Country Report Liberia

Outlook for 2008-09

The president, Ellen Johnson-Sirleaf, is expected to remain in power over the forecast period but will continue to rely on an ad hoc coalition in parliament to support her reform agenda. The 15,000-strong UN peacekeeping force will remain in Liberia but will begin a gradual drawdown of its forces. An IMF poverty reduction and growth facility (PRGF; March 2008-March 2011) will guide economic policy. Real GDP growth is forecast to reach a high 10% in 2008 and to remain strong, at 10.5%, in 2009 as reconstruction and economic production accelerate. Inflation is expected to average 13% in 2008 as domestic demand and international oil and food prices rise, and to edge down to 12.5% in 2009 in line with more stable oil prices. The overall current-account deficit is forecast to increase from US$200m in 2008 to US$250m in 2009 as a result of rising imports.

The political scene

Liberia has continued to secure strong support from the international community, with visits from the US president, George W Bush, and the UN secretary-general, Ban Ki-moon. The UN peacekeeping force in Liberia has continued to decrease, despite local concerns that the country's security forces are far from ready to deal with problems such as high levels of crime, civil unrest or potential regional threats to stability.

Economic policy

The 2008/09 (July-June) budget has targeted a large increase in revenue, but remains relatively small and will focus mainly on covering recurrent expenditure, with foreign donors being relied on to fund development expenditure. The government has reviewed its contract with Firestone, a multinational tyre company, reducing the term to 50 years. In accordance with the Liberian Extractive Industries Transparency Initiative, the government has signed agreements with a number of companies to publish financial information, such as taxes and fees paid to the government. The IMF has confirmed a US$391m PRGF for Liberia, as well as an extended fund facility of US$561 to clear debt owed to the Fund and bolster foreign-exchange reserves.

The domestic economy

Rising food and oil prices pushed year-on-year inflation to 14.8% in February. Reforms have taken place at the Liberian Shipping and Corporate Registry as part of an overhaul of the registry's revenue management.

Foreign trade and payments

The Paris Club of creditors has announced interim debt relief of US$254m for Liberia; payment of arrears of US$789m will be deferred for the time being.