Juggling Economic Recovery & Midterms – Dropping the Ball on Either Will Weaken Liberia's President Further Still
History is at risk of repeating itself as Liberia’s budget is late yet again, the second time in a row. The delay doesn’t just point to institutional weaknesses but has ramifications for ensuring the midterms are on track and moreover, that the Covid-19 recovery plan begins to heal an already-beleaguered economy. The more time that is lost in addressing bread and butter issues, the more opportunities that are lost for President George Weah’s Coalition for Democratic Change (CDC) to suture the widening gap in confidence that the opposition is already beginning to fill.
Late start
Liberia’s parliament is reviewing the draft 2020/2021 budget that the Finance Minister Samuel Tweah presented in July. The appropriation process is behind schedule like it was in 2019, when President George Weah submitted the draft budget two months late. This year’s delay is even more significant because it is hampering plans for midterm elections that have now been postponed from October to December. Meanwhile, the government has not yet proposed an economic recovery plan to deal with COVID-19.
Waiting to Exhale
Liberia entered a state of emergency in April after its first COVID-19 death occurred. Most of the economy shut down in four counties including Montserrado County, where the capital Monrovia is located, and a lockdown was extended to the 11 remaining counties the following month. Business resumed in June and the state of emergency ended in July, but the disruption has complicated government efforts to repair the already-strained economy.
In 2019, inflation was 27% and GDP shrank 2% as output in manufacturing and services fell for the second consecutive year. The head of the Liberia Anti-Corruption Commission resigned in November over unpaid salaries while the government tried to restructure the wage bill and create more fiscal space. Meanwhile, monetary policy was out of control. Public confidence in the banking system was low following a Central Bank of Liberia scandal over missing currency notes, and a subsequent exercise to mop up the equivalent of USD25 million in circulation ended in more controversy. By year end, about 97% of Liberian dollars was outside the banking system.
Prioritising Politicking
Now, politicians in Monrovia must juggle preparing for the upcoming polls and developing a path to economic growth. World Bank projects inflation will be about 20% and GDP growth -2.6% this year. The feeling on the ground is that there is more activity related to the former. The stakes are high. Popular backing for the ruling Coalition for Democratic Change (CDC) has waned since Weah took charge in 2017. Last year, CDC lost a national senate seat for the most populous county Montserrado, which is Weah’s/CDC’s main stronghold. CDC sees the threat ahead of next general polls given the popular opposition protests last year and a newly formed opposition coalition, the Collaborating Political Parties (CPP).
Outlook
Poll campaigns will slow down government’s economic response in the short term, and this will protract the recovery process. Still, it is encouraging that the government had initiated major policy shifts before COVID-19, including measures to reconfigure the wage bill and curb monetary financing. The medium-term outlook depends on how quickly authorities can consolidate those shifts and address institutional weakness, especially at the central bank where Weah appointed a new executive governor Jolue Tarlue in November to rebuild public confidence in the financial system and put monetary policy back on track – the lingering shortage of Liberian banknotes being a starting point.
Ongoing divisions in the ruling CDC threaten its success in this year’s polls and beyond. Meanwhile, CPP appears to have emerged as a viable opposition coalition, and the victory of its candidate, Senator Abraham Dillon, in the 2019 Montserrado by-election has sent a strong message about the CPP’s capacity to make further inroads into CDC strongholds. Both coalitions are competing for momentum this December, and the side that emerges stronger will have laid the groundwork for general polls in 2023.
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