Cautiously Appreciating Liberia’s Potential for Economic Growth – IMF Latest Report
Economic growth is an increase in the production of goods and services in a country over a specific period. Improvements in human resources, advancements in technology, and the upward movement of the workforce are factors that trigger economic growth. The expected results of sustained economic growth are increased average incomes, higher consumer spending, and a better standard of living.
By Amb. Rufus Dio Neufville
The International Monetary Fund (IMF) uses complex indicators to measure economic growth (or decline) in many countries while promoting sustainable growth and development. The IMF supports programs that promote financial stability and monetary cooperation. It also advises the 190 member countries on policies to advance economic well-being.
On August 24, 2022, the IMF Executive Board reported that global developments will dampen economic growth to 3.7 percent this year. But Liberia has the potential to grow by at least 5 percent annually. The IMF also appreciated the new anti-corruption legislation in Liberia while recommending additional steps to avoid delays in implementing structural reforms. Quantitative program performance was quite strong over the period.
There is little room for debate about the positivity of this report. It shows light at the end of the tunnel and suggests a growing free market and the potential for additional revenue. The IMF is not saying that Liberia or Liberians will suddenly get out of poverty; or that our economy is now ready for maximum output. Growth potential means Liberia is taking the necessary steps to achieve targets – setting up the appropriate mechanisms that lead to sustained economic growth.
But we need not celebrate this report without caution. Economic growth is not new in Liberia. We have had intermittent periods in our history where economic growth was directly proportional to abject poverty: the more money we got as a country, the poorer the people became. The Open Door Policy launched by the Liberian government in 1944 is a good example. The Liberian economy grew because of the skyrocketing demand for natural resources after World War II and the investment incentives given to foreign firms. Liberia’s economic growth paralleled great countries on the planet.
Regrettably, however, the Open Door Policy enabled the elites – officials of the True Whig Party (TWP), their families, and concubines – to get richer while the majority remained in perpetual degradation. More money came into the country while more people became poor and subjected to the ever-growing slums of Monrovia. Even the counties that produced the resources could not enjoy a fitting medical facility. Yes! Economic growth can be a blessing or a curse.
Let me also mention that Liberia will stand a chance to take loans from global financial institutions for development if there are signs of a growing economy. We must celebrate the good news because we all benefit from development regardless of our political persuasions. However, we must remind the decision-makers about our ugly history of loans. President E. J. Roye and Speaker Spencer Anderson borrowed $500,000 from a British financier on behalf of Liberia and embezzled the money. This public corruption was the main factor that led to the downfall of Roye’s government in 1871. Speaker Spencer Anderson was shot and killed while leaving the courthouse.Later in 1906, PresidentBarclay secured another British loan of £100,000 with little or no impact on the lives of the poor. Even the Firestone loan in 1927 created more questions than answers. Liberia’s debt to private banking institutions increased from $30 million in 1970 to over $150 million in 1979. We have borrowed billions of United States Dollars. The United States government and other partners have spent billions in aid. Yet Liberia remains among the top ten poorest countries in the world, according to the World Bank’s World Development Indicator (WDI). Interestingly, Liberia has been on this list for the longest.
I am not suggesting that Liberia is doomed. I am not pessimistic about the determination of the government of President George M. Weah to equate growth to development. I believe our generation can graduate from the economic miasma of our forefathers. The Economic Management Team (EMT) must remain on the path that has triggered growth potential. The EMT must develop more people-centered programs and avoid the temptation of gluttons in the bureaucracy, including the legislature.
I am still optimistic that we can emancipate our people from the dungeon of poverty by creating jobs and providing social services. We can build more hospitals, roads, and schools. A structural change in the economy is possible. An economy that maximizes the capacity of the citizens is attainable in our lifetime.
With that said, the government deserves cautious appreciation for meeting the IMF benchmarks for a particular period. The impression on the scorecard of the IMF is commendable. It must be seen as a challenge to work harder. Liberians are demanding that growth must be proportional to development.
Amb. Rufus Dio Neufville is a lawyer and the Executive Director of the People Action Network (PAN-Liberia). Contact: [email protected]