy is poised for recovery following a very difficult period.
The team, led by Mika Saito, discovered that over the last five years, the Ebola crisis, combined with a large decrease in export prices, and the withdrawal of the UN peacekeeping force, and some disruptions associated with the just ended 2017 election period are factors that have kept the economic activity at low levels.
According to the IMF team, the implementation of good policies including measures to improve the business climate and support of the private sector development are favorable for the recovery of the economy.
“The peaceful political transitional will offer support to the recovery of the domestic economy (agriculture and service sectors) through improved consumers and investors’ confidence,” Saito said.
The IMF team head said key commodity sectors are expected to be more active and better power supply is another positive development factor for both existing and new businesses.
Saito added: “The mission supports the Administration’s adoption of a strongly pro-poor agenda. The needs of the poorest segments of the population are clearly large, and it is commendable that the authorities have made this their policy priority.”
The IMF recommends that it would be important to ensure that the ”increase in expenditure goes to hand in hand with measures to ensure macroeconomic and debt stability as the impact of instability would fall disproportionately on the most vulnerable groups and undercut the goal of poverty reduction”.
The IMF maintains that despite the debt levels have been steadily in recent years, the risk of debt distress remains moderate and the borrowing space has clearly reduced over time. However, future obligations will need to be undertaking with caution, specifically with respect to securing favorable terms and conditions.
The country domestic revenue generation, according to the IMF team, is relatively low by regional standards. However, it adds that exploiting the scope for improvement will be essential to expanding investment spending over the medium term.
“Aid remains substantial, but is on a declining trend from past levels which were inflated by the exceptional support given for conflict period and the Ebola emergency,” the IMF team leader added.
“Given these potential constraints on resource mobilization, it will be important to not only mobilize significant quantities of additional domestic revenue and secure attractive terms for future contracted debt, but also to improve the efficiency of existing spending to create additional fiscal space”.
Governance improvements, particularly with respect to inculcate greater fiscal transparency and accountability would be key in order to instill greater order and priority in government’s fiscal relations, IMF added.
Saito furthers, “Replacing development spending with current expenditure to the extent possible would need to be part of this, including by controlling the growth of the wage bill”
In addition, government could also usefully consider adopting a comprehensive program to clear domestic arrears and prevent the emergence of new ones utilizing realistic revenue estimates for budget formation and improving the monitoring of all expenditure including grant and loan financed project the IMF team head said.
Saito continues: “The mission also notes that the need to increase investment spending is coming at a time when resources mobilization from external borrowing, domestic revenue generation, and aid is facing challenges.”
Liberia’s Minister of Finance and Development Planning (MFDP) Samuel Tweah promised to have a “robust partnership” within the IMF, adding that it will enable President Weah’s Pro-poor vision delivers the impacts that are expected.
“And I think to that extent we will be looking for a greater flexibility. We need that flexibility because this is a government that is going to be transparent, transformative and many of the things that organization like IMF looks for are the hand holding of this government,” Tweah said.
Referring to the recent recast budget; MFDP Minister said unlike, in the past, they are going to generate saving by cutting waste.
Tweah added: “And we are responsible enough to apply those waste to Pro-poor investments, activities or programs. Public fiscal management under President Weah’s leadership is going to radically different then what we have seen in the last six years”
According to Minister Tweah, the President’s vision is going to focus around infrastructures, which is around US$1.2 to US$1.5 billion in road financing, adding that the President looks to deliver at least 1,500 kilometer of road in the country.