The World Bank’s report emphasizes the need for Liberia to reform its economy, trapped by natural resources, to achieve sustainable growth. Key recommendations include diversifying activities, modernizing public institutions, and enhancing human capital. Ambitious reforms could position Liberia for significant improvements by 2040, aiming for lower middle-income status and increased GDP.
On March 11, 2025, the World Bank released the Liberia Country Economic Memorandum, titled “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia.” This report analyzes Liberia’s economic situation, highlighting its vulnerability to external shocks that affect sustainable growth and development. The insights aim to enhance the implementation of the ARREST Agenda for Inclusive Development (AAID).
Liberia is challenged by a “natural resource trap,” where a reliance on commodities has resulted in ongoing cycles of stagnation. Factors such as limited human capital, wealth accumulation, and productivity hinder long-term economic growth. The report warns that a “business-as-usual” scenario predicts modest growth unsuitable for achieving middle-income status by 2030 or significantly reducing poverty. Under this scenario, real per capita GDP growth will be slow, delaying the middle-income threshold until circa 2050.
“Institutional and policy reforms are essential to modernize the public sector and provide Liberia with the institutions needed to lead the transformation,” stated Georgia Wallen, World Bank Liberia Country Manager. The report emphasizes systemic reforms to enhance the business climate, encourage private investment, improve public services, and maximize public investments in sectors like education, health, power, and telecoms.
To pave the way for sustainable long-term development, the report suggests five critical transformations. These include reshaping the macro-economy; diversifying from mining to areas better suited for urban labor demands; repositioning the private sector as the main economic driver; and overhauling public policy and institutions.
The report affirms that, with ambitious reforms, Liberia can achieve substantial improvements in medium to long-term economic performance. A robust reform agenda could potentially double annual productivity growth in the non-mining sector. Key initiatives could increase schooling from an average of 4 to 10 years, improve health metrics, and augment public and private investments. Such measures could lead Liberia to lower middle-income status before 2040, create jobs, and increase real per capita GDP to about US$2,000 by 2050.
The World Bank’s Liberia Country Economic Memorandum underscores the crucial need for reforms to steer Liberia away from its natural resource dependency. By implementing systemic changes and enhancing human capital, the country can achieve sustainable long-term growth. The report outlines significant transformations necessary for diversifying the economy, recognizing the private sector’s role, and modernizing governance. These reforms could lead Liberia towards improved economic conditions and a higher standard of living by 2050.
Original Source: www.miragenews.com
