But, the recent meeting held in Monrovia, by finance/economic professional officials of our Government and officials of the US International Monetary Fund (IMF), revealed the critical nature of the Liberian economy already gone to the great beyond, but transmits negative impact through the foreign exchange rate felt by unaffordable prices of food and healthcare drugs.
Apparently, the crux of the matter Economy Liberia is or has been the lack and/or willful disregard of the application of traditional micro/macroeconomic analysis for robust fiscal & monetary policy.
While President George Weah is seeking external financing (by loans or borrowing) in the tone of half billion US dollars for his “pro-poor road expansion agenda” with press reports for Liberian public information that the great “IMF supports Road Expansion”, the President’s Minister of Finance & Development Planning is rejoicing, preaching economic justification that “Government needs more borrowing”, although the IMF advised “care, caution” and “pay your debts” (High lights mine).
At the end of the assessment of the nation’s economy and discussions, according to the New Democrat newspaper (New Democrat, March 23, 2018), the IMF, through its team leader, Mr. Mika Saita, told the Liberian People through the Press that:
a) “Liberia’s debt level is on the increase and that resource mobilization from external borrowing, domestic revenue generation and Aid are declining simultaneously. Borrowing space has clearly been reduced”;
b) “Looking forward, future obligations will need to be undertaken with caution, especially, with respect to securing terms and conditions; the IMF advised the Weah Administration ‘to pay all its domestic arears’ which the government owes various businesses, institutions and vendors”;
c) “Utilizing realistic revenue estimates for budget formulation and improving the monitoring of all expenditures, including grant- and loan-financed projects, government could, in addition, usefully consider adopting a comprehensive program to clear domestic arears and prevent the emergence of new ones”;
d) “In recent years, government has done little in relation to settling financial obligations to local businesses and institutions, thus contributing to decline in economic activities; for example, the Sirleaf Government departed without paying an estimated US $20 million owed local companies, Prestige & Alliance Motors, despite reaching settlement agreement in June, 2017. The companies represent American and German car dealers in Liberia”.
The assessment of the nation’s economy revealed, also, that Liberia’s domestic and external debt stock has been increased, alarmingly, during the past 12-year administration. In a letter dated March 2016, the-then President Sirleaf informed the Liberian Senate about the alarming domestic and international debts which have accrued under her administration, “pleading for immediate action that would rescue the country’s economy”.
In that March, 2016 letter, President Sirleaf wrote and told the Senate that, “On September 16, 2010, Liberia (Republic of Liberia) reached the Heavily Indebted Poor Country (HIPC) completion point which facilitated the cancellation of 96% of the US $4.9 billion external debt accumulated by Liberia . . . over two decades. Nevertheless, certain loans on the debt schedule did not qualify for cancellation. This comprised sixteen (16) loans valued at US $415 million of which US $156 million represented . . . external debt and US $259.3 million . . . for validated . . . domestic debt . . . owed to the Central Bank of Liberia (CBL) as Government of Liberia’s capitalization of the Bank”.
“As of December, 2015, a total of (32) thirty-two (new) loans amounting to US $802 million have been contracted of which twenty-six (26) represented loans . . . from external creditors with a value of US $792 million and six (6) . . . from domestic creditors at a value of US $10 million”.
“To date, a total of US $315 million of the external debt and the US $10 million domestic debt have been disbursed, leaving the balance of US $ 477 million in external debt”.
Accordingly, the Republic’s external and domestic debt portfolio stands as follows:
Debt Amount Total
Local CBL Capitalization US $259. 3 Million
Alliance & Prestige Motors 20. 0 Million US $279.3 Million
External US $477. 0 Million US $756.3 Million
(Three quarters of a billion US dollars)
In the light of the daunting conditions of our economy, President Weah will do well to look inward for capital to invest in national roads/highways construction, the assured, guaranteed enormous return-on-investment with zero risk of loss.
Rather than contract debt of about US half billion dollars at enormous, astronomical cost, where such contract is available, we suggest/recommend local capital formation approach as follows:
a) Salaries of Public officials
The salary levels of government officials, including the President, Vice President, Members of the Legislature, the Judiciary and of managements and sub-management ranks are inflated, not consistent with nor related to a poor, developing nation that Liberia is and, therefore, must be reduced by more than 45%.
Have been and are profoundly abused and the major source of corruption in government.
1. Vehicle purchase and assignment must be at lowest cost levels; no more top-of-the-line purchases and no depreciation sale of government vehicles to officials.
2. Electricity power Generators assignment must be discontinued.
3. LEC, named as such, must provide electricity for all government offices, the city of Monrovia and environs with payment for service or corporate management will be removed.
4. The same condition applies to the LWSC. These organizations are extremely none-productive.
5. Travel allowances for domestic and foreign travels will be made available only for proven official business and budgeted to the concerned agency’s budget.
c) Telephone scratch cards
This is one of the biggest corruption schemes in government. There is no information or telephone directory for government offices (police, etc.), emergency medical, commercial and industrial services desired by the public. There is need for efficient landline services at this time in Liberia!!
d) Pay Roll Padding
This has become an established, public dishonest practice in government. Almost all agencies of government are involved in the practice.
e) Ministry of Finance & Development Planning
Makes contributions to none-existent educational entities and, also, to none-existent private entrepreneurs through LBDI Bank and many more. The Ministry is, also, over-paid and over-staffed with dual citizens who work and earn money here, but do not live in Liberia and with families in foreign countries permanently. The Liberia Revenue Authority is, also, over-paid and over-staffed with dual citizens.
To reduce the cost of government, there is urgent need for comprehensive over-haul of government operations. Money from this policy decision can be used as investment capital for national transport/communications (roads/highways).
Necessary Public investment
This investment assures/guarantees multiple economic development projects (the returns-on-investment).
Indeed, according to Planning/Development Experts, construction of modern, safe, and efficient/effective all-weather roads/highways is the Premier Multiplier Effect for national economic and political development. In fact, it is said to “seek ye first the kingdom of national transport/communications and all others of your development projects shall be added unto you”.
For example, to locate schools, colleges, universities, clinics, hospitals, agricultural and industrial enterprises in remote towns and villages for production of goods & services for local consumption and the export trade, one must, first, get there, expeditiously and safely.
Research information shows that all-weather, modern roads/highways built and established between points A & B attract citizens and businesses who relocate along the new roads/highways. They buy land and build homes, motels, hotels, restaurants, service stations and rest stops for motorists and travelers.
Thus, effective/efficient, modern transport/communication facilitates not only convenient, affordable mass movement of people, but also, the production, exchange and distribution of goods and services, international trade and commerce and provides enormous opportunities for additional investment and employment of citizens. It is in this respect that Transport/Communications, particularly all-weather roads/highways, constitute the “Premier multiplier effect” in national economic development. Add this condition to the developing, modern information technology (IT), then one has the recipe for success that will drive Liberia into the 21st Century economy.
Modern, twenty-first century systems of transport/communication drive business, which, in turn, drives the economy, which, also, in turn, drives the nation. Therefore, Liberia’s incoming political administration should and must plan and build a national system of all-weather roads and highways – from east to west and north to south – linking all county capitals to each other and all county productive, trade and commerce centers to each other, the county capitals and nation’s political, commercial capital city of Monrovia.
Finally, since the Liberian Government is the largest employer-business, it must seek to generate income (revenue) from operations. Therefore, it is about time that government invests 50% in revenue-generating enterprises, not only to pay salaries!!