Liberia: Liberia Outlook for 2013-14

The country (Liberia) is situated in Western Africa, bordering the North Atlantic Ocean, between Cote d'Ivoire and Sierra Leone.
Liberia has borders with Ivory Coast for 716km, Guinea for 563km and Sierra Leone for 306km. Land in Liberia is mostly flat to rolling coastal plains rising to rolling plateau and low mountains in northeast. Liberian land covers an area of km²

The climate is tropical, hot, humid with dry winters with hot days and cool to cold nights. it is wet with cloudy summers with frequent heavy showers.  Liberian(s) speak English 20% (official), some 20 ethnic group languages, of which a few can be written and are used in correspondence.

OVERVIEW

The president, Ellen Johnson Sirleaf, was re-elected in November 2011 and her ruling Unity Party (UP) won a larger share of the vote, increasing its ability to pass legislation but falling just short of a majority. The government will now focus on delivering on its socioeconomic policies through job creation and better service provision.

The mainly young supporters of the opposition Congress for Democratic Change (CDC) will continue to be a potential source of insecurity, however, with a large groundswell of young, unemployed males, particularly in the capital, Monrovia. The Economist Intelligence Unit forecasts real GDP increase of 9% in 2012 and 7.5% in 2013, driven by higher agricultural output and better investment in the extractive industries. Liberia will continue to run a large structural current-account deficit because of the heavy UN presence, which accounts for the majority of imports.

The political scene

The former Liberian president and warlord, Charles Taylor, was convicted on April 26th on amount 11 counts of war crimes and crimes against humanity in his trial at the UN Special Court for Sierra Leone, sitting in The Hague. The president has appointed a Nobel laureate, Leymah Gbowee, to chief a new Reconciliation Commission. The government has opened the first of regional justice and security hubs, which combine the functions of the police, immigration, court and correction services.

Mrs Johnson Sirleaf was inaugurated for a second term as president on January 16th. The defeated presidential ticket of the CDC, Winston Tubman and George Weah, were both in attendance, having called off plans to disrupt the event following last-minute talks with the president. Neither was given a position in the new cabinet. UP candidates won the elections for the posts of speaker of the Home of Representatives and president pro tempore of the Senate, making it easier for the government to pass legislation.

Economic policy

As part of wider plans to increase electricity generating capacity, work will start on the US$50m rehabilitation of the Mount Coffee hydropower plant in July.

In her annual national of the country address at the end of January, the president set out a plan for the first 150 days in office, including ambitious targets in the areas of infrastructure and public service provision, particularly housing. The president as well announced plans to merge the Ministry of Planning and Economic Affairs (MPEA) with the Ministry of Finance and to appoint the former planning minister, Amara Konneh, as chief of the new super-ministry.

The domestic economy

A special joint committee has called for a thorough review of the ten existing production-sharing contracts (PSCs) to ensure their compliance with the New Petroleum Law of Liberia 2002. It has as well called for a review of the act that created the National Oil Company of Liberia (NOCAL) in 2000, and the suspension of amount ongoing negotiations on the country's offshore blocks pending the results of these reviews. An Indian mining company, Sesa Goa, has committed to spending US$2.6bn to develop its mining interests under the Mineral Development Agreement for Western Cluster, an area with estimated iron ore deposits of over 1bn tonnes.

The government has signed a US$21m agreement with a Dutch company, Van Oord, for the dredging of Freeport, Liberia's major commercial port in Monrovia, inclunding the port at Greenville in the south-east of the country. The UN International Fund for Agricultural Improvment(IFAD) has offered Liberia a US$24.9m loan to support coffee and cocoa production.

Liberia has pushed through three major reforms in the past year, improving the general business environment. As a result, it moved up places, from 155 to 151, out of 183 nations in the World Bank's annual Doing Business rankings.

Foreign trade and payments

Investment and aid to Liberia is coming from increasingly diverse sources. China is now the major contributor of aid of the country's emerging development partners, reflecting the strengthening of emerging economies, in contrast with the slowdown in the EU and North America.

A gold mining firm, Hummingbird Resources, has announced that it expects reserves at its gold mine in Tuzon in eastern Liberia to be about 1m ounces, in addition to reserves of 1.8m ounces at its Dugbe pit. The UK company hopes that annual production will from now on reach about 200,000 ounces of gold.

A Japanese trading home, Mitsubishi Corporation, has taken a 10% share in a gas-exploration project operated by Anadarko (US), in Block LB-10. The well at Block LB-15 has been plugged and classified as a sub-commercial discovery.

Outlook for 2013-14

The president, Ellen Johnson Sirleaf, is expected to remain in power. She will introduce anti-corruption measures, but any action taken may serve to reprimand those who are out of favour, while others remain free of censure.
The government will focus on delivering on its pledges through job creation and better service provision. Slow progress will add to the perception of a gap between the rhetoric of the administration and its limited achievements.
The-mainly young-supporters of the opposition Congress for Democratic Change will be a potential source of insecurity. There is a large groundswell of young, unemployed men, particularly in the capital, Monrovia.
We forecast average annual real GDP growth of 7.4% in 2013-14, driven by higher agricultural output and investment in the extractive industries.
Liberia will run a large current-account deficit because of the heavy UN presence, which accounts for the majority of imports. Trade will increase as higher domestic demand and output offsets weak external demand.

Review

On May 21st the Press Union of Liberia ended a self-imposed 12-day blackout on coverage of the president. Media pluralism has improved greatly in Liberia, but there has been little progress in protecting journalists.
The president has dismissed the auditor-general, Robert Kilby, and the head of the General Services Agency, Pearine Parkinson, accusing them of malfeasance. The House of Representatives has endorsed her decision.
According to a survey conducted by Afrobarometer, 63% of people felt that the government was doing "fairly" or "very" badly in terms of fighting corruption in 2012, up from 53% recorded in the previous survey, in 2008.
Rodney Sieh, the publisher and managing director of a domestic newspaper, was jailed in August following a libel case. The case highlights the need to reform the out-of-date libel laws and weaknesses in the judicial system.
The president called the education system a "mess" after all 25,000 high school students taking exams to enter the state university failed. The university eventually lowered the pass grade.
The IMF approved the first review under the extended credit facility (ECF), on July 3rd, enabling the disbursement of US$11.1m. Reforms in public financial management remain slow and subject to periodic setbacks.