Country Report Liberia March 2009

Outlook for 2009-10

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 continue to gradually draw down its forces. 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

Mrs Johnson-Sirleaf's fourth State of the Nation address to the legislature on January 26th highlighted the progress made in the areas of peace and security, economic revitalisation, and governance and the rule of law. Mrs Johnson-Sirleaf's address was strongly criticised by opposition parties for focusing more on the limited successes of her government and ignoring failures in the fight against corruption, infrastructure development and security reform. The TRC released its preliminary findings and recommendations in late January.

Economic policy

In its first review of the country's performance under the PRGF, the IMF praised the government for implementing prudent policies that have contributed to strong economic growth, increasing foreign investment and exchange-rate stability. Mrs Johnson-Sirleaf announced measures intended to mitigate the impact of the global financial crisis, including cuts in business and income taxes and trade tariffs.

The domestic economy

The government signed an agreement with a Canadian energy company, Buchanan Renewable Power, to construct and operate two electricity plants fired by old rubber trees with a total capacity of 35 mw. In January the government reached an agreement worth US$2.6bn with China Union Ltd for the rehabilitation and operation of Bong Minesthe biggest investment in the country to date. Bidding for the Western Cluster Iron Ore Project has been re-opened. The government has awarded forestry contracts to two Liberian com-panies, Liberia Tree and Trading Company and BJ&J Investment Corporation.

Foreign trade and payments

According to the IMF, the country's gross official reserves have risen substantially, to an estimated US$96m, from US$5m in 2004 and US$46m in 2006 when the government first took office.

This report covers the following industry codes:
SIC Code: 37;49;82;47;1;60;10;15;39
NAICS Code: 336;22;61;48;11;52;212;23;31