The government is targeting an annual economic growth rate of on average 6% from 2018 to 2024.
Liberia is in West Africa and is one of the poorest countries in the whole of sub-Saharan Africa, with an economy that is hugely reliant on the exportation of rubber and iron ore. The country’s economy has however suffered a further decline recently, due in part to the 2014 Ebola epidemic which killed at least 11,200 people, and the major decline in the prices of their primary and most important export commodities.
Drop in commodity prices
The majority of Liberia’s foreign currency is earned by exporting iron ore, however the price of iron ore has dropped by over 60% in the last few years. This has created some significant challenges for the Liberia government, which have only been further exaggerated by the drop-in rubber prices, due to an increase in the amount of rubber available on the open market. These challenges have prevented the country’s economy from generating any notable growth in the last three years, which between the years of 2006 – 2013 was achieving a growth rate of on average approximately 8%.
Funding expected to come from the International Monetary Fund and the World Bank
The International Monetary Fund and the World Bank are expected to provide the $1.3 billion loan, which the government is promising will be used to boost and therefore revive the country’s economy.
The Liberian government has committed to spending the money in a way that will help diversify the country’s economy, therefore making it less susceptible to fluctuating commodity prices. They are intending to invest in the agricultural sector and energy projects, and grow their manufacturing sector by increasing the country’s power generation to 200 megawatts by the end of 2017, from the current 22 megawatts. An increase in the country’s power generation capacity will not only boost the manufacturing sector but will also hugely benefit the population, only 2% of whom, according to the United States Agency for International Development (USAID), currently have access to an electricity supply.
During an interview in November, Boima Kamara, the Finance and Development Planning Minister said, “[Liberia] cannot continue to remain reliant on primary commodities,” , “If we do not diversify, the economy is going to remain vulnerable.”
Additional spending cuts expected
In the financial year 2015-2016, Ellen-Sirleaf Johnson the country’s President, announced spending cuts worth $70 million, approximately 3.5% of the total budget, were to be made in an effort to boost manufacturing. The government has now committed to implementing further spending cuts that will run alongside any investment programs funded by the £1.3 billion loan. The government is targeting an annual economic growth rate of on average 6% from 2018 to 2024.
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