The World Bank emphasizes urgent reforms for Liberia’s economy during the launch of the Liberia Country Economic Memorandum, warning that the next five years are critical for sustainable growth. The report discusses challenges associated with the natural resource trap and provides a roadmap for economic transformation, urging that bold policy reforms are necessary to avert continued stagnation and achieve middle-income status by 2030.
The World Bank Group has emphasized the urgent need for bold reforms to facilitate economic transformation in Liberia, warning that the next five years are critical for shaping the country’s economic future. This assertion was highlighted during the launch of the Liberia Country Economic Memorandum (CEM), titled “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia”. The report provides an extensive analysis of Liberia’s economic outlook and addresses the country’s vulnerability to external shocks.
The World Bank indicates that Liberia is challenged by a “natural resource trap,” which leads to cycles of stagnation due to its reliance on commodity-based development. The report reveals that the country lacks essential long-term drivers of economic prosperity, such as human capital development and productivity enhancement, which adversely impacts growth potential. A projected continuation of the current economic trajectory would result in modest growth, insufficient to elevate Liberia to middle-income status by 2030.
Georgia Wallen, the World Bank Country Manager for Liberia, asserted that without significant policy changes, the country faces the risk of remaining in a low growth cycle reliant on natural resource exports. Wallen stated, “These next five years will be decisive for shaping Liberia’s longer-term economic outlook,” emphasizing the need for a comprehensive and accountable governmental approach to achieve sustainable inclusive growth.
The CEM is produced every five years and serves as a detailed analytical resource on Liberia’s economy, comparing its experiences with peer nations such as Ghana and Senegal. Wallen articulated the hope that the report would serve as a guiding resource for policymakers and academics, inspiring proactive measures to enhance Liberia’s economic standing.
Liberia’s new national development strategy, the Agenda for Accelerated Inclusive Development (AAID), aims to increase the income of Liberians by 25% within five years. Wallen articulated the ambition of the AAID to transition Liberia’s economic model, emphasizing “sustainable value addition and processing rather than mere resource exportation”.
To unlock economic potential, the World Bank report highlights five key economic transitions necessary for Liberia. These requirement include better management of public expenditures, enhanced domestic revenue mobilization, and reducing dependency on extractive industries. Failure to embrace significant reforms may result in continued economic stagnation, with the country incapable of achieving significant poverty reduction.
In contrast, the report posits that a rigorous reform agenda could lead to transformative outcomes, improving job availability and living standards substantially. Wallen expressed, “With ambitious reform, Liberia could attain lower middle-income status before 2040,” promising a better quality of life for citizens through enhanced economic opportunities.
The CEM promotes a phased reform approach, emphasizing short-term actions like improving public finance management and expanding domestic revenue as foundational actions necessary for long-term diversification away from mining. Wallen mentioned the significance of a unified governmental approach to these reform initiatives, or else Liberia risks lagging behind its regional counterparts.
The World Bank reiterated its dedication to supporting Liberia’s economic transformation, in alignment with the AAID and the upcoming World Bank Group Country Partnership Framework. Wallen concluded with an optimistic outlook, stating, “We believe in the future of Liberia because we believe in the people of Liberia,” and fostering a belief that informed engagement will catalyze necessary reform efforts. The event was attended by a diverse group of stakeholders, including government officials and development partners, demonstrating a collective interest in Liberia’s economic future.
The World Bank’s Liberia Country Economic Memorandum serves as a crucial call for significant reforms, highlighting that the next five years are essential for overcoming economic challenges and achieving sustainable growth. Through ambitious policy changes and a coordinated approach, Liberia can transition from a resource-dependent economy to one marked by diversified economic activities. The commitment from both governmental and international partners will be vital in realizing the objectives outlined in the AAID and ensuring meaningful economic transformation for Liberia’s future.
Original Source: www.liberianobserver.com
