Country Report Liberia June 2009

Outlook for 2009-10

The president, Ellen Johnson-Sirleaf, is expected to remain in power over the forecast period and support for her reform agenda will be bolstered by the merger of her party, the Unity Party (UP), with the Liberia Action Party (LAP) and the Liberia Unification Party (LUP). The 15,000-strong UN peacekeeping force will remain in Liberia but will continue to draw down its forces gradually. An IMF poverty reduction and growth facility (PRGF; March 2008-March 2011) will guide economic policy. Overall, real GDP growth is forecast to fall to 6.8% in 2009 as the global economic downturn hits investment, before rising to 7.2% in 2010 as the global picture improves. Inflation is forecast to fall to an average of 6% in 2009 and 5% in 2010, in line with lower international oil and food prices. Continued growth of capital imports and weaker prices for exports will cause the current-account deficit to widen to US$350m in 2009, before higher export prices help to reduce this to US$310m in 2010.

The political scene

Three major political partiesthe UP, the LAP and the LUPannounced a merger in early April. The consolidated party will take the name of the UP and is expected to hold a convention within 12 months to elect officials and prepare a strategy to contest the 2011 elections. Gyude Bryant, the former chairman of the National Transitional Government of Liberia, and three colleagues were unexpectedly acquitted in May of charges of corruption, sparking accusations that the jury was compromised or bribed. Results of a census carried out in 2008 show that 68% of the population subsist on less than US$1 a day.

Economic policy

The IMF gave a positive assessment following the completion of the second review under the three-year poverty reduction and growth facility (2008-11). A draft budget for 2009/10 (July-June) was presented to the legislature, which includes a pay rise for civil servants and a new public-sector minimum wage.

The domestic economy

The World Bank has approved a project worth US$44m to improve road access in the capital, Monrovia, and rural areas. There was mixed news in the iron ore sector as two foreign investors expressed interest but the country's biggest operator, ArcelorMittal, announced that it was scaling back operations.

Foreign trade and payments

Liberia's debt has been cut by US$1.2bn following a discounted buyback of debt built up during previous decades of misrule. External debt fell from US$4.2bn in 2007 to only US$1.7bn in 2009, and the country is expected to benefit from further debt relief under the heavily indebted poor countries initiative in 2010.

This report covers the following industry codes:
SIC Code: 60;47;10
NAICS Code: 52;48;212