Liberia

Africa

PIB per Capita (€)
$749.2
Population (in 2021)
5.3 million

Evaluación

Riesgo País
D
Clima empresarial
D
Antes
D
Antes
D

suggestions

Resumen* (contenido solo disponible en inglés)

Strengths

  • Diverse natural resources: iron, gold, rubber, cocoa, palm oil, timber, diamonds, oil
  • Strong agricultural and forestry sector (36.5% of GDP)
  • Financial support from the international community, particularly the United States
  • Large expatriate remittances (5% of GDP in 2023)
  • Member of the Economic Community of West African States (ECOWAS)
  • Return to democracy, illustrated by the peaceful transition of presidential power in 2023
  • Flag of convenience (15% of world cargo capacity)

Weaknesses

  • Dependence on commodity prices
  • Poor electricity and transport infrastructure
  • Recent and fragile democracy, high level of corruption
  • High levels of poverty and unemployment, weak education and healthcare systems
  • Dependence on food imports, particularly rice
  • Recent Ebola epidemic, possible recurrence
  • Difficult business environment
  • Weak monetary policy due to high dollarization and small banking system
  • Use of Liberian-flagged vessels to serve countries under sanctions, such as Russia

Intercambios comerciales

Exportaciónde mercancías en % del total

Suiza
68%
Estados Unidos
15%
Europa
13%
Emiratos Árabes Unidos
2%
Singapur
1%

Importación de mercancías en % del total

Costa de Marfil 26 %
26%
India 16 %
16%
China 15 %
15%
Europa 8 %
8%
Estados Unidos 4 %
4%

Outlook

This section is a valuable tool for corporate financial officers and credit managers. It provides information on the payment and debt collection practices in use in the country.

A dynamic mining sector to drive growth

GDP growth is set to pick up again in 2024, thanks to the robustness of the mining sector. Mining production and revenues will increase, supported by gold and iron ore prices. ArcelorMittal Liberia intends to further increase its iron ore production. Its second phase of expansion will support the construction sector and encourage investment in infrastructure, particularly transport. The agreement signed between the government and the company in September 2021 provides for the upgrading of the railroad line connecting the mine, close to the Guinean border, to the port of Buchanan. In addition, the government is expected to continue investing in rural development, in particular by improving the road network. The economy will continue to rely on the agricultural and forestry sectors, on which around 60% of the working population depends. Crops are mainly subsistence and dependent on rainfall (palm oil, manioc, rice), but rubber, cocoa and timber are likely to remain among the country's main exports. Poor harvests in Asia, affected by the El Niño phenomenon, combined with export restrictions, will increase the cost of certain foodstuffs, such as rice, the country's second largest import. However, inflation will begin to recede under the effect of monetary tightening, with the Central Bank of Liberia raising its rate to 20% in July 2023, allowing consumption to gradually rebound.

Extensive external dependency

In 2023, despite "election" spending, the public deficit has fallen thanks to the fiscal consolidation carried out under the IMF program backed by an Extended Credit Facility, together with the reduction in the rice subsidy announced in December 2022. Nevertheless, it is set to rise slightly again in 2024, as spending growth outstrips revenue growth. The new president has promised to improve infrastructure and invest in agriculture, while fighting corruption. As a result, purchases of goods and services will rise to around 45% of expenditure, while the large wage bill will continue to weigh heavily on the budget (35%). However, the government will still see its revenues increase, thanks to the influx of mining royalties generated by the ArcelorMittal project and high prices. The deficit will be financed by multilateral concessional loans, notably from the World Bank, to finance projects. A financing agreement worth $96 million was signed with the IDA (International Development Association) in February 2023, for the construction of a two-stage solar power plant. However, the new government will have to finance its deficit without the help of the IMF facility, which expires in December 2023. The burden of public debt, mainly external (36.5% of GDP), is set to increase slightly, but its service will remain moderate due to its concessional nature.

The current account deficit has widened in 2023 and will continue to do so in 2024, due to large-scale spending on imports of food, fuel, equipment and services, largely induced by ArcelorMittal's expansion and the associated rail and port development. Imports will also be boosted by the gradual recovery in private demand and government investment. Exports will benefit from increased production and favorable prices for gold, rubber and iron ore, although they will not be able to reverse the trend. Our statistics do not take into account service credits recorded by Liberia due to its flag-of-convenience status. The country accounts for 15% of registered freight capacity, making it a world market leader thanks to its advantageous tax policy. The primary income deficit will increase with the repatriation of profits linked to increased iron ore production. The deficit will be financed by FDI (9.5% of GDP), mainly in the extractive sector, and by multilateral concessional loans.

The new president will govern without a parliamentary majority

In a very close two-round presidential election, Joseph Boakai succeeded ex-footballer George Weah with 50.64% of the vote in November 2023. He will govern without a majority in parliament, as following the October 2023 legislative elections, his party (Unity Party) holds just 3 seats in the Senate and 11 in the House of Representatives, against the 15 and 37 respectively required for a majority. Joseph Boakai, 79, elected for a 6-year term, was Liberia's vice-president from 2006 to 2018, before being defeated in the previous presidential election. He now takes the helm of a country marked by corruption and poverty affecting 34.5% of the population, which continues to be weakened by the Ebola and Covid-19 health crises. The country will therefore continue to depend on international aid (8% of GDP), particularly from the United States, with which it will maintain close relations. In 2023, Washington sanctioned several Liberian-registered ships for transporting Russian oil above the $60/barrel ceiling imposed by the G7 following the invasion of Ukraine.

Last updated: December 2023

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