Finance Minister, Amara M. Konneh has spoken on the growth of the Liberian economy saying that there has been a significant growth in Liberia's GDP.
Giving an update on the State of the Economy following the passage of the National Budget, Minister Koneh disclosed that in spite of the noise and confusion in recent times, some of the events of the past few weeks have had a profound impact on the nation's economy and on the Agenda for Transformation.
Konneh said the most important instrument passed by the National Legislature is The National Budget Law FY 2013/2014. He said the passage of the National Budget by the Senate on Thursday, September 12, following an extended period of stakeholder consultations, dialogue and debate demonstrates the progress the country has made in the past few years in building the democratic institutions.
Mr. Konneh said the approved budget which is approximately US$582 million articulates clearly the policy priorities and direction of the Government, investing in key infrastructure and social programs intended to expand the economy for growth, development and job creation.
"Given the size of our budget and the fiscal space with which we must navigate our development agenda, the passage comes at a very critical point in our drive to stimulate growth through increased consumer spending and execution of Public Investment Projects," the Minister said.
He said the priority investment fund allows the government to target specific interventions that will sow the seeds of stability, prosperity and social welfare and the approved budget has appropriated over US$111m for these key national projects.
Konneh named another significant milestone which he said is the passage of the legislation creating the Ministry of Finance and Development Planning (MFDP) and the Liberia Revenue Authority (LRA). "The passage of these laws will go a long way to bring the much needed cohesion to the operations of government by eliminating current duplications and gaps in the functions of the Ministry of Finance (MoF) and the Ministry of Planning and Economic Affairs (MPEA), thereby resulting in the more efficient and effective employment of human and financial resources for better service delivery," he intimated.
Commenting further, Min. Konneh said Liberia will receive US$65m in credit from the European Investment Bank to refurbish Mt. Coffee Hydro. According to him, once rehabilitated in late 2015/early 2016, the plant will generate between 64 & 80 MW of electricity (depending on whether it has 3 or 4 generators) during the rainy season. "This will drastically reduce the cost of producing electricity to less than 10 cents/Kwh, facilitating the growth of business and industry.
On the West Africa Power Pool (WAPP FA & WAPP CLSG Treaty), Min. Konneh said the World Bank will contribute about US$1 50m in credit to build a transmission line that will interconnect the Côte d'Ivoire, Liberia, Sierra Leone, and Guinea (CLSG) Power Systems.
He added that the line will go from Mano through Monrovia to Buchanan, and then up to Yekepa, allowing Liberia to purchase up to 20MW of electricity from Cote d'Ivoire. He said this will also bring down the cost of doing business, by making electricity cheaper and more readily available. He said a rural electrification component will bring electricity to over 700 villages.
Commenting on the Liberia Accelerated Electricity Expansion Project (LACEEP), Konneh disclosed that the $30 million project will build a Transmission and Distribution (T&D) line from Paynesville to Kakata, and a fuel unloading facility at the Monrovia Freeport. "The T&D line will bring electricity to one of Liberia's fastest growing and most dynamic cities, which is home to an estimated 50,000 people. A fuel unloading facility is being built by the World Bank in collaboration with the Liberian Government. This facility will help supply heavy fuel oil to Liberia's power plants at a low cost," he further pointed out.
On the Liberia Road Asset Management Project (LIBRAMP), the Liberian Finance Minister averred that this US$50m credit from the World Bank will support the paving of the Redlight-Ganta-Guinea Border Highway, one of Liberia's main economic corridors, linking Monrovia to the country's breadbasket and then onto the southeast to facilitate trade with neighboring Guinea & Cote D'Ivoire.
He said approximately 60 percent of the people live along this corridor adding, that paving the road will increase trade, food security and access to public services such as clinics and schools thereby, improving the quality of life for Liberians in connected areas.On the Fishtown-Harper Highway, Lot 1, Konneh stated that the African Development Bank is providing US$64m to pave the first 50km from Harper to Karloken.
He said paving this road will increase economic activity, especially as it traverses several key agricultural concessions. "It will generate jobs and facilitate access to markets, boosting growth in the historically marginalized southeastern region of the country. The project is the first step in an ambitious plan to link Harper to Ganta with a paved, all weather highway. This will link the two halves of the country together and complete a missing segment of the Trans-West African Highway, boosting regional trade," he said.
2 6 Smallholder Tree-Crop Revitalization Support Program: US$15m from the International Fund for Agricultural Development (IFAD) will go towards supporting Liberian farmers in enhancing and replacing their stock of tree-crops, including rubber, cocoa and coffee. The project will target Bong, Nimba and Lofa Counties, where many plantations that were established before the war are suffering decreasing productivity as the trees age.
On the state of the nation's economy, Min. Konneh said the fundamentals of the economy still remain solid adding, "We have grown at an annual average of 7 percent since 2003 reflecting the peace dividends following the end of a protracted civil war."
He added that despite the rapid growth, the Agenda for Transformation (AfT) recognizes that the main drawback from this growth is the limited number of jobs created as the expansion of the economy has been driven mainly by the so-called enclave sectors- the extractive sector. "These are the same drivers before the civil war with very narrow spillovers over the rest of the economy," he added.
He disclosed that real economic growth remains on a solid footing noting that the country's revised projections for 2013 imply a real GDP growth of 8.1 percent, compared to 7.5 percent in 2012. "The higher-than-anticipated growth at the time of the first review is associated mainly to stronger mining activity.
Commenting on the rise in the US rate against the Liberian Dollar, Min., Konneh said the depreciation of the LD is being driven mainly by the structural imbalance between the supply of and demand for the US dollar in the market due to high and growing trade deficit with practically everything that is consumed in the Liberian economy being imported while exports receipts have somewhat stagnated.
"Another reason for the depreciation is the injection of more Liberian dollars in the economy in the past six months. As you are aware, the CBL has a number of monetary instruments at its disposal which it is using to intervene to stabilize the exchange rate," Minister Konneh pointed out.