Of Momentary Economic Crunch and Looming Smiles Ahead
Analysis By Sherman C. Seequeh
There is no question about the fact that in-country living conditions—or the costs of living in Liberia—have been changing for the worse for many people if not all. The prices of goods and services are increasing, and many are finding it difficult to fend for themselves and families or make ends meet. And for the most part, since the last ten months, it appears these conditions were put into a catapult and shot in economic space. Wherever one turns, the cry is all the same: life is hard, things are bad and little is done to save us.Why it is true that every Liberian—illiterate or educated, private business person or public official, critic or supporter of Government—agree that things are pretty bad, explanation and blames for the causes and what’s needed to be done is different from person to person. There are those who think—and perhaps understandably out of frustration—that government is to blame for not being austere and radical to dealing with prevailing economic conditions. Others also posit, however, that the current government is not to blame, that it inherited worsening conditions already in orbit at its advent and that much is being done to repel the economic crisis.
There is a sense in which any rational person will agree with both positions—but partly. It may sound odd, isn’t it?
Firstly, it would be irresponsible to give government blanket vindication in the prevailing matters of the unfavorable state of the national economy. And this is not because the George Weah government has done anything specifically wrong creating the situation. It is simply because it is the government in charge and that it is naturally the shock absorber of the faults of politics and economics it has inherited, but also of the frustrations, criticisms and condemnations that come with it. So, to this extent of this line of thinking, the government is not totally clear of blame.
Secondly, it would also be irresponsible and disingenuous to accept fully that the current political administration has anything by omission or commission in the prevailing tough times. All honest analyses and examinations of problems economically affecting the people of Liberiapoint straightly to spillover effects from what happened or was done before this time, 2018.
In fact, those who have seen and read firsthand the World Bank’s October 12 security, political and economic updates would nottake the misrepresentations pivoted by detractors lightly; for the Report had neither explicit nor implicit insinuations of complicity of the Weah government in any of the factors underpinning rising inflation and associated high cost of living in the country.
One does not need to be theoretically economically savvy to understand and appreciate what the Work Bank wrote in that Report. The Report states: “Liberia’s economy is still struggling to recover fully from the effects of multiple shocks in recent years; namely: Ebola Virus Disease (EVD) outbreak, collapse of commodity prices, UNMIL withdrawal and the perception of risk associated with the political transition in January 2018. Real gross domestic product (GDP) growth in 2017 is estimated to have recovered to 2.5% and is projected to rise to 3.0% in 2018.”
“Liberia’s economy is still struggling to recover fully from the effects of multiple shocks in RECENT YEARS,” [emphasis mine], the Report asserts–not in recent months. And thank God the report, which is supposedly held in high esteem by both critics and supporters of Government, notes that the “Real gross domestic product (GDP) growth in 2017 is estimated to have recovered to 2.5% and is projected to rise to 3.0% in 2018”—an “incipient recovery is driven largely by increased production of gold and iron ore, following the uptick in the prices of gold and iron ore on the international market.”
That the report posits that the “Agricultural sector growth remains subdued” is not the blame of Government but is “due to weak recovery in global prices of rubber and palm oil.” Even, as the Report further asserts, “Headline inflation continued to rise during the year, reaching an all-time high of 24% in June 2018 from 10.8% the same period last year. This is largely due to a sharp drop in foreign exchange supply (30% following the drop in the exports and donor inflows), in the face of relatively rigid demand for U.S. dollars and rising global oil prices.” Liberia neither controls global oil prices nor can an infantile government settle the insidious foreign exchange problem in just nine months.
Still, it wouldn’t make much sense holding the 9-month government for what is considered“the resultant rise in the cost of living and limited employment opportunities that continue to undermine the welfare of Liberia” or “the fiscal deficit [that] widened to 5.2% of GDP in FY2018 compared to 4.8% of GDP in FY17, due to a significant short-fall in revenues and higher than anticipated non-discretionary expenditures.”
The report showed that, in fact, “The shortfall in revenues (20% of the approved budget) is due to the slower than anticipated economic activities due to prolonged period of political uncertainty, tax waiver policies in the run up to the presidential elections, unresolved court dispute with respect to the collection of petroleum levy and lower than projected donor grants.” Not a single of those underpinnings is attributable to the current Government, as much of it have to do with external actions—prolong period of political uncertainty, tax waiver policies up to the presidential elections, etc., all of which got consummated before the birth of the George Weah Government.
Should the George Weah Government fold its arms and allow the biting economic conditions facing Liberians continue unabated and worse? In fact, is the government really folding its arms? Even the much quoted Report points to the medium term economic outlook that it says is “optimistic despite substantial downside risks.”
Many Liberian regimes and other countries before us had similar conditions—conditions in which either a young government bumped into crushing economic nightmares or a longtime incumbent administration witnessing economic hell breaking loose. Manyendured the direst of conditions.
In the United States, for instance, therewas the Great Recession—“severe financial crisis combined with a deep recession.” Taking the mantle of power in 2008, an infantile Obama administration bumped into this devastating crunch which had begun December 2007 and took several years for the economy to recover to pre-crisis levels. At about the same time, or thereabout, many European Union countries, including Greece, suffered severe economic crises. They were bailed out by neighbors. And please don’t ask how similar conditions rocked and are rocking African countries.
Though the causes and remedies of those conditions may not be fully identical to ours, it underlines one fact—that no nation is immune or insusceptible to harsh economic conditions. What is emblematic to all such situations is that there are always options walking out of them. The solid hope is that Liberia will prevail because, firstly decision-makers of this Government, the Head of State George Weah included, is fully aware how they were demonized and dismissed as not having the capacity to govern well. And they are resolved to prove critics wrong. Additionally, and because of that first point, President Weah and his corps of officials have fastened their governance ideals around people-centered ideologies firmly articulated by the pro-poor agenda which they have all sworn to defend, promote and implement to the letter.
And secondly, thank God voodoo economics is not part of the menu of options before the crops of Liberia’s best economists in charge, who are spending sleepless nights figuring out and applying the most expeditious but sustainable remedy to the crushing situation on hand. The last time I checked, I saw the likes of Samuel Tweah, Finance Minister, preoccupied with fostering prescriptions that have got the endorsement of revered international economic institutions, such as World Bank and IMF. They all have concurred on the need to mitigating the impacts and risks of the prevailing economic crisis by embarking upon “policy reforms that will promote economic diversification, improve the investment climate, promote domestic revenue mobilization and to ensure prudent borrowing strategy.”
It is therefore a matter of time before Liberia, like other survivors of devastating economic crunches of yesterdays, will triumph over the natural fluctuations in human activities and expectations and would celebrate a boom looming in the air as massive visible developments begin on the ground around the country very soon if not now.