The World Bank warns that Liberia must make bold economic reforms in the next five years to escape its natural resource trap and achieve sustainable growth. The release of the Liberia Country Economic Memorandum (CEM) outlines the necessary policy changes and economic transitions needed to elevate the country from low growth to middle-income status. The focus should be on improving public expenditure, increasing domestic revenue, and diversifying beyond extractive industries to foster a more resilient economy.
The World Bank has issued a crucial alert that Liberia’s economic future hinges significantly on the actions taken in the coming five years. This announcement was made 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 emphasizes the need for substantial reforms to aid Liberia’s economic transformation.
The report outlines Liberia’s struggle with a “natural resource trap,” where reliance on a narrow range of commodities has led to stagnation and an inability to prepare for external shocks. Key contributors to this issue include inadequate human capital and low productivity levels, severely limiting Liberia’s economic growth potential and long-term prosperity.
The World Bank’s projections indicate that if current economic policies continue without reform, Liberia will experience only modest growth, failing to achieve middle-income status by 2030. Under the “business-as-usual” approach, real per capita GDP is expected to remain below the $1,000 mark until approximately 2050.
Georgia Wallen, the World Bank Country Manager for Liberia, stated during the launch, “These next five years will be decisive for shaping Liberia’s longer-term economic outlook.” She emphasized the necessity for strong policy actions involving a collective government approach to achieve sustainable high growth.
The CEM serves as a vital resource for policymakers and stakeholders to enhance economic understanding and expedite Liberia’s progress. Wallen noted that the report is designed to assist a variety of audiences, including policymakers, academics, students, and Liberians globally, in making informed decisions.
Aligned with the Liberia national development strategy, the Agenda for Accelerated Inclusive Development (AAID), aims to boost the incomes of Liberians by 25% in the next five years. According to Wallen, this strategy seeks to fundamentally reshape Liberia’s development from merely exporting resources to focusing on sustainable practices and value addition.
The report identifies five essential economic transitions required to harness Liberia’s growth potential: improving public expenditure management, increasing domestic revenue collection, and diversifying the economy away from extractive industries. Continuing the current economic framework could result in insufficient growth, significantly hindering poverty reduction.
In contrast, a robust reform agenda might lead Liberia to achieve lower middle-income status before 2040, fostering better jobs and enhanced living conditions across the nation. Wallen indicated that such ambitious reforms can lead to substantial improvements for Liberians nationwide.
The CEM highlights lessons from other regional countries regarding successful economic reforms. Wallen proposed a phased reform strategy, starting with immediate actions such as improved public finance management, advancing towards long-term goals of broad economic diversification.
The successful execution of these measures requires a unified government approach to prevent falling behind regional standards. The World Bank remains committed to backing Liberia’s economic transformation, in cooperation with the AAID and the upcoming World Bank Group Country Partnership Framework.
Wallen concluded by expressing optimism about Liberia’s future, stressing the potential for significant economic reforms, stating, “We believe in the future of Liberia because we believe in the people of Liberia.” The launch event gathered various stakeholders, including government officials and community leaders, amplifying the collective commitment to Liberia’s economic progression.
The World Bank’s recent report highlights the critical five-year window for Liberia to implement necessary reforms for sustainable economic growth. By addressing the natural resource trap and enhancing public finance and revenue mechanisms, Liberia aims to shift from a narrow development model to one focused on sustainable growth and diversification. The commitment of the government, along with support from the World Bank, is essential to realize these aspirations, ultimately enabling enhanced living standards and economic resilience for the Liberian population.
Original Source: www.liberianobserver.com
