The Liberian economy is expanding, inflation is relatively contained and the government's fiscal position has improved. Yet, for a growing number of citizens, these gains have not translated into better living conditions. The World Bank's seventh Liberia Economic Update exposes this troubling disconnect that economic growth is accelerating while extreme poverty is rising.
The contrast captures one of the country's most persistent development challenges--growth in national output does not necessarily mean growth in household incomes, employment or living standards.
At the launch of the report, World Bank Country Manager Georgia Wallen described the situation as the "paradox at the heart of this report" -- an economy growing faster while more people struggle to meet their basic needs.
Real GDP growth reached an estimated 5.1 percent in 2025, up from 4 percent in 2024. Inflation remained relatively contained, while the fiscal deficit narrowed to 2.1 percent of GDP. Wallen credited what she described as "disciplined macroeconomic management" by the government and the Central Bank of Liberia.
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These improvements are significant. Macroeconomic stability helps protect purchasing power, supports investor confidence and creates room for public investment. But the latest poverty figures reveal the limitations of treating economic growth and fiscal discipline as sufficient measures of national progress.
According to the report, extreme poverty increased from 34.6 percent to 36.1 percent over the past two years. That means the benefits of economic expansion are not reaching households widely enough to reduce severe deprivation.
The central issue, therefore, is not simply how quickly the economy grows, but what drives that growth, who benefits from it and how effectively it creates opportunities for ordinary citizens.
A major explanation lies in the composition of economic growth.
Mining has become a significant driver of the country's recent economic expansion. The World Bank's country data show that mining growth surged from 2.1 percent in 2024 to 17 percent in 2025, while agriculture grew by only 2.6 percent. Services expanded by 4.6 percent.
The difference matters because mining is capital-intensive. It requires substantial investment in machinery, equipment, infrastructure and specialized operations, but does not necessarily create employment on a scale comparable to the number of people who depend on agriculture, petty trading, transport and small businesses.
A mining project can increase exports, government revenue and GDP without generating enough direct and indirect employment to substantially improve household welfare.
This is not an argument against mining. Liberia needs investment in its mineral sector, and the industry can generate foreign exchange, tax revenue, infrastructure and business opportunities. The challenge is ensuring that these benefits spread through local procurement, employment, skills development, downstream industries and productive public investment.
Without those linkages, mining-led growth risks producing impressive national economic figures alongside persistent poverty.
The agricultural sector presents a particularly important concern. Agriculture remains a major source of livelihoods, especially in rural communities, but low productivity, inadequate infrastructure, limited access to finance, weak storage facilities and high transportation costs continue to restrict its potential.
The World Bank's May 2026 analysis of the Liberian private sector identified agriculture as accounting for approximately 33.8 percent of GDP in 2024 and serving as the primary livelihood source for most households. It also estimated that about 87 percent of workers were engaged in smallholder farming or unregistered micro-enterprises.
This exposes a fundamental weakness in the country's growth model: the sectors generating substantial increases in national output are not necessarily the sectors supporting the livelihoods of most Liberians.
The difficulties confronting small businesses further explain why economic growth has not translated into broad-based prosperity.
The private sector is dominated by micro and small enterprises, many of which operate informally, employ few people and have limited capacity to expand.
The World Bank's 2025 Enterprise Survey offers a revealing picture. The proportion of businesses identifying access to finance as their biggest obstacle increased from 29.9 percent in 2017 to 39.8 percent in 2025.
Electricity remained another major constraint, cited by 21.6 percent of surveyed firms in 2025. More concerning, real annual sales growth declined from 27.3 percent in 2017 to 7.9 percent in 2025, while average annual employment growth fell from 19.8 percent to 8.9 percent.
These figures suggest that businesses are not expanding at a pace sufficient to generate the volume of productive employment Liberia needs.
Access to finance is particularly important. Businesses unable to secure affordable credit cannot easily purchase equipment, increase inventories, improve technology or expand operations. High borrowing costs and collateral requirements can keep otherwise viable enterprises small and limit their ability to hire.
Electricity shortages and unreliable supply compound the problem. Businesses must often depend on generators, increasing operating costs and reducing competitiveness. High transportation costs and administrative burdens further constrain production and trade.
The result is a cycle in which businesses remain small, productivity stays low, employment opportunities are limited and household incomes remain vulnerable.
