United States Institute of Peace (Washington, DC)
Raymond Gilpin and Emily Hsu
7 May 2008
analysis
Improving economic management after almost two decades of violent conflict and civil unrest has been a top priority of Liberian President Ellen Johnson Sirleaf's reform agenda since her January 2006 inauguration.
In April 2008, her administration could point to appreciable improvements in fiscal performance and economic progress, signs that the desired enhancements in economic management may have started to materialize. Many observers speculate whether these developments could be attributed to the country's multi-stakeholder Governance and Economic Management Assistance Program (GEMAP). If so, what lessons could be learned for other post-conflict countries?
At an April 9, 2008 USIP event on the subject, the Liberian Finance Minister, the Honorable Antoinette Sayeh, reflected on GEMAP's impact, highlighted some challenges and discussed its applicability as a model for other countries. While recognizing the program's contributions, she emphasized that it is only one component of a much broader framework of reforms initiated since 2006. Sayeh also underscored the vital leadership role that President Sirleaf has played in the design and implementation of Liberia's public expenditure reform program.
Responding to Sayeh's remarks were Eric Nelson, principal associate at Nathan Associates (Virginia, USA) and Raymond Gilpin, director of the Economies and Conflict Center of Innovation. Daniel Serwer, vice president of the Center for Post-Conflict Peace and Stability Operations, moderated.
GEMAP Overview
After assuming office in 2003, the National Transitional Government of Liberia (NTGL), established under the Accra Comprehensive Peace Accord, failed to control public expenditures, generate adequate revenues or utilize the country's resources in a judicious, transparent manner. Mindful of the centrality of sound economic policies and governance in peacebuilding, a consortium of regional and international stakeholders initiated a process of consultations with the NTGL to design a mechanism to ensure that donor and national resources are used efficiently and effectively.
Following months of difficult negotiations, concerns about perceived infringements on Liberia's sovereignty, the release of a comprehensive audit report on public enterprise financial mismanagement in Liberia (funded by the European Commission), an investigation of corruption within the office of the NTGL Chairman (funded by the Economic Community of West African States (ECOWAS)) and threats of major donors to withdraw all support, the NTGL signed the GEMAP agreement on September 9, 2005.1 GEMAP's main focus areas are listed in Box 1.
The most prominent feature of the program involves imposing rigorous controls on public expenditure by placing internationally recruited experts with co-signature authority in key ministries, agencies and state-owned enterprises. Many analysts consider GEMAP to be one of the most innovative experiments in economic intervention in recent history. The Economic Governance Steering Committee, chaired by the Liberian head of state with the U.S. ambassador to Liberia as deputy chair, provides oversight for GEMAP's implementation.
Finance Minister Assesses Progress in Economic Governance
In evaluating the impact of GEMAP in Liberia, Sayeh discussed the program's successes and challenges within the context of much broader governance reforms instituted by the Sirleaf administration since 2006. She underscored the administration's "extraordinary commitment to reform," emphasizing that GEMAP has been complementary to national efforts to reduce corruption, improve fiscal performance and build capacity, while promoting peace and prosperity for all Liberians.
"Since the inauguration of President Sirleaf's administration, Liberia has witnessed substantial progress in many of the areas targeted by GEMAP," Sayeh said. "However, it is difficult to disentangle which and to what extent progress has been a result of GEMAP's measures or of the administration's own commitment to significant public financial management reform, of which GEMAP has been one part."
Some Progress
* Spending Controls. Perhaps GEMAP's most visible and substantial contribution has been the strengthening of financial controls over public spending. The plan achieves this by assigning internationally-recruited experts to key financial institutions: the Liberian Central Bank, the Ministry of Finance in support of the inter-ministerial Cash Management Committee, and the Bureau of the Budget, among others. These experts are vested with co-signature authorities in public expenditure processes, going beyond the traditional "advisory" roles of technical assistance projects.
* Transparency. Transparency of financial processes has improved significantly. The government's budget along with quarterly and annual reports on financial and budget results are posted on the Ministry of Finance's website and printed in local newspapers. Additionally, the presence of a multilateral governance structure has opened Liberia's public expenditure processes to greater scrutiny than ever before. These developments bode well for the ongoing anti-corruption efforts.
* Revenue. Fiscal revenues have risen by 135 percent since 2006. Although projected revenue for the 2008 fiscal year is about $185 million, mid-year data suggests that the government will "over perform." Sayeh explained that while GEMAP has contributed to the positive revenue performance, recent developments are rooted in administration efforts to reduce revenue leaks, establish tax identification numbers, create an automated bill payment system, and pass critical budgetary legislation.
Overcoming Challenges
* Capacity Building. The expectations raised by the recruitment of international experts have not fully materialized, particularly in the areas of skills transfers through on-the-job training and effective teamwork. According to Sayeh, this could be attributed to differing institutional cultures in the public service or broader civil service challenges—such as inadequate compensation or the lack of encouragement in adopting new skills. The minister suggested that Liberians must over time do more to assume the critical functions that GEMAP experts currently perform.
* Communication Strategy. While civil society is included in GEMAP oversight processes, there is a sense in broader Liberian society that the international community imposed the program, Sayeh said. Liberians see GEMAP as reflecting the international community's perspective on what needs to change in Liberia, and does not include enough of the indigenous perspective. This has aroused suspicion and fueled politically inspired criticism regarding the program's merits. All of the speakers at the event agreed that the Liberian authorities should develop and implement a more effective communications strategy that would enhance transparency and foster national ownership for GEMAP and the principles on which it is predicated.
* Judicial Reform. The relative weakness of Liberia's judicial system has constrained the administration's anti-corruption efforts. Initial drafts of the GEMAP agreement proposed the deployment of international judges and legal experts. However, the constitution prohibits foreign lawyers from practicing law in Liberia and defines the courts as sovereign institutions. Sayeh acknowledged that a functioning judiciary, a vital component of economic governance, is possibly the most significant challenge the administration has faced in implementing change. She agreed that rule of law issues must also be prioritized.
* Speed of Reform. Many Liberians believe that the expectations that GEMAP raised have not been fully matched by results. Sayeh explained that many viewed the program as a panacea that would deliver wide-ranging results expeditiously. She acknowledged that while some progress has been made, the pace leaves much to be desired. She also highlighted difficulties in expediting the involvement of the Liberian diaspora, not only to participate in GEMAP by serving in leadership positions but also to provide enterprise skills to jumpstart the economy. While the minister identified existing programs aimed at recruiting Liberians living abroad through competitive salaries and support from Liberian embassies, it was agreed that more should be done to publicize these initiatives.
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