Liberia: Opposition Liberty Party Advises Weah-led Govt. On IMF Extended Credit Facility Agreement
Monrovia – The opposition Liberty Party says while it welcomes the announcement of a Staff-level Agreement between the International Monetary Fund (IMF) and the Liberian Government, on an Economic and Financial Program that could be supported under the Extended Credit Facility (ECF) of the Fund, it hopes the George Manneh-Weah-led administration will not continue to spend what it does not have.
Report by Rodney D. Sieh, [email protected]
In a statement, Wednesday, the party through its political leader Senator Nyonblee Karnga Lawrence, urged the government to guard against massive hiring of partisans to government jobs, which it says has put a burden on the economy.
The LP statement said: “The Liberian government cannot continue to spend what it does no have, employ who it cannot pay, erode economic and financial institutions of needed public confidence, attend national decision-making with incompetence and partisanship, deplete international and domestic reserves through wasteful borrowings, travel around the world with oversized delegations on spending safaris, and contract bogus deals and luxuries that are heaping pressures on the budget.”
The staff-level agreement is subject to fulfillment of significant prior actions in the fiscal and monetary areas that will need to be undertaken by the Liberian authorities. “Assuming these are satisfied in a timely manner, it is anticipated that the IMF Executive Board could consider approval of Liberia’s formal request for financial support under the Extended Credit Facility as early as the first half of December 2019.”
‘Demonstrate Minimum Standards’
For the agreement to yield fruits, the LP says the Weah administration must demonstrate the minimum standards of leadership required so that the assistance of the international community is not wasted on themselves but rather, enable the recovery of the economic from which all Liberians will benefit. “Our hope is that the Weah-led administration will listen, and act,” the party said.
The IMF on Tuesday announced that it had reached a staff-level agreement on a new program subject to fulfillment of significant prior actions in the fiscal and monetary areas.
The objectives of the program, according to the monetary body, are to restore macroeconomic stability, provide a foundation for fiscally sustainable, inclusive growth, and address weaknesses in governance.
One of the key elements of the program is implementation of a 2020 budget that constrains expenditure to available resources and avoids inflationary and reserve-depleting borrowing from the Central Bank of Liberia.
On Wednesday, the LP said the IMF’s announcement comes at a time of worsening economic conditions for Liberia and unprecedented hardship on the people due in large measures to the runaway incompetence of the current managers of the Liberian economy.
The party cited the near-collapse of the monetary system mainly on account of the politicization and corruption of the Central Bank of Liberia, gross fiscal indiscipline, corruption in high places, and the obvious poor quality in national decision-making, which is being driven by a focus on narrow partisanship at the expense of the broader national interests, among the key factors posing hardships for scores of Liberians.
“The Liberian government cannot continue to spend what it dies no have, employ who it cannot pay, erode economic and financial institutions of needed public confidence, attend national decision-making with incompetence and partisanship, deplete international and domestic reserves through wasteful borrowings, travel around the world with oversized delegations on spending safaris, and contract bogus deals and luxuries that are heaping pressures on the budget.”– Liberty Party statement
IMF Impressed with Progressive Outcome
In recent weeks, the IMF says it has been impressed with Liberian authorities’ determination to restructure the wage bill, declaring the process as a key policy reform needed to free up fiscal space and make a credible and viable budget possible, while also increasing transparency, accountability, and equity. “It is noteworthy that all three branches of Government participated, and that the process yielded a progressive outcome, in that the burden was borne by the higher paid employees with the poorest benefiting from salary increases, including among teachers, health workers and line security forces,” the IMF directors noted.
The LP said a train of international reports, including a recent Report of the OECD, paints the dire picture of our country, under the Weah-led administration, as having lost its bearings, sliding again into crisis, haunted by incompetence, and trapped in fragility. “Of course, Liberians do not need these reports to confirm the worsening economic and political nightmare they are now experiencing.”
This is why, LP says it welcomes the agreement which, in the midst of the prevailing gloom, attempts to offer the Liberian people a ray of hope if, and only if, the Liberian Government can fulfill “significant prior actions in the fiscal and monetary areas”.
The LP says it believes it is irresponsible for the leaders of the country to engage in such fiscal indiscipline and luxuriate, while at the same time, believe themselves worthy to request the task payers of other countries to pay our doctors, teachers, nurses, and civil servants, stock our medical facilities with supplies to care for our people, and help our educational institutions return quality to classrooms.
The LP averred that the Weah-led administration has lost touch with the plights of the Liberian people and is trapped in a bubble of expired excuses, gross incompetence and shaming ineptitude.
Urging Stakeholders to Remain Engaged
The LP is urging stakeholders of the Liberian economy, to continue to engage the government to act nationally, competently, diligently and prudently so that the announced Staff-level Agreement of the IMF can ultimately qualify for approval by the Executive Board to earn a chance to be implemented.
The party says its voice remains strong, and in concert with others, to compel the Weah-led administration to seize on this opportunity, and rather than in their own interests, this time, work in the interests of alleviating the crushing hardship of the Liberian people.
The agreement between Liberia and the IMF has been in the works for months, preceded by a series of discussions between authorities in Liberia and the IMF negotiation missions in June and September 2019 and, most recently, during 2019 IMF Annual Meetings.
The IMF team, led by Mika Saito, engaged with a high-level delegation from Liberia led by Minister of Finance and Development Planning Samuel D. Tweah and former Central Bank of Liberia (CBL) Governor Nathaniel Patray III. The economic context and framework for these discussions were informed by the 2019 Article IV Consultation with Liberia that was concluded by the IMF Executive Board on May 31, 2019.
The results of most of those discussions centered on the fact that Liberia faces major economic challenges.
The IMF executives have emphasized the need for steadfast and well-sequenced policies and structural reforms, as these were essential to regaining macroeconomic stability and promoting high, sustainable, and inclusive growth.
Protect Essential Social Spending
The executives also emphasized that significant fiscal adjustment was needed going forward, including by mobilizing additional domestic revenue and rationalizing spending, especially in the wage bill, while securing needed fiscal space for social and capital spending. “They also called for further progress in public financial management reforms to improve the quality of spending in a resource-constrained environment, and for improvements in the business environment to attract high-quality, growth expanding investment. The Central Bank of Liberia (CBL) was also urged to significantly tighten monetary policy to reduce the inflation that was eroding the living standards of the poorest Liberians, while taking strong measures to safeguard financial sector stability.”
Since the Article IV consultation, in a context of intensifying economic challenges, the Liberian authorities and IMF staff have now agreed on an economic and financial program that could be supported by Fund resources. A key element of the program is the FY2020 budget recently approved by the Legislature that constrains expenditure to available resources, and avoids inflationary and reserve-depleting borrowing from the CBL. This budget is underpinned by important reporting and institutional safeguards aimed at preventing slippage and avoiding the re-occurrence of domestic payment arrears. The budget faces tight financing constraints at a time of significantly reduced fiscal buffers and will therefore need to be strictly implemented. Importantly, this budget retains its intended pro-poor orientation. It protects essential social spending, while providing enough resources to allow the CBL to use monetary policy aggressively in the fight against the inflation that has been so damaging to the living standards of the most vulnerable members of society.