World Bank Advocates Comprehensive Reforms for Liberia’s Economic Growth

The World Bank’s report, ‘Escaping the Natural Resource Trap,’ stresses the need for reforms in Liberia’s economy, addressing its vulnerability to external shocks and promoting sustainable growth. It proposes five key transformations to drive economic development, including diversifying away from mining and enhancing public services. Institutional reforms are essential for achieving higher productivity and improving welfare, with hopes of reaching lower middle-income status by 2040.

On March 11, 2025, the World Bank released its flagship report, the Liberia Country Economic Memorandum, titled “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia.” This report analyzes Liberia’s economic conditions and emphasizes the impact of external shocks on sustainable growth, aiding in the implementation of the ARREST Agenda for Inclusive Development (AAID).

Liberia is confronted with a “natural resource trap,” characterized by a narrow focus on commodity-based development resulting in persistent stagnation. This dependency has rendered the country vulnerable to economic shocks, primarily due to insufficient growth drivers such as human capital and productivity. The report indicates that a continuation of current economic practices will yield only moderate growth, insufficient for achieving middle-income status of US$1,000 per capita by 2030, with projections suggesting this threshold will only be reached by 2050.

“Institutional and policy reforms are essential to modernize the public sector and provide Liberia with the institutions needed to lead the transformation,” stated Georgia Wallen, World Bank Liberia Country Manager. She highlighted that implementing these reforms is crucial for transforming the business environment, fostering private investment, enhancing public service efficiency, and improving human capital in education and health.

The report proposes five key transformations necessary for Liberia’s long-term growth: reshaping the macro-economy; reducing dependence on the mining sector by promoting labor-aligned activities; recognizing the private sector as a vital economic engine; and instituting robust policy reforms to modernize public sector practices.

Additionally, the report anticipates that with proper reforms, Liberia could achieve sustainable economic performance over time. A focused reform agenda could potentially double productivity growth in the non-mining sector. It also emphasizes enhancing educational outcomes, health metrics, and public service efficiency, while proposing increases in both private and public sector investments to stimulate GDP growth. As a result, it suggests that Liberia could attain lower middle-income status by 2040, create significant employment opportunities, and potentially elevate real per capita GDP to US$2,000 by 2050.

In summary, the World Bank’s Liberia Country Economic Memorandum underscores the necessity for comprehensive reforms to escape the natural resource trap hindering Liberia’s economic growth. Emphasizing the importance of diversifying the economy, improving public services, and enhancing investment in human capital, the report outlines a pathway toward sustainable development. With the implementation of strategic reforms, Liberia has the potential to achieve significant economic progress and elevate its status within the global economy.

Original Source: www.miragenews.com