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Liberia Economical Facts

 

Economical overview

Liberia is rich in natural resources such as water, minerals and forests and has a climate that benefits agriculture. Yet poverty is deep and widespread. During the civil war in the 1990s and in the early 2000s, the country was ruined. Agriculture was abandoned and put into decline, infrastructure decayed and industrial plants destroyed. Some recovery has taken place since the democratically elected government took office in 2006, but the severe Ebola epidemic 2014–2015 also hit hard on the economy.

The two civil wars threw the country back many years in time. Most of the inhabitants were completely out of the modern economy and without disaster relief from the outside world Liberia would have perished. Outside the small state sector, there were almost no jobs. Most Liberians were referred to the so-called informal economy and black stock trading, drug trafficking and prostitution flourished. Gross domestic product (GDP) declined so sharply that it was barely measurable from the mid-1990s.

  • Countryaah.com: Major imports by Liberia, covering a full list of top products imported by the country and trade value for each product category.

But money was still in circulation. Smuggling and illegal extraction of raw materials occurred on a large scale. The warlord Charles Taylor is estimated to have withheld at least 100 million US dollars from the Treasury every year during his presidency in 1997-2003. A law from 2000 had given the president exclusive rights to conclude agreements on the sale of gold, diamonds, iron, wood, rice and rubber, among others. Corruption is considered to have continued to an almost equal degree under the Interim Government's 2003-2006 regime; still, in the mid-2010s, it is far from extinct.

  • Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including LBR which represents the country of Liberia.

Economical Facts of Liberia

Traditionally, the economy has been based on exports of raw materials such as iron ore, timber and rubber, which has made the country vulnerable to fluctuations in world market prices. For example, the country was hit hard by falling iron ore prices in the 1980s. The partly Swedish-owned mining company Lamco, which has been in Liberia since 1955, was discontinued in 1989. All organized operations in the country's iron mines were discontinued in 1990 and all facilities destroyed during the war.

After the re-establishment of democracy in 2006, the international company ArcelorMittal, the world's largest steel manufacturer, decided to invest a billion dollars to resume iron mining. The investment also included the construction of a new railway to the coast and the upgrading of the port in the city of Buchanan and was by far the largest new investment after the war. Later, several foreign companies have made similar investments, including the Chinese-owned China Union. In the early 2010s, iron ore could again be exported from Liberia.

One of the few sources of income for the civilian interim government during the war was the registration of merchant vessels under so-called convenience flags, which allow shipowners to circumvent their own countries' laws on maritime safety, wages, etc. The operation was hardly affected by the wars at all, since it was run from the United States. At year-end 2014, Liberia had one of the world's largest merchant fleets with 3,800 vessels, almost all foreign-owned. Ship traffic brought in $ 21.4 million in the 2013/2014 fiscal year, or 4.2 percent of the state budget. It was, despite a certain upturn, considerably less than the government had calculated, but still meant an important source of foreign currency.

Liberia had, since the end of the 1980s, had a considerable budget deficit and major difficulties in paying off its foreign debt. This led to the International Monetary Fund (IMF) and the World Bank suspending its cooperation with the country until further notice. From 1990, for many years, virtually no new loans were granted to Liberia and no repayment was made from the Liberian side. However, in November 2007, the IMF member states, with the US at the forefront, agreed to grant Liberia extensive debt write-offs.

However, this could not happen until Liberia, from the end of 2005, was placed under international economic patronage, something that the democratically elected government had to accept. All operations at the central bank and the five most profitable government agencies and companies were overseen by foreign finance experts. No major transactions were allowed without their approval. Among the projects were the UN, EU, Ecowas, AU, USA and the World Bank. The program was completed in autumn 2009 for most of the authorities involved, but IMF staff continued to help the Ministry of Finance and the central bank implement reforms to strengthen the country's economy, including improving tax collection.

From the beginning of 2008, Liberia could be part of the global debt cancellation program for particularly debt-ridden countries. The last of the then debt, US $ 1.2 billion, was written off in September 2010. The country could then start applying for new loans. At the same time, the government announced that these should not go to consumption but only to investments in infrastructure. In 2014/2015, the total external debt was estimated at just under 24 percent of GDP. In March 2015, the IMF granted over $ 36 million in new debt write-offs to Liberia.

The new government is considered to have done a good job of reducing the state's expenditure overall and at the same time investing more in schools, health care and infrastructure. While the number of government employees has at least formally been reduced - among other things, by removing 7,000 so-called ghost workers (non-existent employees who have received wages) from the payrolls - wages have been increased for those who remain and paid wages.

Up until 1998, the Liberian dollar was officially equivalent to the US, but in practice its value had been severely eroded (in mid-2015, it received 86 Liberian dollars for an American). This led to a "dollarization" of the economy, where the US dollar was used more often than its own currency. This led to significantly increased living costs for the many people who did not have access to US dollars and had to pay more and more for imported goods.

It also reduced the government's ability to conduct its own economic policies, but since 2004 the government has managed to keep prices reasonably stable. Inflation in 2004–2013 averaged 10 percent per year. Subsequently, however, higher prices for fuel and food have caused it to rise. From 2004, economic growth was constant at more than 6 percent per year on average and amounted to 8 percent in 2011 and 2012; In 2013, it reached more than 11 percent. The growth was mainly due to increased exports and increased foreign investment. Since 2006, Liberia has managed to attract investments for $ 16 billion from primarily large companies such as Chevron, Firestone and ArcelorMittal.

However, the growth was abruptly interrupted by the Ebola outbreak in spring 2014, when few foreign companies dared to invest in Liberia and many of those who had already done so at least temporarily canceled their commitments. Although Liberia received emergency loans from the IMF to fight the epidemic ($ 49 million in 2014 and, together with the equally affected neighboring countries Guinea and Sierra Leone, another $ 100 million in 2015), the Liberian state was also forced to withhold investment to invest money instead on the fight against Ebola and its consequences.

Since then, some investors have returned to the country, but for future good economic growth, many more investments are needed (and good investments - some of the international companies that have been commissioned in Liberia have been, if not "shady", had stringent ownership conditions). and apart from labor law, environmental considerations and more; it has not always been right when the contracts were drawn up). Increased investments in infrastructure and trade are also needed. It is also important that the country continues to receive international financial assistance and that political stability remains. A cloud of concern was the low world market prices for Liberia's export goods (iron ore, timber, rubber) in the mid-2010s.

FACTS - FINANCE

GDP per person

US $ 674 (2018)

Total GDP

US $ 3,249 million (2018)

GDP growth

1.2 percent (2018)

Agriculture's share of GDP

37.4 percent (2018)

Manufacturing industry's share of GDP

1.8 percent (2018)

The service sector's share of GDP

50.0 percent (2018)

Inflation

22.2 percent (2019)

Government debt's share of GDP

39.9 percent (2018)

External debt

US $ 1,137 million (2017)

Currency

Liberian dollar

Merchandise exports

US $ 368 million (2017)

Imports

US $ 998 million (2017)

Current account

- US $ 566 million (2017)

Commodity trade's share of GDP

49 percent (2018)

Main export goods

rubber, timber

Largest trading partner

Germany, USA, South Africa, Japan, China

 

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