Political Overview
The Government initiated the process of establishing the “Office of a War and Economic Crimes Court for Liberia” through an Executive Order on May 2, 2024. The Court will investigate atrocities committed during Liberia’s fourteen years of civil war and will aim to hold responsible parties accountable for their crimes. On May 3, 2024, the Liberian Senate and House of Representatives endorsed a joint resolution in support of the mechanisms for the court’s establishment. The process leading to the recruitment of officials to administer the affairs of the court has commenced.
In line with a strong focus on accountability and good governance, the Government has also established an Assets Recovery and Property Retrieval Taskforce to pursue allegations of illegal acquisition of wealth and property while placing emphasis on transparency and accountability. According to the Liberia Anti-Corruption Commission (LACC), only 26.5% of officials across the three branches of government have fully met asset declaration compliance requirements to date. This is critical for transparency and accountability: all appointed, elected, and selected public officials are required to declare their assets, incomes, and liabilities per the National Code of Conduct and LACC regulations. The primary purpose of this exercise is to prevent and detect illicit enrichment, conflicts of interest, and other forms of corruption.
The Government continues to pursue its accountability agenda. The General Auditing Commission has been actively conducting financial audits, some of which have led to arrests and issuance of indictments. The Government has outlined its vision for Liberia’s development through the ARREST agenda – an acronym representing Agriculture, Roads, Rule of Law, Education, Sanitation, and Tourism. The Government wants to leverage these key sectors to reverse economic stagnation, emphasizing the need for comprehensive and interconnected development strategies.
Economic Overview
Liberia’s economy expanded by 4.7% in 2023 and is expected to maintain this momentum over the medium term. Growth in 2023 was primarily driven by mining, expansion in gold output, and construction. The services sector grew by 3.7%, driven by the financial and hospitality subsectors, increased trade and transport activities, and improved access to electricity. Output in the agriculture sector grew by a modest 1.4%, reflecting declines in palm oil and rubber production. On the demand side, continued recovery in private consumption, increased public-sector spending, and a surge in gold exports were the main drivers of growth. Growth is expected to remain robust, averaging 5.8% over the medium term supported by renewed interest and investments in mining coupled with continued implementation of critical reforms in key enabling sectors such as energy, transportation, trade, and financial services.
The government’s fiscal deficit reached an unsustainable level in 2023 but is expected to narrow in the medium term. Liberia’s fiscal deficit increased by 1.5%age points to 7.1% of GDP in 2023 due to a decline in revenues and grants and increased consumption spending. In the medium term, the fiscal deficit is expected to decrease as the authorities enhance domestic resource mobilization and bolster expenditure controls. Liberia is at moderate risk of external debt distress and high risk of overall debt distress. The country’s debt to GDP ratio stood at 58.8% of GDP in 2023.
Headline inflation rose to 10.1% in 2023, up from 7.6% in 2022, primarily driven by food prices, exchange rate depreciation, and monetization of the budget deficit. Inflationary pressures have started to ease in 2024 and are expected to remain within single digits in the medium term if the authorities maintain prudent fiscal and monetary policies.
Liberia’s savings and investments gap widened during 2023, leading to a current account deficit (CAD) of 26.4% of GDP. Exports increased by 8.2%, slower than the 16.6% growth in 2022, while imports expanded by 27.2% due to higher petroleum products and machinery prices, leading to a higher trade deficit. The CAD was financed by net IMF credit, loans, and drawdowns of gross official reserves. Consequently, gross external reserves fell to US$486 million in 2023 from US$644 million in 2022, covering about two months of imports. The CAD is projected to remain elevated in the medium term, averaging 22% of GDP, due to increased domestic demand and capital imports for vital infrastructure and investments.
Last Updated: Oct 16, 2024
