Liberia Overview: Development news, research, data

Political Overview

The new Liberian Government was inaugured into office on January 22, 2024. His Excellency President Joseph N. Boakai’s full cabinet was confirmed within weeks of the inauguration. President Boakai presided over his third Cabinet meeting in early April and he is putting measures into place to prioritize critical deliverables during his first 100 days in office.

The new administration has outlined its vision for Liberia’s development through the ARREST agenda – an acronym representing Agriculture, Roads, Rule of Law, Education, Sanitation, and Tourism. The Government wants to leverage these key sectors to reverse economic stagnation, emphasizing the need for comprehensive and interconnected development strategies.

The Government has also established an Assets Recovery and Property Retrieval Taskforce to pursue allegations of illegal acquisition of wealth and property while placing emphasis on transparency and accountability.

Economic Overview

Liberia’s economy expanded by 4.7% in 2023. The expansion in 2023 was driven mainly by mining, specifically gold production. Growth in the primary sector was sluggish – 1.4% as output of key agricultural products such as rubber and crude palm oil declined during the year. Output in the secondary sector expanded by 13.9% led by mining largely driven by increased gold production. Growth in services picked up slightly from 2.8% in 2022 to 3.8% in 2023.

Headline inflation increased in 2023 driven by increases in transport and food prices. Annual average inflation rose to 10.1% in 2023 from 7.6% in 2022. Food inflation reached 12.3% in 2023, from a disinflation of 1.6% in 2022, while nonfood inflation averaged 10.3%, down slightly from 10.6% during the same period.

The government’s fiscal deficit remained high in 2023. The fiscal deficit is estimated at 5.5% of GDP in 2023, 0.1 percentage points lower than in 2022 due to declines in revenue and grants and increased consumption spending. With a debt-to-GDP ratio of 54.5, Liberia is assessed to be at moderate risk of external debt distress and high risk of overall debt distress.

Liberia's current account deficit remained high in 2023, despite increased gold exports. The country’s current account deficit increased to 24.4% of GDP, up from 17.7% in 2022. The increase in the current account deficit was driven by trade dynamics. The trade deficit worsened to 18.4% of GDP, from 11.8% in 2022, as growth in imports driven by minerals, machinery, and petroleum outpaced the growth in exports. The current account deficit was financed by net IMF credit, loans, and drawdowns of gross official reserves.

The monetary policy stance has remained appropriately tight in 2023 and responsive to overall conditions. In 2023, the Central Bank of Liberia (CBL) raised the policy rate twice in May and July by 500 basis points cumulatively to 20.0% to rein in inflation. The CBL also removed the ceiling on the offered amount of CBL bills to help accommodate the growing oversubscription, absorb the excess liquidity in the banking system, and strengthen its monetary policy operations. The financial sector remained adequately capitalized with minimum capital adequacy ratio at 21.2%, well above the floor of 10%. Non-performing loans as share of total loans also declined to from 16.4% to 11.2%, slightly above the tolerable levels of 10%.

Liberia’s medium-term growth prospects are positive on balance. The economy is expected to expand by 5.3% in 2024 and average of 5.9% in 2024–26. Medium-term growth prospects require maintaining macroeconomic stability, prudent fiscal consolidation, and implementation of ongoing structural reforms in key enabling sectors. Tightening monetary policy will ease inflationary pressures and bring inflation down to single digits in the medium term. The fiscal deficit is projected to moderate to an average of 3.3% of GDP in the medium term as the government strengthens domestic resource mobilization and expenditure controls. The current-account deficit is expected to remain elevated in the medium term due to a surge in aggregate demand driven by foreign direct investment (FDI) related imports.

Last Updated: Apr 11, 2024

Agriculture

The World Bank is funding two projects with the Ministry of Agriculture in Liberia

1. The $25 million World Bank financed Smallholder Agriculture Transformation and Agribusiness Revitalization Project (STAR-P) which is expected to close by November 28, 2024 has made significant progress towards achieving its development objective and has surpassed almost all of the targets of its key performance indicators across the three value chains (rice, oil palm and horticulture). For rice, project-supported farmers have achieved average yield of 2.85mt/ha, surpassing the end project target of 1.56 mt/ha by 82.69%. The mean yield of crude palm oil, among beneficiaries, has increased to 2.18 mt (against the end of project target of 1.44mt), boosted by project supported investments in improved processing capacities. With respect to horticulture (represented by chili pepper), project-supported farmers have achieved average increase in yield of 2.97 mt/ha, exceeding the end project target (2.4 mt/ha) by 23.8%. The average volume of sales of rice by project supported farmers is reported at 0.57 mt (against the target of 0.75mt). Similarly, the average volume of sales of crude palm oil has increased to 18.54 mt (against the target of 4.1 mt), while the volume of sales of vegetables (chili) by project supported farmers has reached 5.94 mt against end of project target of 1.6mt. The total project direct beneficiaries currently stand at 40,968 (against the target of 38,000) with women constituting 53% (15,299) against the 30% target.

