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World Bank Projects Liberia’s GDP Growth Recovery to 1.4% in 2020, 3.4% by 2021

World Bank Projects Liberia’s GDP Growth Recovery to 1.4% in 2020, 3.4% by 2021 Featured

The World Bank Group has reported in her latest Economic Overview that Liberia’s medium-term growth prospects are expected to improve, according to the group as microeconomic stabilization and structural reforms get implemented.

The group said, following the expected contraction in 2019, Liberia’s GDP growth is expected to recover to 1.4% in 2020 and further to 3.4% in 2021, according to the World Bank Group this is driven by the recovery in the non-mining sector and a moderate expansion in the mining sector.

The World Bank recounted that the government of Liberia has put into place a development strategy “Pro-Poor Agenda for Prosperity and Development (PAPD)” according the group the strategy was put into place at the latter part of the first year of the administration (2018). “The PAPD is guided by four pillars focusing on empowering Liberians through education, health, youth development and social protection, enabling private sector-led economic growth, supporting a peaceful society, and creating an inclusive and accountable public sector”. The group overview said.

Liberia’s economy is projected to contract by 1.4% in 2019, following the modest growth of 1.2% in 2018. Inflation reached 31.3% by August 2019, up from 26.1% the previous year. The non-mining sector is expected to contract by 3.4 per-cent in 2019, on the back of contraction in services and manufacturing and weak performance in agriculture, while mining sector is expected to grow by 7.8% due to increased production of gold and ore.

The overall fiscal deficit of the central government widened from 4.1% of GDP in FY2017 to 4.8% of GDP in FY2018 and further to an estimated 6.2% in FY2019, reflecting low domestic revenue mobilization and high public spending.

Tax revenues accounted for 12.1% of GDP in FY2019, which is low by regional standards. The wage bill increased to 10.1% of GDP or over two-thirds of total expenditures in FY2019, crowding out other recurrent expenditures, particularly the provision of goods and services in the social sectors and infrastructure spending.

The larger fiscal deficit led to a rapid increase in public debt from 40.2% of GDP in FY2018 to 54.5% of GDP in FY2019.The Government is currently implementing wage bill reforms intended to reduce the size of the wage bill, going forward.

Liberia’s current account deficit narrowed to 21.1% in 2019 from 23.4% of GDP in 2018. This was largely due to a decline in imports following the complete UNMIL draw down, while exports of gold and iron ore rose. However, these improvements were offset by a fall in net income and decline in Foreign Direct Investment (FDI) and donor transfers, and consequently gross official reserves declined from USD 333 million (2.5 months of import coverage) at end- 2018 to an estimated $280 million (2.1 months of import coverage) at end-2018 to an estimated $280 million (2.1 months of import coverage) at end-2019.

Read 236 times Last modified on Thursday, 16 January 2020 06:02
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