"Liberia: Overcoming Challenges—Past, Present, and Future," Speech by Christine Lagarde, Managing Director, International Monetary Fund

IMF News, September 11, 2015

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• Authors: Christine Lagarde Managing Director
• Published: September 11, 2015

Context and opening

• Speech by Christine Lagarde, Managing Director, International Monetary Fund, Monrovia, Liberia, September 11, 2015. As prepared for delivery.
• Celebrates Liberia’s history and resilience: first African country to declare independence in 1847; first African country to elect a female president in 2005; President Ellen Sirleaf is one of only 4 female Nobel Prize winners in Africa.
• Central framing: Liberia conquered Ebola village by village and now must focus on sustainable recovery and development.

1. Lessons from the Ebola response

Findings and observations:

• The Ebola epidemic threatened the fabric of Liberian society, causing loss of loved ones, leaders, teachers, caregivers and friends and causing the economy to grind to a halt.
• Liberia established a “Coordinating Body” including all stakeholders—leaders of the three Branches of Government, the international community, civil society, traditional and religious leaders—to coordinate donor response and community action.
• Legislature granted special spending authority to establish the Ebola Trust Fund to restore basic health services and provided more resources when the fight intensified.
• Liberians provided assistance to neighboring countries by sharing best practices.

IMF contributions (exact figures and instruments):

• The IMF provided “cash in the bank” support beginning last September to finance an expanded government budget deficit, and stepped up again in February.
• The IMF provided almost $100 million in budget support and over $30 million in debt relief to Liberia under the Catastrophe Containment and Relief Trust.
• In total, the IMF provided a total of $404 million to Liberia and its neighbors Guinea and Sierra Leone, through that Trust and regular lending facilities.

Policy lessons and priorities:

• The international response should be faster and more effective next time; need more knowledge of how such diseases emerge, spread, and can be prevented.
• Rebuilding the health system, addressing vulnerable households further impoverished by the outbreak, and supporting recovery amid a deteriorating external environment are urgent priorities.
• The Catastrophe Containment and Relief Trust can be used for future pandemics, earthquakes and other natural disasters.

2. Restoring Liberia’s growth prospects

Baseline and challenges:

• Pre-crisis growth reached an impressive 8 percent growth rate.
• Global slowdown (advanced economies, China, and emerging markets) is reducing commodity production and prices, lowering export receipts, government revenue, and investment.

Key constraints and statistics:

• Only 2 percent of the population has access to the electricity grid.
• A mere 6.2 percent of roads are paved.
• Liberia’s trade with West African neighbors: 7 percent of total trade compared with 10 percent for the ECOWAS group.
• Youth comprise 65 percent of the population.
• Youth unemployment is as high as 85 percent.
• There are 50,000 labor market entrants each year.

Priority areas for policy action:

• Scale up investment to address infrastructure gaps:
  • Strengthen domestic resource mobilization; Liberia Revenue Authority performance has been “strong and steady.”
  • Improve efficiency of investment execution through better project planning and enhanced governance and accountability.
  • Support recommencement of projects such as the hydro-power rehabilitation at Mount Coffee.
• Diversify the economy to support inclusive growth:
  • Invest in agriculture to reduce food imports, strengthen exports, and increase incomes for the two-thirds of the population employed in agriculture.
  • Improve trade integration and reap gains from Liberia’s pending entry into the WTO.
  • Create a business climate that encourages innovation and investment in new or non-traditional sectors.
• Invest in human development:
  • Rebuild the health system, acknowledging the loss of medical personnel.
  • Scale up education, vocational and technical training to develop labor-intensive sectors and transition youth out of the informal sector.
  • Close the gender gap: women already represent more than 20 percent of cabinet ministers and a third of the judiciary, but explicit measures (for example, quotas) and policies to improve women’s access to health services and higher education are recommended.

3. Global challenges and IMF commitments

Global resource mobilization:

• Development resources come from domestic finance mobilization, Official Development Assistance, development lending, and the private sector.
• The private sector remains the largest untapped reserve for development investment; improving the business climate and removing regulatory hurdles is essential.

IMF policy adjustments and support (exact commitments):

• The IMF will raise access levels for concessional facilities by 50 percent.
• The IMF will set the interest rate on fast disbursing support under the Rapid Credit Facility at zero percent for the long term.
• The IMF will strengthen technical assistance and capacity building services in areas such as tax administration and scaling up infrastructure investment.

Conclusion and recommendations

• Liberia has demonstrated resilience and unity—“In union, strong success is sure”—and can translate that solidarity into economic revival and progress toward middle-income status by 2030.
• Practical recommendations emphasized throughout the speech:
  • Maintain vigilance against new outbreaks while prioritizing health-system reconstruction.
  • Scale up and make more efficient public investment in infrastructure.
  • Diversify the economy with emphasis on agriculture, trade, and non-traditional sectors to absorb youth labor.
  • Invest in human capital, with particular focus on youth and women to close persistent gaps.
  • Leverage international support and IMF concessional financing and technical assistance to accelerate recovery.

Source: "Liberia: Overcoming Challenges—Past, Present, and Future," Speech by Christine Lagarde, Managing Director, International Monetary Fund, September 11, 2015.

References

• Liberia and the IMF
• Speeches
• Christine Lagarde
• PRESS CENTER
• https://www.imf.org/en/home