15 December 2013

Liberia: Fact Vs. Fiction - the IMF & the Liberia Economy


IN APPROVING the Special Drawing Rights (SDR) of 7.382 million (about US$11.4 million ) for Liberia last week, Mr. Naoyuki Shinohara Deputy Managing Director and Acting Board's Chair, the International Monetary Fund(IMF) made a rather conflicting revelation when he said: "Liberia's economic growth remains strong and the medium-term outlook is positive, provided new projects in the mining and plantation sectors come on stream".

MR. NAOYUKI also said the non-resource real GDP growth is expected to continue and pick up in 2014-15, as the authorities continue to press ahead with the implementation of large energy and road infrastructure projects in line with their Agenda for Transformation.

WHILE WE applaud the numerous assistance the IMF has given to Liberia over the years, we find it troubling that the monetary body continues to put out ironic and contrasting reports month in and month out about Liberia's economic outlook and offering hope when in reality, those languishing at the bottom of the economic ladder are not feeling the so-call "positive" and "strong" economic outlook the IMF's experts are seeing.

WE FIND IT PUZZLING that the same IMF, in December 2010, reported that Liberia had made progress over the past two years in strengthening its institutions, cutting debt and improving regulations but faces many vulnerabilities. "Broad-based growth is necessary to reduce the high levels of underemployment and widespread poverty," the IMF said in a report after a review of the country.

THE IMF WENT on to recommend using future commodity revenues to improve infrastructure and said Liberia needs to develop its financial sector more fully to support development.

AT THE TIME, the IMF forecast that Liberia's gross domestic product, or total national output, will grow by 6 percent in 2010, an improvement from 2009's expansion of 4.5 percent. The monetary body urged Liberian authorities to take steps to bolster what it said were generally favorable medium-term prospects. "Significant challenges stemming from volatile commodity prices and large development needs will need to be tackled to put the economy on a sustainable, high-growth path," the IMF cautioned.

WHAT WE FIND confusing is how come each year, the IMF comes out with these findings of strong economic growth and a positive reviews when the foreign exchange rate continues to worsen and the local currency continue to flood the market and fall down in value at the end of each market trading day.

ALL THIS COMING on the heels of the IMF's report that the observation of central government revenue collection, caps on the central bank's direct credit to the government and central bank foreign reserve figures has been waived because of the country's impressive economic strides.

WHILE WE remain hopeful, we are cautious about the IMF's conditional declaration of a brighter future for Liberia, that the economic growth remains strong and the medium-term outlook is positive, provided new projects in the mining and plantation sectors come on stream.

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