Managing Director, International Monetary Fund
Monrovia, Liberia, September 11, 2015
As prepared for delivery
Minister Konneh – thank you for your gracious introduction. My thanks to all of you for joining me today.
I am honored and deeply moved to visit Liberia – a country with which the IMF has a rich and longstanding partnership. You have played a historic role in “leading by example” – as the first country in Africa to declare independence, which you did far back in 1847; and as the first African country to elect a female president, in 2005, President Ellen Sirleaf, who is also one of only 4 female Nobel Prize winners in Africa!
Today, however, I pay tribute to the heroism of this nation and its people. You have faced a trial unprecedented in the modern era–a terrible disease that threatened the very fabric of your society. Your families, your neighborhoods, your places of work and worship all fell under the dark cloud of the Ebola epidemic. You lost loved ones, leaders, teachers, caregivers and friends. Your economy ground to a halt.
I commend the leadership demonstrated by President Sirleaf and her government in responding to this threat. I especially commend you, the Liberian people, who fought back with tenacity. Village by village, street by street, patient by patient, you conquered Ebola. Your heroes are everywhere–doctors and nurses, hygienists and ambulance drivers, contact tracers, and gravediggers. All Liberians put their lives on the line, and, sadly, far too many made the ultimate sacrifice.
Your country has a proud legacy of extraordinary resilience in the face of adversity–ending a terrible civil war and achieving reconciliation; ultimately standing together as one. This comes out loud and clear in your national anthem: “In union, strong success is sure.”
So today I salute you. Liberia’s perseverance is an example to its neighbors and the whole international community. If you remain vigilant about what I hope is a distant possibility of new outbreaks, you can turn your attention to what comes next–the difficult challenge of setting your country on the road to permanent and sustainable recovery.
With that in mind, I would like to share my perspective on three topics:
First, the lessons for the international community from the fight against Ebola.
Second, the economic challenges that Liberia now faces.
And finally, how your struggle to build a better future fits into the global effort to support development and overcome poverty.
1. “In union strong” – together confronting the threat of Ebola
Let me start by drawing on one of Liberia’s heritage of wise proverbs: “Do not look where you fell, but where you slipped.”
So what lessons does Liberia’s remarkable feat offer us? Where did we slip, and what can we do better?
To be sure, the international response to the epidemic also helped turn the tide. But it should have been faster and more effective. Yet what is remarkable about the Liberian experience is how the people themselves took on the challenge to save the country.
The Government took full ownership of the task. A “Coordinating Body” was established to include all stakeholders – leaders of the three Branches of Government, the international community, civil society, traditional and religious leaders. This helped immensely in coordinating donor response and drawing communities together.
I commend your Legislature for granting special spending authority to establish the Ebola Trust Fund to restore basic health services–and then providing more resources when the fight intensified.
You were all part of the “united” response. Indeed, Liberia has provided assistance to neighboring countries by sharing best practices for containing this disease.
What did the IMF contribute? We are of course not a front-line health provider. But once we recognized the depth of the Ebola crisis, we moved quickly. We provided Liberia with support last September – “cash in the bank” that the country could draw on right away. These resources financed an essential expansion of the government’s budget deficit to pay salaries and prevent a larger recession. And when more was needed, we stepped up again in February.
Altogether, we provided almost $100 million in budget support and over $30 million in debt relief to Liberia under a newly created Catastrophe Containment and Relief Trust. In total, we provided a total of $404 million to your country and your neighbors Guinea and Sierra Leone, through that Trust and our regular lending facilities. Now that it is in place, the Catastrophe Containment and Relief Trust can be used for future crises–to help countries facing pandemics, earthquakes and other natural disasters.
For the international community, Liberia’s experience offers many lessons to draw about coordination and consistency. We need more knowledge of how such diseases can emerge seemingly out of nowhere, how they spread, and how they can be prevented. Next time we must–and will–be even faster.
Your fight against Ebola has been formidable. Yet the task ahead is equally as daunting: rebuilding your health system, addressing the needs of vulnerable households further impoverished by the outbreak, and supporting the country’s recovery in the face of a difficult and deteriorating external environment.
2. Restoring Liberia’s growth prospects
This brings me to my second topic: restoring Liberia’s growth prospects.
Beyond the crucial Ebola response issues I have just discussed is the need to revitalize the Liberian economy–an economy that had reached an impressive 8 percent growth rate before the crisis. This will not be an easy task, especially in the face of a more challenging global economy.
We are in a period of renewed uncertainty. While the advanced economies have been recovering, the pace of that recovery has been disappointing. China and other emerging markets are facing many challenges. Their slowdown is affecting the commodity markets that are so important to Liberia and other African countries. Production of these commodities, such as iron ore, is already down because of the pandemic, and now the prices you receive are much lower. That means smaller export receipts, declining government revenue, and delays and cancellations of planned investments.
Nonetheless, there are steps you can take to boost growth. The government’s Economic Stabilization and Recovery Program appropriately incorporates priority interventions to address post-Ebola needs, and to transition the country back to the Agenda for Transformation objectives. I take particular note of the fact that these objectives include Liberia’s achieving middle income status by 2030–a goal we fully support.
I know there is a Liberian saying: “Monkey work, baboon draw.” But this is not the time for that! Now is the time for everyone in Liberia to work together to ensure a better future for the country.
