Economists warn that upcoming U.S. aid cuts may destabilize Liberia’s economy, urging salary cuts and reforms to protect jobs. With significant funding from the U.S. and World Bank at risk, the government faces challenges maintaining public services. The situation necessitates urgent reassessments and local production initiatives to ensure stability.
Economists warn that expected cuts to United States aid funding could significantly hinder Liberia’s development and incite political instability. They recommend that President Joseph Boakai’s administration implement salary reductions and restructure allowances for officials to mitigate job losses and economic impacts. With the U.S. as Liberia’s largest bilateral donor, these cuts could have dire consequences for various sectors.
Recently, U.S. President Donald Trump paused over $40 billion in global aid, affecting projects funded by USAID. The agency allocated approximately $80 million to Liberia for health, education, and agriculture in 2024, reflecting the nation’s dependence on external aid. Levied criticisms point out that much of this aid funds operational costs rather than directly benefiting Liberia’s economy.
With a government budget of just $800 million – a portion remaining with the Legislature – the Liberian government struggles to deliver public services independently. If anticipated USAID cuts materialize, services will likely shrink, exacerbating an already challenging socio-economic climate. The government’s ambitious $8 billion development plan, the ARREST Agenda, may also falter without external support.
Health and NGO workers have already begun to be laid off in anticipation of funding cuts, creating a crisis in clinics and educational programs. Gbarpolu senator Amara Konneh emphasized the potential impact, stating, “This clearly is going to affect Liberia in many sectors, including health, education, and agriculture.”
Political analysts predict that ongoing U.S. aid cuts will be permanent, as public support in the U.S. wanes. The Swedish government has similarly cut its funding commitment to Liberia by nearly 20% for 2025. This decision has been influenced by Sweden’s commitment to supporting Ukraine amid ongoing conflict, highlighting shifting priorities in international aid.
Concerns also mount over the future of the World Bank, Liberia’s primary donor, which allocated $190 million in 2024 alone. The U.S. contributes significantly to the World Bank’s International Development Association, and potential funding withdrawal could severely affect vital projects, including critical energy initiatives.
Dr. Tenney warned that reductions in remittances from the diaspora due to potential deportations could further strain Liberia’s economy. He predicted this combination of cuts would lead to diminished job availability and increased risk of civil unrest.
The Liberian government is racing against time to assess the economic fallout from these cuts. Finance Minister Augustine Ngafuan recently presented an assessment to President Boakai, who has initiated austerity measures for his administration, focusing on budget reduction strategies.
Calls for re-evaluation of government spending are intensifying, with suggestions to streamline operations to enhance efficiency. As emphasized by Senator Konneh, diverting savings to critical areas like education and health will be essential for national development.
Immediate attention to food security is vital, as Liberia relies significantly on imported rice, which can immensely burden the economy. Improved domestic production capabilities are crucial, but issues like unstable power supply hinder this objective, creating further economic strain and risking food insecurity.
With the need for expanded job creation for the youth, the prospect of political instability looms large, should these economic challenges remain unaddressed. Liberians await clarity on the future of U.S. foreign aid under the new administration, with significant consequences on the horizon for the nation’s economy.
In summary, the anticipated U.S. aid cuts could have devastating implications for Liberia’s development. Economists stress the importance of government reforms, including salary cuts and tax law overhauls, while urging a focus on local production. As international support wanes and economic challenges mount, the need for immediate action is critical to prevent severe social and political instability.
Original Source: frontpageafricaonline.com