Wallen illustrated these challenges by pointing to farmers facing high transportation costs, traders relying on generators because of unreliable electricity and entrepreneurs struggling with taxes.
The concern is that even when the national economy expands, the ordinary businesses that could distribute growth through employment and income generation remain constrained.
Macroeconomic stability is not household prosperity
The improvement in the country's fiscal and monetary indicators deserves recognition, but it must be understood in context.
A narrower fiscal deficit means the government is spending more cautiously relative to its available resources. Lower inflation helps moderate the erosion of purchasing power, while exchange-rate stability can reduce uncertainty for businesses and consumers.
However, these achievements do not automatically increase wages, create jobs or reduce the cost of essential goods and services.
A household struggling with unemployment, low earnings, expensive food, transportation costs and inadequate access to electricity may experience little immediate improvement from a better fiscal deficit.
There is also a development trade-off in the government's approach to fiscal consolidation.
The report notes that capital spending declined from 8.5 percent of GDP. While expenditure restraint can help preserve fiscal stability, sustained reductions in productive investment may undermine the infrastructure needed to support future growth.
Roads, electricity, ports, water systems, schools and healthcare facilities are not merely government expenditures. They are essential economic infrastructure that enables businesses to operate, farmers to reach markets and workers to become more productive.
Wallen cautioned that fiscal consolidation has limits because infrastructure investment is necessary to sustain economic expansion.
This creates a difficult policy balance: the government must control expenditure and manage debt without cutting the very investments needed to generate jobs and improve productivity.
The issue is not simply how much government spends, but whether public expenditure produces measurable economic and social returns.
The seventh Liberia Economic Update places considerable emphasis on state-owned enterprises, which provide essential services such as electricity, water, port operations and petroleum supply.
Their performance has direct consequences for the cost of doing business, household welfare and the government's fiscal position.
A poorly managed electricity utility, for example, can increase production costs across the economy. Inefficient port operations can raise the cost of imports and exports, while financial weaknesses in public enterprises can create demands for government subsidies and additional borrowing.
Presenting the report's findings on SOE governance, World Bank Senior Public Sector Specialist Bonnie Ann Siroris said the government lacks reliable information to properly assess the performance, financial exposure and value for money of many state-owned entities.
The scale of the information gap is significant.
Over six years, financial information was submitted for only 83 of 276 potential entity-years. Twenty-five of the 46 entities operating through 2025 had never submitted a single financial return.
Auditing is similarly incomplete. Only 17 operational entities had completed at least one audit since fiscal year 2019, while 29 more audits were underway. Only four audits across all SOEs received unqualified opinions, and all 10 available compliance audits were adverse.
The problem extends beyond incomplete reporting. Where figures could be compared, 40 percent differed by more than 5 percent between audit reports and data held by the Bureau of State Enterprises or the State-Owned Enterprises Authority of Liberia.
Such discrepancies make it difficult for government, lawmakers and citizens to determine how much public enterprises earn, spend, owe and receive in government support.
The financial position of the reporting entities also raises concerns.
For fiscal year 2024, 19 reporting entities recorded an adjusted combined surplus of approximately US28million.However,threeentitiesaccountedforaboutUS47.4 million, while the remaining 16 recorded a combined deficit of approximately US$19.4 million.
The reported surplus also included US15.1millioningovernmentsubsidiesandUS16.7 million in development partner grants. Without those transfers, the portfolio would have recorded an estimated loss of US$2.7 million.
This distinction is important because a public enterprise receiving subsidies is not necessarily performing poorly. Some subsidies finance legitimate public service obligations, particularly where services must remain accessible to citizens who cannot afford their full commercial cost.
The more important question is whether the government knows what it is paying for, whether the services are being delivered efficiently and whether public support is producing measurable results.
At the end of 2025, the 19 reporting entities had approximately US815.4millioninliabilities.Loanson-lentorguaranteedbygovernmentamountedtoaboutUS423.3 million, with the Liberia Electricity Corporation accounting for approximately 77 percent.
The report also identifies gaps in the reconciliation of arrears, unpaid government bills, supplier claims and court judgments. This means the actual financial exposure associated with public enterprises may be greater than the figures currently available.
These weaknesses can ultimately affect taxpayers and public service users. When public enterprises accumulate losses and liabilities, the consequences may include higher government subsidies, reduced investment in services, additional borrowing or pressure to increase tariffs.
