Sierra Leone Telegraph: 23 December 2020:
The International Monetary Fund (IMF) last Monday completed its first and second reviews of Liberia’s economic performance, which prompted the institution to immediately disburse US$48.86 million to the Liberian government, of which US$38 million will fill the fiscal financing gap arising from the impact of COVID-19.
According to the IMF – restoring macroeconomic stability, providing a foundation for sustainable inclusive growth, and addressing weaknesses in governance remain the main objectives of its agreement with Liberia.
IMF expects Liberia’s economic activity to contract by about 3.0 percent in 2020, reflecting the effects and challenges from the COVID-19 disruptions, but says that signs of recovery are now emerging with growth projected to reach 3.2 percent in 2021.
“While the fiscal stance has been loosened to meet humanitarian needs, tight monetary policy, much improved public financial management, domestic revenue mobilization, and no central bank financing have helped achieve price and exchange rate stability, preserving the purchasing power of the poor,” the IMF said today in a statement.
“After mixed program performance initially, the authorities have taken corrective actions to address weaknesses in the program and they continue to make progress in structural reforms. Reflecting the impact from the COVID-19 pandemic, the growth forecast for 2020 has been revised down from 1.4 percent at the program’s inception to -3.0 percent. Assuming global conditions gradually normalize, growth is projected to reach 3.2 percent in 2021, but downside risks to the outlook are high. Liberia remains fragile and vulnerable to shocks as both fiscal and external buffers remain low. Liberia continues to be assessed as having a sustainable debt burden, but borrowing space is limited,” the statement warns.
Following the Executive Board discussion, Mr. Tao Zhang, Acting Chair and Deputy Managing Director, made the following statement:
“The COVID-19 pandemic continues to exert significant strain on Liberia’s fragile economy. The authorities have taken the necessary steps to stabilize the economy amid multiple challenges. A modest fiscal loosening is appropriate to meet humanitarian needs during the COVID19 pandemic.
“The authorities are committed to fiscal discipline and further improvements in cash management, transparency and accountability in spending, and domestic revenue mobilization to finance their development agenda. The monetary policy stance is appropriately aligned with the inflation objective, and significant progress has been made in strengthening central bank independence.
“In the context of the gradual de-dollarization of fiscal spending, it is important to further refine instruments for open market operations and enhance policy coordination between the central bank and the government.
“Further efforts are needed to contain the central bank’s operational expenses and build up reserves. Rebuilding confidence in the financial sector is critical for financial stability. Priority should be given to addressing risks from weak financial institutions and ensuring the supply and quality of Liberian dollar banknotes.
“Further improvements in governance are necessary for efficient delivery of public services. Steps are being taken to clear the fiscal audits backlog, further enhance procurement transparency, and upgrade the anti-corruption legal framework. Efforts to increase borrowing space would support sustainable growth. The authorities should continue to work with donors and development partners to secure grants and concessional borrowing, and carefully prioritize the use of public resources.”
Once again the IMF is acting like a life guard. Not for first time, and I will bet my life not for the last time, this international financial institution is throwing a life-line to another failing government in the West African sub-region. What happens in Liberia matters greatly in Sierra Leone. We all know Doe’s mismanagement of Liberia’s economy and where that got us. Charles Taylor the former Liberian head of state serving time for war crimes committed in Sierra Leone not Liberia. That gives you a flavour why these two countries are joined in the hip. The sort of corruption we are used to in Sierra Leone cannot be divorced from what’s going on under George Weah. Indeed it runs parallel. A footballer turned politician.
I suppose like many Sierra Leoneans, Liberians are fed up with a government that promised them great things, but so far has delivered very little. I wish we never had natural resources, then maybe our politicians will sit up and try and figure out how to come up with practical ways of investing in sustainable development goals that benefit every one. Maybe George Weah, was never cut out to be a president. He would better served his country by managing the National football team. Even at that, I don’t think they will beat the mighty Leone Stars that held Nigeria to a draw recently. Like Bio, George Weah has disappointed his fan base especially the youths who put their trust in him, only to turn out to be an almighty failure. As they say politics is full of ups and downs. But Bio and Weah have taken us into downward trend and we don’t believe there is any hope of coming back up. Our economies are heading south. I think the IMF and international financial institutions are aiding and abetting this failure of accountability and corruption. It is about time they turn off the tap of easy money.