MONROVIA-The economic climate was overheating when President George M. Weah took to the stage to steer the affairs of the nation, in 2018.
Lacerated by the roaring impact of the deadly Corona Virus Disease, the departure of the United Nations, the falling prices of major commodities on the global market, and the low investment portfolio, the Liberian Leader was determined to shift the economic paradigm of the country.
When President Weah took Office in 2018, the Liberian economy was in a state of major distress and macroeconomic foundations were weak.
The country’s net international reserve, which had been used by the previous Government to stabilize the exchange rate, was very low.
The exchange rate had plunged into free fall, and the then Government did not seem to have the tools to deal effectively with stabilizing the currency at that time.
In the 6th State of the Nation Address, the Liberian Leader mentioned that as part of efforts to mitigate the economic challenges, development partners met with the government to adopt new measures aimed at accelerating economic growth.
The Liberian Leader noted that the government was instructed by partners to rationalize the payroll and place workers who were not previously captured.
He pointed out that the cost of such an initiative was in the neighborhood of $12 Million U.S. Dollars.
President Weah stressed that the departure of the United Nations deprived the Liberian economy of over $ 115 Million.
He mentioned that the Government’s credit rating with commercial banks was at its lowest because the Government could not settle its domestic obligations to lenders.
The Liberian Leader indicated that the total Government’s obligation to the Central Bank of Liberia was not even known because some Government debt to the Central Bank was not officially recognized.
President Weah pointed out that as a means of restoring the Government’s credit rating, which was at its lowest in 2018, the Government of Liberia acknowledged all of its debt owed to the Central Bank of Liberia, and issued bonds to commercial banks to settle the legacy debt that we met on the books.
“What we did not realize at the time is that the recipe for economic disaster had already been set. We had assumed that our economy was sitting on a strong foundation, but we were in for a rude awakening when the decline in the exchange rate began to accelerate” he added.
He mentioned that the government had to get to work quickly, to re-think, to re-work, and to re-establish the principles of macroeconomic fundamentalism as they are known around the world.
The Liberian Leader pointed out that in 2019 when he delivered an Economic Address to the Nation, he announced an end to Government borrowing from the Central Bank of Liberia.
President Weah stressed that this policy forced the Government to depend on its own resources and to live within the means of the national budget.
He indicated that in 2019, the government embarked on a process to fix the broken and unfair wage system in which Government workers were paid without any set rules or pay grades.
“We had to abolish a general allowance system that was allowing this to happen. Although we were faced with revenue challenges, we were determined to keep all civil servants on the payroll. And so we adjusted the wage system and gave every Government worker a salary that is based on a standard and consistent pay grade. As a result of this exercise, fifteen thousand (15,000) civil servants received higher salaries, while some seven thousand (7,000) were adjusted downward” the Liberian Leader averred.
President Weah noted that the government also in 2019, entered an IMF-supported program, and began a series of fiscal, monetary, and governance reforms.
He noted that under this program, the Central Bank of Liberia developed a new monetary framework that worked to stabilize the exchange rate without drawing down excessively on net international reserves, as had been done by the previous Government.
President Weah noted that the government is determined to improve the fiscal balances, and domestic debt management, and strengthen the fight against corruption.
“Today, Liberia is a macroeconomic exception in the West African region. We have brought inflation down from a high of thirty (30%) percent to a single-digit rate that is now under seven (7%) percent. We accomplished this in just under two years, making it one of the fastest rates of inflation collapse in recorded economic history”.