(Bloomberg) — Liberia is cleaning up its own act to rebuild confidence and turn around its crisis-hit economy, Finance Minister Samuel Tweah said.
The West African nation is trying to recover from a period of economic decline after the currency lost more than a fifth of its value against the dollar and inflation accelerated to 30% by the end of its previous fiscal year in June. During 2019, public debt increased by almost a third.
As public protests grew louder against the rule of President George Weah after two years in office, the government turned to the International Monetary Fund for a bailout in return for reforms to stem the slump.
Among the many ills, authorities have agreed to cut back on its bloated wage bill, end borrowing from the central bank and improve fiscal and monetary governance, Tweah said in an interview by phone.
The steps are designed to “restore investor confidence,” he said. “We’re optimistic that Liberia is on the path of recovery.”
One of the world’s poorest countries with a gross domestic product of less than $3.5 billion, Liberia has struggled to shake off the legacy of civil war that ended in 2003 and the worst-yet outbreak of Ebola more than a decade later which derailed its recovery. The economy probably contracted in 2019 and will only rebound slightly to expansion of 1.4% this year, according to IMF estimates.
Former AC Milan soccer star Weah won power in December 2017 after drawing support from especially young people, pledging to improve the quality of living in a nation where more than half the people live on less than $2 per day. However, scandals at the central bank, poor governance and allegations of corruption have so far overshadowed any attempt of economic recovery.
The country’s woes are not insurmountable, said Tweah.
“I would’ve loved to have a better investment climate, instead we ran into quicksand,” said Tweah. “The foundation that was supposed to be strong plummeted so we had to restore that foundation before continuing our program.”
Since the implementation of the reforms, inflation has slowed to 26% and growth is expected to accelerate to 3.4% in 2021, according to government estimates. The $214 facility from the IMF will mainly be used for infrastructure projects and investments in the agriculture sector, Tweah said.
“There’s no way we can change this country without investing in electricity, road and agriculture,” Tweah said.
The budget for the current financial year is credible and consolidates public finances, including “rightsizing the compensation of employees and implementing long-overdue comprehensive civil service reform,” the IMF said in a December report. The country has also put in place systems and measures to improve fiscal monitoring and control, as well as reforms of the central bank, it said.