Monrovia — In his 5th Annual Message to the 54th Annual Legislature, President George Weah painted blossom picture of the country's 2021 economy. He told the Legislators and the nation in the presence of members of the diplomatic corps that he has managed to keep the economy stable and expanded it by 3.6 percent - a nominal value of US$300 million in 2021.
The 3.6 percent growth of the economy in 2021 was an improvement from the -3 percent in 2020 as that year was heavily struck by the coronavirus pandemic. Inflation was reduced to less than 6 percent in November 2021, from 13.1 percent in December 2020.
The improvements in the economic performance were due to improvements in the coordination between monetary and fiscal policies with the aid of the International Monetary Fund's support to the Central Bank of Liberia.
"We have remained committed to the independence and autonomy of the Central Bank of Liberia in support of economic reforms for a stable economy. Although the year under review was challenging for the economy, my Government was fully supportive of policy implementations from the CBL that have kept the recovery of our economy on course," Pres. Weah said.
He also outlined that during the year under review, his administration was successful in increasing the gross international reserves of Liberia to more than US$600 million, representing more than 4 months of import of goods and services in compliance with ECOWAS convergence target.
"Based on the sound management and good performance of our economy, Liberia received $345.3 million US dollars in August 2021 under the general Special Drawing Rights allocation to IMF members," he said.
However, a study of the second edition of the Economic Update of Liberia released last November by the World Bank, it is clear that most of these positives in the economy are not directly impacting the ordinary citizens. Liberians, according to the Economic update, remain the second poorest people in West Africa. The first being Guinea Bissau.
According to the report, despite the recovery and lower inflation, extreme poverty in Liberia increased in 2021 but at a lower pace than in 2019 and 2020.
The Economic Update cited the High Frequency Phone Monitoring Survey report launched in August 2020, which indicates that two out of three households in Liberia are food insecure, three out of four households reported job losses, and two out of three households reported income losses because of COVID-19.
According to World Bank Group projections, the prevalence of extreme poverty has increased since the Ebola epidemic in 2014 and is estimated at 51.0 percent in 2020 (up from 38.6 percent in 2014). On average, 81.9 percent of the households interviewed in round 6 of the COVID-19 High Frequency Phone Monitoring Survey indicated that they were worried about not having enough food to eat, while 27.2 percent effectively ran out of food.
The report, among other things, indicated that most Liberians lack access to good jobs that provide sustainable earnings. Three out of four of those in the labor force are self-employed in agriculture (36 percent of all employment) or nonagricultural activities (almost 40 percent). Only 20 percent of workers are in wage employment, which tends to provide higher and more stable earnings.
The Economic Update also revealed that the Liberian government spends more than the average in Sub-Saharan Africa and countries with similar GNI per capita
It explained that Capital expenditure is higher in Liberia than in comparator countries at similar levels of development. Capital expenditure amounted to 10.2 percent of GDP over 2017-2020, a share much higher than in Guinea Bissau (0.5 percent), Madagascar (3.7 percent), Mozambique (4.4 percent), Malawi (5.3 percent), Burkina Faso (7.0 percent), or Mali (8.0 percent). The countries with similar levels of capital expenditure (to GDP) are Rwanda (10.3 percent) and Togo (11.9 percent). Capital expenditure is also higher in Liberia than in neighboring countries. Over the period 2017-2020, capital spending amounted to 6.8 percent of GDP in Sierra Leone, 4.9 percent of GDP in Côte d'Ivoire, 4.7 percent of GDP in Guinea, and only 2.0 percent of GDP in Ghana.
Similarly, while capital expenditure represented 31.8 percent of total expenditure in Liberia in the last four years (2017-2020), that share was 30.9 percent in Sierra Leone, 28.9 percent in Guinea, 26.4 percent in Côte d'Ivoire, and 9.3 percent in Ghana.
Liberia's investment spending is less efficient and its capital stock lower than in comparator countries. Although Liberia spends more on public investment as a share of GDP than countries in the Economic Community of West African States (ECOWAS) and Sub-Sahara Africa in general, its overall capital stock is estimated to be lower than that of ECOWAS comparators, according to the IMF's Public Investment Management Assessment (PIMA) report.
The Government of Liberia makes no saving and contributes little to the financing of its own public investment, the report revealed.