MONROVIA — Liberia's economy is on track to expand 5.6 percent in 2025, outpacing last year's growth, as the government reported stronger tax revenues and steady budget execution in its mid-fiscal year review. But rising inflation, procurement bottlenecks, and mounting debt service costs pose risks to the fragile recovery.
The Consolidated Mid-Fiscal Year Review for FY2025, released by the Ministry of Finance and Development Planning (MFDP), covers the first half of the fiscal period from January through June. The report paints a picture of how revenues are slightly ahead of target, donor disbursements are flowing, and public investments are gaining traction. Yet, fiscal pressures persist, particularly in managing debt obligations and addressing gaps in social spending.
Economy Expands Amid Structural Shifts
Liberia's economy is projected to grow 5.6 percent in 2025, up from 4.8 percent in 2024 and 4.6 percent in 2023, according to the review. Growth is "broad-based, with particularly strong momentum in mining and panning, agriculture, manufacturing, and infrastructure development," the MFDP noted.
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Mining leads with projected expansion of 8.6 percent, fueled by increased gold and iron ore output and foreign investment. Agriculture and fisheries are set to grow 5.2 percent, driven by cassava, rice, palm oil, and rubber. Services remain the backbone, contributing 38.6 percent of GDP, while manufacturing is emerging with growth of 6.2 percent, largely from cement and beverage production.
Finance officials credited reforms in energy, trade, and financial services for underpinning medium-term growth. "Over the medium term, growth is expected to average 5.8 percent, underpinned by improved electricity supply and structural reforms," the review stated.
Inflation and Currency Trends
Inflation averaged 11.8 percent in the first half of 2025, compared with 8.8 percent a year earlier, which is blamed on exchange rate depreciation, global price shocks, and supply constraints.
By June, the rate had eased slightly to 11.1 percent, down from 12.5 percent in the first quarter. The review projects a gradual decline to 8.2 percent by year-end and 7.1 percent by 2027, provided fiscal and monetary discipline holds.
The Liberian dollar also showed signs of stabilization. The average exchange rate stood at L$199.1/US$1, compared with L$193.1 a year earlier. Year-on-year depreciation slowed to 3.3 percent in 2025, down sharply from 9.3 percent in 2024 and 14.4 percent in 2023.
Budget Revenues Edge Ahead
At mid-year, government revenue totaled US$412.5 million, exceeding projections by US$2.7 million. The overperformance was "driven entirely by tax revenue," which reached US$338.5 million--82 percent of total collections.
Income and profit taxes brought in US$176.1 million, up nearly 28 percent year-on-year. Taxes on international trade rose to US$118.1 million, boosted by compliance reforms and rollout of customs automation at rural ports.
But non-tax revenue lagged badly, at US$64.1 million against a US$82.5 million target. Shortfalls were linked to "major declines in SOE dividends, road fund contributions, and mineral royalties," the review said. Only the Liberia Petroleum Refining Company remitted dividends, while other state-owned firms and mining companies fell short.
"Non-tax revenue underperformed significantly, falling short of projections by US$16.8 million (-22.3 percent), despite contributing 15.5 percent of total collections," the report noted.
Expenditure and Investment
On the spending side, budget execution reached US$353.6 million out of US$473.1 million allotted, a 74.7 percent execution rate.
Recurrent expenditure still dominates, with employee compensation consuming US$135.6 million by mid-year. Debt service totaled US$70.8 million, split almost evenly between external and domestic creditors. "Domestic servicing was prioritized at 77.9 percent, compared to 41.9 percent for multilateral and 42.3 percent for bilateral creditors," the report said.
The Public Sector Investment Program (PSIP), targeted for infrastructure, agriculture, and energy, achieved 70.2 percent disbursement efficiency. Roads remain the largest capital item, with more than US$52 million earmarked for construction and rehabilitation.
"This shift reflects a deliberate policy signal: a gradual pivot toward development-oriented spending, particularly in sectors that drive long-term economic transformation," the ministry stated.
Donor Support and Aid Flows
Official Development Assistance is projected at US$356.6 million for FY2025. By mid-year, US$167.5 million had been disbursed, mainly to human capital development (US$64.3 million), infrastructure (US$42.9 million), and economic transformation (US$42 million).
Combined government and donor spending reached US$727.2 million, underscoring what the MFDP described as "strong coordination and alignment with national priorities".
Debt Pressures Mount
As of June, Liberia's total public debt stood at US$2.69 billion, up 4.95 percent from December 2024. External debt climbed to US$1.62 billion, while domestic debt fell slightly to US$1.07 billion, reflecting targeted repayments.
The review warned that "debt service obligations vs. budget realities" are creating a growing fiscal gap. The government paid US$70.8 million in debt service in the first half, but execution gaps remain, particularly with multilateral and bilateral creditors.
Despite this, officials insisted that timely servicing is vital to credibility. "Timely debt servicing reduces rollover risks, supports favorable credit ratings, and helps anchor exchange rate stability," the report said.
Progress on ARREST Agenda
Implementation of the government's flagship ARREST Agenda for Inclusive Development showed mixed but improving results. Mid-year performance across the six pillars averaged 53 percent.
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Notable gains included a fourfold increase in rubber exports, 338 kilometers of roads improved, 1,215 schools receiving feeding support, and "digital reforms advancing across sectors".
Still, execution gaps persisted in agriculture, education, and governance, reflecting procurement delays and institutional bottlenecks.
Risks and Recommendations
The review cited procurement delays, reporting gaps, structural constraints, and liquidity shortages as key obstacles. Off-budget spending pressures also remain a concern.
To address these, the MFDP recommended "strengthening monitoring and evaluation, enhancing institutional capacity, improving budget predictability, fostering coordination, and institutionalizing quarterly performance reviews".
The report framed the review as more than a statutory requirement. "It is a strategic tool for transparency, reform, and results," the ministry said. "It offers policymakers, development partners, and citizens a clear window into how public resources are mobilized, allocated, and deployed across sectors".
With US$407.8 million--nearly half the budget--still to be executed in the second half of FY2025, officials stressed the importance of accelerating disbursements while maintaining discipline.
"The FY2025 Mid-Year Review reflects a government committed to reform, resilience, and results. With continued collaboration and adaptive management, Liberia is well-positioned to consolidate progress and deliver inclusive development," the report concluded.