LEC illustrates the cost of weak institutional accountability
The Liberia Electricity Corporation provides a particularly important example of how public enterprise weaknesses can affect the wider economy.
According to the report, LEC's revenue increased substantially between fiscal years 2022 and 2024. However, its earnings were positive only when grant income, much of it non-cash, was included.
The corporation also received adverse audit opinions through fiscal year 2023 and was owed approximately US34million,includingaboutUS30.8 million from government institutions.
These figures illustrate a difficult contradiction: the electricity utility is expected to support economic development and provide an essential public service, yet its financial and operational challenges continue to place pressure on its sustainability.
Unpaid government bills weaken its cash position, while financial and governance weaknesses make it harder to plan investments, maintain infrastructure and improve service delivery.
The wider economy bears the consequences through unreliable electricity, increased business costs and reduced competitiveness.
This is why SOE reform should not be treated as an isolated administrative exercise. It is directly connected to the country's ability to create productive jobs and improve living conditions.
The country's concentration in a narrow range of export commodities presents another vulnerability.
According to the report, iron ore and rubber account for more than 90 percent of the country's exports. This exposes national revenue and foreign exchange earnings to fluctuations in international commodity prices and demand.
When global prices rise, export earnings and economic growth may improve. But when prices weaken, the consequences can affect government revenue, investment, employment and the country's external position.
The International Monetary Fund has also identified commodity-price volatility, higher fuel costs, declining donor support and climate-related shocks among the risks to Liberia's economic outlook.
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Diversification therefore remains central to the country's long-term development prospects.
Agriculture, manufacturing, agro-processing, tourism, fisheries and services offer opportunities to broaden the productive base, create employment and reduce dependence on a few export commodities.
However, diversification requires more than identifying promising sectors. It requires reliable electricity, roads, affordable financing, predictable regulation, technical skills, access to markets and institutions capable of supporting private investment.
Without these conditions, the sectors expected to absorb the workforce will continue to face constraints.
What the statistics reveal
The World Bank's findings point to several interconnected weaknesses that help explain why poverty can rise even as GDP expands.
| Indicator | Reported figure | Development implication |
| Real GDP growth, 2025 | 5.1% | Stronger national economic output |
| Mining growth, 2025 | 17% | Growth concentrated in a capital-intensive sector |
| Agriculture growth, 2025 | 2.6% | Slower expansion in a major livelihood sector |
| Extreme poverty | 36.1%, up from 34.6% | Economic gains not sufficiently reaching poor households |
| Workers in informal or smallholder activities | About 87% | Limited access to stable, productive employment |
| Firms citing finance as their biggest obstacle | 39.8% | Credit constraints restrict business expansion |
| Firms citing electricity as a major obstacle | 21.6% | Infrastructure weaknesses increase operating costs |
| Firm employment growth | 8.9% in 2025, down from 19.8% in 2017 | Weaker capacity to create jobs |
| Export concentration | More than 90% in iron ore and rubber | Exposure to commodity-price shocks |
| SOE liabilities, 19 reporting entities | US$815.4 million | Significant public-enterprise financial exposure |
| Government-guaranteed or on-lent SOE loans | US$423.3 million | Potential pressure on public finances |
Sources: World Bank seventh Liberia Economic Update figures provided at its launch and World Bank country and private-sector analyses. Figures relate to different reporting periods and should not be treated as a single-year statistical series.
The establishment of the State-Owned Enterprises Authority of Liberia (SEAL), following the signing of its enabling legislation in February 2026, represents an institutional response to longstanding weaknesses in public enterprise oversight.
The authority is expected to strengthen reporting, improve accountability and provide government with a clearer picture of the financial and operational performance of state-owned entities.
The World Bank recommends that by the end of fiscal year 2027, government should classify the SOE portfolio, establish verified registers of entities and directors, introduce common reporting templates and direct audit resources toward the five highest-risk entities.
By June 2028, it wants the government's financial relationship with LEC, the National Port Authority and the Liberia Petroleum Refining Company fully reconciled.
These are practical measures, but their impact will depend on implementation, institutional independence and the willingness of public enterprises and government agencies to comply.
Siroris cautioned that stronger SOE governance would not automatically lower electricity costs, improve services or create jobs. Rather, it would provide the information and accountability needed to identify underperformance, determine its causes and assign corrective action.