2. The $55 million Rural Economic Transformation Project (RETRAP) approved by the World Bank Board of Executive Directors on June 4, 2021, is helping to improve productivity and market access for smallholder farmers and Agri-enterprises for selected value chains in Liberia. The World Bank Board also approved the Liberia Rural Economic Transformation Project Additional Financing ($30 million) on December 22, 2022, to stimulate domestic food supply response through emergency production support to food crisis affected communities while addressing the underlying vulnerability to such future food security shocks. In December 2023, the World Bank Board of Directors approved a second Additional Financing of $85 million to scale up RETRAP supported investments in establishing basic road connectivity, which is vital to food production, livelihoods strengthening, social inclusion, resilience building, and overall competitiveness of Liberia’s economy. Overall, the project is making steady progress towards achieving many of its key performance indicators. Farmers reached with agricultural assets or services are 15,783 of which 8,544 (54%) are women. The average yields of targeted agriculture produce (cassava, rubber, pigs and poultry) by project supported farmers has increased by 12.9%, while the average increase in marketed volumes of locally produced agricultural commodities by project supported Farmer-Based Organizations (FBOs) have increased by 33.6% against the target of 20%. So far, the project has reached 63,132 direct beneficiaries (against the target of 96,000) of which 50% are women.

Health and Nutrition

There are currently three World Bank Financed operations in the health sector in Liberia:

Liberia COVID-19 Emergency Response Project ($18.5 million) – Closing in September 2024;
Institutional Foundations to Improve Services for Health (IFISH) Project ($85 million) – Closing in August 2026;
Health Security Program in West and Central Africa ($18 million) – Closing in June 2029.

The total value of these projects is $121.5 million. In the area of reproductive, maternal, newborn, child and adolescent health and nutrition (RMNCAH-N), the World Bank is currently supporting the Government of Liberia in the implementation of proven cost-effective interventions on community and adolescent health; a performance-based financing scheme; provision of specialized training in nursing and midwifery; strengthening systems to improve the availability of core health workers; construction and equipping of a 155-bed capacity hospital for the provision of maternal and child health services; rehabilitation of primary health centers; and procurement of essential medicines, routine vaccines for children, RMNCAH-N products, and medical supplies.

The financial and technical support provided by the World Bank through previous and ongoing projects has enabled Liberia to increase access to RMNCAH-N services, leading to a reduction in the prevalence of diseases and death among women and children. World Bank support has also been instrumental in the prevention, mitigation, control, and management of infectious illnesses such as Ebola, COVID-19, malaria, typhoid, Lassa fever, and others. Despite these achievements, there is need to further expand investments in the health sector in Liberia. The country still has insufficient health infrastructure and human resources, and funding to the health sector by the government and development partners is still very low. Liberia also faces significant challenges in stunting and acute malnutrition, resulting from the lack of nutrition-specific commodities and rising prices of basic food and fuel; and regular outbreaks of infectious diseases.

Energy

Results in the Energy sector supported by the World Bank have continued to gain momentum, making significant progress towards sustainable development by tackling the greatest challenges in the power sector. The Bank is the leading financial partner to the Government in this sector.

(i) Expanded energy access to all: With World Bank support, Liberia has made continued progress in expanding access to electricity, with the electricity access rate reaching 33.2% in 2023 from roughly 20% in 2020. Customers’ connections doubled, from 142,947 to 282,505, during 2021-2023. Over 160,000 people have been provided access via off-grid solutions. The regulatory frameworks and instruments supported by World Bank-financed projects will accelerate private-led off-grid initiatives to provide electricity access to at least 1,000,000 people by 2030. Liberia’s energy access growth rate over the last decade is two times higher than West Africa’s average rate. The residential tariff was reduced from $35cent/kWh to $24cent/kWh making electrify more affordable.

(ii) Liberia Electricity Corporation’s (LEC) transition toward to a financially sustainable utility: LEC’s net losses decreased from $21,174 million to $11.656 million during 2021-2023 and sales increased by 127.5%, from $27,106 million to $54,629 million in the same period. Commercial losses remarkably reduced by 16.3%, from 47.7% to 31.4% over a period of two years (none of the countries in Africa were able to achieve a similar result). LEC was also able to make needed investments and settle the power import arrears using its own budget. These gains are contributing to improved perceptions of Liberia’s energy sector, which is becoming more attractive for private investment.

Transition to low carbon, low-cost renewable energy generation: The Government's strategic decision on expansion of generation capacity based on renewable energy will underpin the addition of at least 320 MW solar PV and hydropower to the system, tripling Liberia’s generation capacity and replacing polluting, high-cost HFO generation with low-cost, sustainable renewable energy.

A National Electrification Platform aims to serve as a flexible, adaptable, and readily available energy planning tool to inform decision-making by Government and other stakeholders on the energy access agenda. This platform, coupled with the developed regulatory frameworks and instruments (for instance Solar Home System Results-Based Financing), will enable Liberia to accelerate delivery of reliable energy access to all Liberians.

Last Updated: Apr 11, 2024