Editorial: Stabilizing The Nation’s Economy: Will The Weah’s Administration Adhere To The IMF’s Recommendations?
When President George M. Weah addressed the nation on several national issues, including the deepening economic situation, he informed the Liberian people that a team from the International Monetary Fund (IMF) was by then expected in the country soon to create an IMF program tailored for Liberia.
He told Liberians that such a program will help us to take the needed steps to stabilize our economy, restore confidence in our currency, and offer technical assistance to continued social services.
He also disclosed that an IMF program requires greater discipline across government’s budgets and further added that his government will be introducing salary caps for government’s workers, and asking the legislators to share the burden as well. Weah also noted that the government will review performance and revenues from our state-owned enterprises, ensuring that leakages or inefficiencies do not undercut the ability of government to support its people.
The IMF team of experts and technicians have come and gone, but with many findings and recommendations to the government in stabilizing the nation’s economy, something that continues to strangulate the citizens, mostly those with less purchasing power.
The big question now is with the departure of the IMF team, will the George M. Weah’s administration adhere to the IMF’s recommendations in resuscitating our drowning economy?
Let this government and its officials seize fire and stop the political responses to opposition for now and focus on resuscitating the economy. It is no secret that Liberians are dying due to the hardships facing the citizens; Let President Weah and his officials consider the escalating rate of the United States Dollar against the Liberian Dollar; the inflation and prices of basic commodities; this is about time that we listen to our international partners like the IMF that has advanced several recommendations in helping to stabilize our economic. I’m sure that if the government begins to listen and focus on some of the issues raised by the IMF, we will sooner or later be on the way to recovery.
In a special statement as it concluded its visit to Liberia, the visiting International Monetary Fund (IMF) made several recommendations to the Government of Liberia to act on so as to improve the nation’s economy but I’m concerned as to whether government officials will adhere to the IMF’s recommendations and put aside the politics for now and save the nation.
The IMF team of experts and technicians in its concluding statement noted that following a series of external shocks including a fall in key commodity prices, the lingering effects of Ebola, and the rapid depreciation of the exchange rate that followed the economic situation facing Liberia has proved challenging. Growth has slowed, reserve stocks have come under significant pressure, and macroeconomic imbalances have increased. Inflation accelerated and now stands at about 23 percent.
The difficult economic conditions and loss of purchasing power are being felt particularly by the most vulnerable members of society, many of whom are experiencing significant hardship. Macroeconomic stabilization, particularly a lowering of inflation, is the immediate priority.
The success of the reform agenda is predicated on the adoption of a credible and executable budget for FY2020 and beyond. In addition, participation across all groups within the public sector is essential to support the reform agenda.
Key to this is that expenditure be held to a level consistent with realistic estimates of the resource envelope, so that budget execution in the coming year can proceed with predictability and efficiency. This is needed to support the provision of essential public services and avoid the accumulation of domestic arrears.
Securing enough resources to fund an efficient government expenditure program will require both additional revenue measures and reforms to reallocate expenditure. The latter requires a reduction in the size of the public sector wage bill, as it currently accounts for almost 65 percent of total budget expenditure and is effectively crowding out needed spending in other areas.
Full implementation of a credible and equitable wage restructuring program is essential to the success of the overall reform agenda. The mission noted the importance of rebuilding foreign exchange reserves to improve resilience to externals shocks, which is one of the key objectives of Fund-supported programs. The mission also highlighted the importance of allowing the exchange rate to remain flexible and improving the transparency of CBL’s foreign exchange operations.
The mission welcomes the new monetary policy framework developed by the Central Bank of Liberia (CBL), aiming to better manage monetary conditions to achieve price stability. In this regard, the mission supports the CBL’s intention to achieve greater alignment of interest rates on its newly introduced monetary policy instruments.
The mission notes, however, that success of the new monetary policy framework will also hinge on a successful fiscal program and the elimination of additional government borrowing from the CBL.
The reform agenda will also place requirements on managing the CBL’s operational budget, improving internal controls and oversight, and strengthening governance. The mission welcomed the recent appointment of non-executive Governors of the CBL and the two acting deputy governors—as essential for the improvement in the bank’s operational efficiency and governance.
Discussions also included a package of growth-enhancing structural reforms to strengthen public financial management, reduce corruption, and improve the business climate. In this regard, the mission noted the need to improve private sector confidence in the reform agenda, the attainment of better economic outturns in the years ahead, and on government’s commitment to working closely with businesses to remove unnecessary administrative barriers and reduce corruption.
The Mission would like to thank the authorities for the excellent cooperation it received, and for the candid and constructive discussions that facilitated a productive exchange of views. It looks forward to further discussions to follow in the period ahead.
A mission from the International Monetary Fund (IMF) led by Mika Saito, visited Monrovia June 12 – 24, 2019 to discuss possible financial support under the Extended Credit Facility.
The mission supports the authorities’ objectives of restoring macroeconomic balance in the near-term, addressing weaknesses in governance and institutions of the public sector, improving the business climate, and putting Liberia on a fiscally sustainable and inclusive growth path.
Towards these aims, good progress was made in a number of important areas, including the contours of the FY2020 budget, the stance and modalities of monetary policy, and a structural reform program that is consistent with the Government’s Pro-Poor Agenda for Prosperity and Development. Discussions will continue over the period ahead.
The mission held discussions with President George Manneh Weah, Speaker of the House of Representatives Dr. Bhofal Chambers, President Pro-tempore of the Senate Albert Chie, Finance Minister Samuel D. Tweah, Central Bank Governor Nathaniel R. Patray, Minister of Commerce Wilson K. Tarpeh, members of the House and Senate, senior government and central bank officials, and development partners.
This is the clear message from the international monetary body; a message that our government must study and act on to save this nation from the economic stagnation. As the IMF clearly noted and it is no secret that the difficult economic conditions and loss of purchasing power that are being felt particularly by the most vulnerable members of society, many of whom are experiencing significant hardship. Let us use our collective efforts to implement the IMF’s recommendation and that should also include the opposition, civil society organizations, experts and other well-meaning Liberians. Let’s, for now, forget about making a fuss and focus on our macroeconomic stabilization, particularly a lowering of inflation which should be the immediate priority of this government.
As the IMF right said, key to addressing the economic situation facing this nation is that expenditure be held to a level consistent with realistic estimates of the resource envelope, so that budget execution in the coming year can proceed with predictability and efficiency. This is needed to support the provision of essential public services and avoid the accumulation of domestic arrears.
And that is why we are eagerly awaiting the proposed Economic Conference of which President Weah spoke of to which he invited opposition leaders, members of Civil Society Organizations, the business community and others to discuss the prevailing economy situation, the rate of the USD against the Liberian Dollars, the level of inflation, among other issues affecting this nation. This is the time to talk and talk and not to tear each other’s apart, our country is gradually drowning and we need to save this land now before we regret in the future.
This is the only time that we have and we must utilize it to the fullest. When the nation is economically stable, then we can sustain and maintain the peace for which thousands of our fellow compatriots lost their lives.
In concluding, let me again thank the IMF’s team of experts and technicians for the level of work done in just a short period of time and for the crafting of such fine recommendations to the government of Liberia, because in all sincerely, the document is well crafted and fine, but my major concern is the implementation of it, which I have no doubt that the government will do only when focused rather than continually responding to opposition.