imf /dwPublic Policy 

LPP Differs With ‘IMF Rosy Economic Performance Under Weah’ -Wants To Know Liberia’s Success Story Under IMF Since 1962

 

For Immediate Release

 

The Liberia People’s Party(LPP) has said that a staff (unidentified) at the Washington, D.C. Offices of the International Monetary Fund (IMF) disagreed with allegations made by the party that the IMF is wittingly and unwittingly aiding and abetting President George Weah Administration to steal government money. The staff, according to the party, reacting to the story published by The Analyst newspaper of Liberia, advised LPP to focus on corruption and forget about Liberia’s Gross National Domestic Products (GDP). He claimed that the increase from USD $1.4 billion in 2019 (See Central Bank of Liberia {CBL} 2019 Report) to USD $3.0 billion in 2020 (See CBL 2020 Report) was correct. Moreover, he added, experts had underreported Liberia’s economic activities, and the USD $3.0 billion reported in 2020 was underreported.

The party noted that interestingly, it will be good to know why the adjustment of 114% (i.e., $1.6 billion/$1.4 billion-{$3.0B minus $1.4B}) affected nominal GDP, but it did not affect real GDP in any of the years; 2016 through 2020. (See page # 14 of the 2018 CBL Report and page # 25 of the IMF Report No. 20/386). Moreover, LPP hopes that Liberian Officials will explain how nominal GDP increased by 114% since IMF claimed that inflation was declining, or prices were falling.

To provide a broader understanding of the issue raised in its assertion, LPP provided an insight to define Gross Domestic Product and stated “Note, GDP is one of the most important metrics for evaluating the economic activity, stability, and growth of the economy, according to (www.Investopedia.com).  And it is usually reviewed from two angles: nominal and real, says Investopedia. The main difference is Nominal, which is referred to as the “Current Dollar GDP,” uses current prices in its measure, while Real, which is referred to as “Constant Dollar GDP,” uses base-year prices in its measure, Investopedia added”.

In the press release, LPP claimed that experts of the IMF had deliberately and deceptively agreed with President Weah on some issues, which include that  IMF stated on page # 3 of its Report No. 21/9 issued on January 2021 that President Weah government was prudently managing the affairs of the government because it was not using money from the Central Bank of Liberia to finance government programs. However, the government did deficit financing when it borrowed money by selling treasury bills and treasury bonds to commercial banks. “…Page # 47 of the Central Bank of Liberia 2020 Annual Report stated that “… the total unredeemed T-Bills and T-Bonds for the review period stood at L$7.53 billion and US$65.93 million…  in various tenors (2-weeks, 1-month, 3-months, 6-months, and 12-months)”, that the government also borrowed $40M from the Liberia Social Security and Welfare Corporation (NASSCORP), and also failed to pay interest on the $40M loan.

Further, it illegally got $6M dividends from pensioners’ retirement corporation, and it has not paid rent for the past two years for the building the Liberia Revenue Authority is using, etc. and that contrary to the view of the IMF that Liberia has improved its management of the economy, the State Department of the United States of America in June 2021 stated that Liberia did not follow the 2009 PFM Law. In its report, it stated that during the review period, the government did not make its budget documents, including the executive budget proposal, enacted budget, and end of year report, publicly available in a reasonable period of time.”

“IMF, in re-stating the government’s claim that President Weah’s economic Team has reduced fuel prices, stated that the government has reduced prices, including fuel prices. Again, the IMF is incorrect. The price of fuel is now L$640 per gallon in 2021, while it was around L$500 in 2020. The prices of fuel in Liberia might be higher than the prices of fuel in other countries, but the prices of fuel in Liberia are not declining.

yanqui zaza
J. Yanqui Zaza, Chair LPP

“How come experts of the IMF did not question the different Nominal Gross Domestic Products numbers (USD $1.4 billion reported in 2019 and USD $3.06 billion reported in 2020) for the same year-ended 2020? The IMF and President Weah want to persuade stakeholders to borrow money. The higher denominator will provide a convincing number. Let us look at an example. If you divide Liberia’s debt of USD $1.5 billion by USD $1.4 billion, the ratio is above 107%. On the other hand, if you use USD $3.08 billion as the denominator and USD $1.5 billion as the numerator, the ratio is 36%, which indicates that Liberia can borrow more money”, the party said.

The party further stated that besides manipulating gross domestic to get money, IMF and corrupt government officials occasionally use other methods to misinform stakeholders and listed five reasons which include that the IMF and former President Sirleaf did not inform stakeholders that Liberia owed USD 260m to the Central Bank of Liberia in 2016 until May 2019 when the debt increased to USD 355M, that the IMF and former President Sirleaf encouraged stakeholders to eliminate the 10% tax on exported goods on December 5, 2015, which is forcing Liberia to borrow money to make up for the shortfall in revenue and that the IMF and former President Sirleaf awarded 66 fraudulent concessionary agreements, which is compelling Liberia to borrow money in order to make up the revenue shortfall.

Providing further the party said former President Sirleaf, with the consent of the country’s economic adviser, IMF, printed new banknotes with the promise to replace old banknotes and that her administration did not fail to get the old banknotes from circulation, but her administration also encouraged stakeholders to borrow additional USD139M loan between September 2016 and June 2017, according to page #2 of 2018 IMF

“LPP recommends that experts of the IMF should review these questions. What are IMF success stories in Liberia since the country joined this institution on March 28, 1962?  Why has Liberia’s debt ballooned to USD $1.5 billion after good-loving people canceled Liberia’s USD $4.5 billion debt in 2010? Do experts of the IMF have any role in the application of donor funds by international governmental agencies?

“In addition, LPP recommends that experts of the IMF-Liberia should revisit IMF risk policy advising personnel: “(1) that risk policies inherent in day-to-day operations are mitigated by establishing a system of internal controls. 2) that risk management function is responsible for developing and maintaining the risk management framework, fostering the development tools, and reporting on the General Department’s overall risk profile highlighting areas where additional mitigation efforts are needed an internal audit function is responsible for providing an independent assessment of the effectiveness of governance and internal control procedures,” the party said.

 

Main Photo: IMF Building, Reuters

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