GOVERNMENT OF LIBERIA ANNUAL ECONOMIC REVIEW 2015 MINISTRY OF FINANCE & DEVELOPMENT PLANNING APRIL 2016 ANNUAL ECONOMIC REVIEW | 2015 FOREWORD Together as a nation, and with the help of our macroeconomic management and our firm development partners, we have charted a adherence to convergence criteria. path through the major hurdles of the last We also remain optimistic for 2016, two years, and toward our goal of building a anticipating a revival of major growth sectors, stable and sustainably developed economy, by 2030. In 2014, we united to fight the namely: agriculture, which we project to deadly Ebola Virus Disease (EVD) epidemic, register a 1.4 percent real growth rate, which struck our society and caused a nearly against an estimated 1.0 percent contraction 5 percent setback in our projected 2014 GDP in 2015; mining, which signals some growth. In 2015, we saw the falling global improvement, while remaining below 1 prices of rubber and iron ore – our major percent; and manufacturing, which promises export commodities – slow the domestic a 5.2 percentage-point jump to 11.3 percent, mining and agriculture activities and from an estimated 6.1 percent in 2015. downgrade our real GDP growth projection Moreover, we expect improvement in the from 0.9 percent to 0.3 percent. services sector, especially in the hospitality and tourism sub-sectors, in view of the Yet, in the face of all these challenges, we eradication of EVD. maintained a single-digit inflation rate – closing 2015 at 8.0 percent – through In this fourth edition of its Annual Economic stronger collaboration with the Central Bank Review, or AER 15, the Ministry of Finance & of Liberia (CBL), our commitment to strong Development Planning (MFDP) highlights developments in the real, fiscal, monetary, and external sectors; and elaborates on the J MINISTRY OF FINANCE & DEVELOPMENT PLANNING i 2015 | ANNUAL ECONOMIC REVIEW Government’s efforts to address current Finally, the MFDP expresses its unchanging challenges, while advancing its development gratitude to President Johnson Sirleaf and Her agenda. Furthermore, AER 15 offers critical Excellency’s Cabinet; the Central Bank of analysis of the social services sector, and key Liberia; the African Union, the Mano River insights on the EVD’s impact on social welfare Union, the diplomatic corps and our in Liberia. development partners; the private sector and Drawing on this rich content, fostered by our civil society; the gallant men and women of new Ministry’s emerging culture of robust the health care service; and our beloved citizens, all of whom fought valiantly to expel research, the Government remains equipped and committed to applying evidence based the EVD from the borders of the Mano River strategies toward spurring development, basin. Because of you, is EBOLA IS NO MORE! inclusive growth and job creation, through Our children are back in school; our health the creation of opportunities and an enabling facilities have reopened; our economy is environment for business. getting back on track; and we are back to work, wiser and more determined than ever, Looking beyond 2016, the MFDP remains to lay a firm foundation for “a middle-income committed Liberia’s ownership and country characterized by sustainable and achievement of the Sustainable Development inclusive growth and development, by 2030.” Goals (SDGs) by 2030. Led by H.E. President Ellen Johnson Sirleaf, one of the three world leaders who co-chaired the United Nations’ High Level Panel of Eminent Persons on the Post-2015 development agenda and chaired the African Union’s High Level Committee on Amara M. Konneh the Common African Position on the SDGs, Minister of Finance & Development Planning Liberia is determined to maintain its lead role Republic of Liberia in Africa’s development through SDG implementation and continental advocacy to April 2016 ensure that we “LEAVE NO ONE BEHIND.” ii ANNUAL ECONOMIC REVIEW |2015 TABLE OF CONTENTS FOREWORD .................................................................................................................................. I TABLE OF CONTENTS ................................................................................................................. III TABLES ....................................................................................................................................... IV FIGURES ...................................................................................................................................... V ACRONYMS ................................................................................................................................ VI EXECUTIVE SUMMARY .............................................................................................................. VII 1. INTRODUCTION ..................................................................................................................... 11 2. GLOBAL AND REGIONAL ECONOMIC DEVELOPMENT & OUTLOOK ........................................ 12 3. DOMESTIC ECONOMIC DEVELOPMENT & OUTLOOK ............................................................. 16 3.1 Overall GDP Performance ........................................................................................................... 16 3.2 Socio-economic Impact of Ebola on the Liberian Economy ..................................................... 16 3.3 Economic Outlook for 2016 ........................................................................................................ 17 3.4 Inflation ........................................................................................................................................ 17 4. REAL SECTOR DEVELOPMENT ............................................................................................... 19 4.1 Sectoral GDP Contributions and Performance .......................................................................... 19 4.2 Labor Market ............................................................................................................................... 24 5. MONETARY SECTOR DEVELOPMENT ..................................................................................... 25 5.1 Monetary Indicators.................................................................................................................... 25 5.2 Monetary Aggregates ................................................................................................................. 26 5.3 Exchange Rate Development ...................................................................................................... 29 5.4 Liquidity Management ................................................................................................................ 30 5.5 Bank Lending and Interest Rates ................................................................................................ 30 6. FISCAL DEVELOPMENT .......................................................................................................... 32 6.1 Fiscal Overview ............................................................................................................................ 32 6.2 Tax Expenditure ........................................................................................................................... 36 6.3 Fiscal Rules and Recovery Plan ................................................................................................... 37 7. EXTERNAL SECTOR DEVELOPMENT ....................................................................................... 38 7.1 Current Accounts ........................................................................................................................ 38 7.2 Capital and Financial Accounts ................................................................................................... 38 7.3 Merchandized Trade ................................................................................................................... 38 7.4 Direction of Trade ....................................................................................................................... 40 8. SOCIAL SERVICES SECTOR ...................................................................................................... 42 J MINISTRY OF FINANCE & DEVELOPMENT PLANNING iii 2015 | ANNUAL ECONOMIC REVIEW 8.1 Impact of EVD on the Health and Education Sectors ................................................................ 42 8.2 Health........................................................................................................................................... 42 8.3 Education ..................................................................................................................................... 44 8.4 Water and Sewerage Services .................................................................................................... 46 9. INFRASTRUCTURE & OTHER BASIC SERVICES ........................................................................ 48 9.1 Infrastructure .............................................................................................................................. 48 9.2 Transportation Services .............................................................................................................. 50 9.3 Energy distribution, transmission and distribution ................................................................... 50 REFERENCES ............................................................................................................................