Monrovia – Finance and Development Planning Minister-designate Samuel D. Tweah has told members of the Senate’s Ways, Means and Finance Committee that there are no quick fixed solutions to Liberia’s economic challenges at the moment.
Report by Henry Karmo – [email protected]
However, he stated that anything that will be done in the in term to revive the economy will be to ensure an equilibrium that is manageable.
“The economy today is not good; the numbers we are seeing are not good. Our challenges began with the Ebola crisis and to where we are now.”
“The fall in the prices of our major commodities, including rubber and iron ore, took a big hit,” Mr. Tweah said.
Appearing before the Senate’s Committee on Ways, Means and Finance Wednesday, January 24, Tweah, who is among the first group of nominees in President George Weah’s administration further said that Liberia, being an import-based economy, there is high demand for foreign exchange and people are willing to pay any amount just to get the US dollars.
He also told members of the committee that rush to de-dollarize the Liberian economy caused increase in the exchange rate between the US and the Liberian dollars.
“Reversal of some de-dollarization policy ongoing now would help the real sustainable solution.”
“There is no quick short-term fix.”
“The economy has to generate foreign exchange so we have to domesticate sources of production in Liberia and increase our import base on food especially rice.”
The Finance and Development Planning Minister-designate believes the first impact of the de-dollarize policy is the reduction in the US dollars earning potential in the economic.
According to him, the Central Bank has only been able to buy US$3.6 million annually in the last six years far short of the US$86 million that was annually bought.
This he said is a significant shortfall in foreign exchange, which puts pressure on the Liberian dollars.
“Anything we do in the short term will be to ensure that it be at an equilibrium that is manageable.”
“Unless there are investment policies to ensure that Liberian businesses get into manufacturing and the private sector is fully capitalizing to leverage the gains we will not be able to solve that problem over time and if we attempt to just change it over time by saying let’s use Liberian dollars, it is going to get worse.”
In other statements, Mr. Tweah stated that Liberia’s debt in GDP is 40 percent and the country will need close to three billion United States dollars to complete road construction across the country.
This is a sharp contrast to previous projections about the amount of money needed to have paved and asphalted road networks connecting all the counties’ capitals.
Former Public Works Minister William Gyude Moore had said times without number that Liberia would need US$2 billion to connect all the counties with paved roads.
International survey conducted on the Liberian economy indicates that the country is a low-income country that relies heavily on foreign assistance.
It is richly endowed with water, mineral resources, forests, and a climate favorable to agriculture. Its principal exports are iron ore, rubber, gold, and timber. The government has attempted to revive raw timber extraction and is encouraging oil exploration.
According to the survey, in the 1990s and early 2000s, civil war and government mismanagement destroyed much of Liberia’s economy, especially infrastructure in and around the capital.
With the conclusion of fighting and the installation of a democratically elected government in 2006, businesses that had fled the country began to return. The country achieved high growth during 2010-13 due to favorable world prices for its commodities.
“However, in 2014 as the Ebola virus began to spread, the economy declined and many businesses departed, taking capital and expertise with them.”
“The epidemic forced the government to divert scarce resources to combat the spread of the virus, reducing funds available for needed public investment.
The cost of addressing the Ebola epidemic will weigh heavily on public finances at the same time decreased economic activity reduces government revenue, although higher donor support will partly offset this loss.
Revitalizing the economy in the future will depend on increasing investment and trade, higher global commodity prices, sustained foreign aid and remittances, development of infrastructure and institutions, and maintaining political stability and security.