You are already making efforts to get the economy going again, and I would like to highlight three areas where I think progress will be crucial.
The first area is scaling up investment to address infrastructure gaps. Liberia’s infrastructure gaps are huge. Only 2 percent of the population has access to the electricity grid and a mere 6.2 percent of roads are paved. These constraints were a drag on growth even before Ebola hit.
It is heartening to see that the hydro-power rehabilitation project at Mount Coffee has been re-started. But this is just the beginning–there are so many roads to be repaired, homes to receive electricity, and schools to build. I know, resources are scarce and demands are multiplying.
Yet there is room to scale up investment–by more effectively mobilizing your own resources. I welcome the performance of the Liberia Revenue Authority, whose revenue collection has been strong and steady in this difficult year. I can only encourage you to build upon this experience to bring revenues up to levels that are prevailing in other countries in the West African community.
There are equally important measures on the spending side–particularly on improving the efficiency of investment execution. This means strengthening project planning and enhancing the governance and accountability of the institutions involved. This will not bear fruit overnight, but efficient spending of public money is not only important for fiscal reasons, but also to obtain broad public acceptance for public investment projects.
The second area of action is diversifying the economy to support inclusive growth. For good reasons, I am usually cautious making recommendations about the structural aspects of an economy. We are not in the planning business, after all. But it strikes me that investments in agriculture in Liberia could be useful to reduce reliance on food imports, strengthen exports, and increase incomes for the two-thirds of the population employed in this sector.
Indeed, there seems potential for increasing trade. Liberia’s trade with its West African neighbors is below the average for the region: 7 percent compared with 10 percent of total trade for the ECOWAS group. So I would like to congratulate you heartily on Liberia’s pending entry into the WTO, and encourage you to pursue further gains from external trade.
As you know, successful countries have often managed to encourage business and investment across many areas of the economy. So it is very important to create a climate that encourages innovation and investment in new, or non-traditional sectors. This could provide more opportunities for gainful employment to Liberia’s burgeoning youth–65 percent of your population. With unemployment in this group as high as 85 percent, and 50,000 labor market entrants each year, it is imperative to turn youth into an asset, and for that every idea, every project, every job offer counts.
This leads me to the third area of action – investing in human development. Investing in your youth, your women, your future.
Let me start with the most obvious–the need to re-build the health system. In Liberia and the other two countries ravaged by Ebola, this task has a very different dimensions, given the terrible losses suffered by doctors, nurses, and other medical personnel. I salute those who lost their lives trying to heal others. I hope you will be able to re-fill the ranks of the medical profession, although I have no illusion that the skills and training of those who have passed away will be difficult to replace.
There is certainly a need for a large education effort which, by the way, goes beyond just the health sector. The President has set an example with her focus on vocational and technical training–in fact, many more steps in my view would be welcome that help develop labor-intensive sectors and get young people out of the informal sector.
We must also not lose sight of an important asset that remains largely untapped in Liberia–that is the women of Liberia. I commend the government of President Sirleaf on its progress in promoting economic participation for Liberian women.
To date, women represent more than 20 percent of cabinet ministers, and a third of the judiciary. Women today occupy more positions of authority compared to any previous administration in the history of the country. And I must say that I personally have the pleasure of working with one of Liberia’s extremely talented women–Antoinette Sayeh–your former Minister of Finance and our current Head of the African Department.
In spite of this progress, Liberia still has a large gender gap that needs to be closed. As in Rwanda, which leads the world in terms of representation in the legislature, explicit quotas for women would help. Policies to improve women’s access to health services and higher education would be essential to ensure equality of opportunities.
So these are my suggestions where determined efforts could help to achieve growth in a more sustainable and inclusive way. I certainly don’t think that this will be easy. Yet, there are other countries in this region that have overcome conflict and fragility to achieve strong and inclusive growth.
I have no doubt that Liberians can do it, too. Nothing can be harder than beating Ebola!
3. Global challenges, global commitments
That brings me to my final point–the international community’s commitment to development.
Finding the resources for development is never easy. Yet the resources do exist. Some come from a better mobilization of domestic finances, as I have just mentioned. Some come in Official Development Assistance and development lending.
Still, the largest untapped reserves are in the private sector. Business is always looking for new opportunities, as we have seen in the rising levels of investment throughout Africa. However, as I mentioned a minute ago, unleashing this sector means improving the business climate and removing regulatory hurdles, an area where Liberia too can do better.
For its part, the IMF will contribute to this effort, including by raising access levels for concessional facilities by 50 percent, and setting the interest rate on fast disbursing support under the Rapid Credit Facility at zero percent for the long term.
The IMF will also strengthen its technical assistance and capacity building services in the areas of tax administration and scaling up infrastructure investment, among others. This will be particularly supportive of your development goals, given the importance of these areas for Liberia.
In conclusion, let me draw one more time on the wisdom of Liberian proverbs: “You cannot pick a stone with one finger”.
Liberia has defeated one formidable foe. The people of Liberia can unite in the same way to take the steps needed to revitalize the economy and ultimately move Liberia to middle-income status – within this generation.
There is a brighter future for Liberia and throughout Africa. You can do it. The international community has made a commitment to support your efforts, and so has the IMF. We are here to be a partner with you on this journey.