18 July 2018

Liberia: We Will Fix It - Pres. Weah Institutes Measures to Fix Messy Economy

Photo: Boakai Fofana/allAfrica
Traders in Monrovia's largest market district of Waterside on the morning the quarantine was lifted off West Point that's nearby.

Amidst the soaring price of basic essential commodities and the astronomical hike in service charges as well as the depreciation in the Liberian dollars across the country, President George Weah is calling on Liberians to remain calm as his administration is exerting the needy efforts aimed at changing the conditions and making Liberia better once again.

The Liberian leader who inherited a broke government in late January 2018, has already instituted short and long term measures to fix what is being described as a messy economy.

"Nearly six months ago, I was sworn in as President of the Republic of Liberia, following an historic election in which the majority of Liberians demanded change for hope. One week after my inauguration, I was required to fulfill a constitutional mandate to report to the country on the State of the Nation. You will recall that during that first Annual Message, I candidly described the poor state of affairs of the economy which my administration had inherited. The economy was weak and under-performing, and the government was facing solvency and liquidity challenges. Our currency was experiencing rapid and unprecedented depreciation, contributing to rising inflation.

Unemployment was very high, and our foreign reserves were at an all-time low. Today, five months later, it is not for us to complain about the bleak situation we inherited; or to cast blame upon previous administrations. Rather, ours is a duty and responsibility to find new and sustainable solutions to these age-old problems that have stubbornly defied solution in the past," President Weah said during his speech to the nation on the state of the economy.

Prior to President Weah's address on the current state of the Liberian economy, the Liberian dollar depreciated drastically on the foreign exchange market, trading as high as L$163 to one United States dollar, the first of its kind since the funding of the nation in 1847.

The over US$16 billion investment which was boasted by the immediate past regime of Ellen Johnson-Sirleaf has all apparently vanished since the outbreak of the deadly Ebola Virus Disease that decimated the lives of thousands of people in Liberian and ramshackle the Liberian economy.

Additionally, millions of dollars misappropriated by some former public officials are yet to be accounted for as dozens of audit reports are still incubating on shelve, as the plunderers of those money are walking the streets without being prosecuted.

Meanwhile, during his speech, Presidents Weah announced an immediate infusion of US$25Million (Twenty-Five Million United States Dollars) into the economy, through the Central Bank of Liberia.

The amount according to the President is intended to mop up the excess liquidity of Liberian dollars.

Additionally, he has with immediate effect mandated the Central bank of Liberia to provide more effective supervision and regulation of money-changers or foreign exchange bureau across the country.

Another mandate the Liberian leader gave the CBL is to provide more robust oversight of banks under its supervision; conduct a comprehensive review of regulations on the hoarding of both Liberian dollars and U.S. dollars outside the banking system, as well as provide incentives and safeguards to encourage the utilization of the banking system, including financial instruments among others.

"The government will announce a series of monetary and fiscal measures that we believe should help reverse the decline in the value of the Liberian dollar," President Weah declared. He added that the government also intends to engage the minds of the best and the brightest Liberian economists, both at home and abroad and even seek advice and active support from our international partners. As a first step in this direction, we have placed emphasis and urgency on the formulation of a comprehensive development strategy that will be supported by a strategic implementation plan.

The development strategy, to be known as the Pro-Poor Agenda for Prosperity and Development, is nearing completion, and will very shortly be presented to all stakeholders, including our foreign development partners, the private sector, and the general public, for consultation, input, and buy-in, before being finalized into a strategic implementation plan," Pres. indicated during his speech.

The Liberian Chief Executive cited the departure of the United Nations Mission in Liberia (UNMIL), as well as the huge decline of exportation of goods from Liberia as some of the major factors leading to the shortage of the United States on the Liberian market.

President Weah therefore reaffirmed his commitment of working to ensure that Liberian owned businesses are empowered so as to lead the transformation of the economy.

"I am fully aware that we are faced with a very difficult macroeconomic situation in Liberia. For many decades, we have incurred trade deficits because we import more than we export. We also have an economy based on traditional exports such as iron ore, rubber, coffee, etc., which are shipped to foreign buyers in their raw state, without any value-added propositions which could have also contributed significantly to industrialization and employment," Pres. Weah asserted.

Additionally, he lamented that the prices and demand for our exports are determined and affected by factors beyond our borders, and are therefore beyond our control, stressing that slumps in demand for the products which utilize our raw materials will always result in externally-generated shocks to our economy.

"The world as a whole is facing new economic challenges. Of late, trade wars between the major manufacturing countries could also reduce demand and place downward pressure on the prices of our major exports. In the meantime, on a positive note as regards investor confidence, Liberia has moved to a new level of sustainable peace, which has led to the withdrawal of the United Nations Peace Mission in Liberia. However, the negative impact on real estate, and inflows into the economy of the US Dollars spent by the former Peacekeepers, is significant. Finding lasting solutions to the present macroeconomic challenges will take some time, because nothing less than the structural transformation of the Liberian economy will produce sustainable recovery and growth.

The key to success in this endeavor is for Liberians to produce more goods and services locally, so that we reduce our importation of goods and services from abroad, whilst at the same time increasing our exports and adding value to the raw materials that we ship to the world. In this regard, our Government intends to embark upon a major push to ensure that Liberia becomes more competitive in terms of domestic production. And in so doing, we intend to encourage and empower Liberian businessmen and Liberian-owned businesses to lead the transformation of the Liberian economy. We will enable them to become more competitive, by providing affirmative policies and support, including ready access to finance and expertise. The aim and intention of this approach is to encourage import substitution and manufacturing for export, as well as sustainable wealth and job creation," he added.

Meanwhile, placing emphasizes on some long term plan, the President emphasized that his administration has placed emphasis and urgency on the formulation of a comprehensive development strategy that will be supported by a strategic implementation plan.

He informed that the development strategy, to be known as the Pro-Poor Agenda for Prosperity and Development, is nearing completion, and will very shortly be presented to all stakeholders, including Liberia's foreign development partners, the private sector, and the general public, for consultation, input, and buy-in, before being finalized into a strategic implementation plan. The development strategy and implementation plan will serve as a roadmap for the urgent and important next-steps to be taken in giving direction to our economic recovery, and will consist of short-term interventions, medium-term reforms, and long-term restructuring of the Liberian economy according to him.

"My Fellow Citizens: The above measures, and many more currently being considered, are critical steps toward the goal of arresting the rapid deterioration of the Liberian dollar.

However, the ultimate solution for strengthening the Liberian dollar is to ensure domestic economic competitiveness and the existence of a strong private sector that is oriented towards domestic consumption, import substitution, and export. This is a goal we seek to achieve in the Pro-Poor Agenda for Prosperity and Development. The road to this transformation will be long, and sometimes difficult, and so we ask our people for patience. We fully understand the urgency and critical nature of the situation, and we are fully focused in trying to solve these problems, some of which have existed for many decades. Let us all work together to lift our people out of poverty," he pointed.

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