World Bank Calls for Urgent Reforms in Liberia’s Economic Landscape

The World Bank emphasizes urgent reforms in Liberia, warning that the next five years will profoundly impact the nation’s economic transformation. The Country Economic Memorandum discusses the risks of a “natural resource trap” and advocates for a shift towards sustainable growth. Without significant changes, modest growth could hinder Liberia from achieving middle-income status and decreasing poverty levels.

The World Bank has warned that the next five years are crucial for Liberia’s economic transformation during the launch of its Country Economic Memorandum (CEM). Titled “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia,” the report emphasizes necessary reforms to avert ongoing economic challenges.

The CEM details Liberia’s economic vulnerabilities, notably its dependence on a narrow, commodity-based model, leading to cycles of stagnation. It indicates that without significant reforms, the nation is projected to struggle to achieve the middle-income threshold of $1,000 per capita until around 2050, with only modest economic growth.

Georgia Wallen, the World Bank Country Manager for Liberia, stressed the imperative for ambitious policy changes to break the cycle of low growth and reliance on natural resource exports. She stated, “These next five years will be decisive for shaping Liberia’s longer-term economic outlook.”

The report offers a comprehensive review of Liberia’s economic situation while comparing it with similar countries. It aims to serve as a resource for policymakers, academics, and students, facilitating informed decision-making to foster economic advancement.

Aligned with Liberia’s new national development strategy, the Agenda for Accelerated Inclusive Development (AAID), the report aspires to uplift incomes by 25% within five years. Wallen highlighted the strategic intent behind this initiative, focusing on shifting from a resource export economy to sustainable value addition.

Moreover, the CEM outlines five essential transitions for unleashing Liberia’s growth potential: enhancing public expenditure management, increasing domestic revenue, and reducing dependency on the mining sector. The document warns that maintaining the current economic framework will yield insufficient progress toward achieving significant poverty reduction and middle-income status.

The report advocates for a high-ambition reform agenda that could reverse this trend and enhance living standards across Liberia. With robust reforms, the nation could reach lower middle-income status before 2040, significantly improving quality of life.

Wallen proposed a phased reform strategy, advocating immediate improvements in public finance and revenue collection while promoting economic diversification in the longer term. She emphasized that without a coordinated government approach, Liberia risks lagging behind its regional counterparts.

Reiterating the World Bank’s commitment to Liberia’s economic progression, Wallen expressed the institution’s readiness to partner with the country and support its strategic redirection under the AAID. She conveyed a message of hope regarding Liberia’s potential for economic transformation with appropriate policy measures in place.

In summary, the World Bank’s report highlights the urgency of reforms for Liberia’s economic future, indicating that the next five years are pivotal. It identifies critical economic transitions necessary for sustainable growth and warns against complacency, which could result in continued low growth. By embracing an ambitious reform agenda, Liberia has the potential to improve its economic prospects significantly and achieve a viable transition to lower middle-income status.

Original Source: www.liberianobserver.com