Liberia to Cut Spending, Widen Tax Base as Economy Slumps

  • Nation’s economy probably contracted in 2016, IMF says
  • Liberia struggling to transform economy after Ebola outbreak

Liberia’s President Ellen Johnson Sirleaf said the West African country will cut spending while widening its tax base in an economy that probably contracted in 2016.

Delivering her final annual message to lawmakers Monday in the capital, Monrovia, Johnson Sirleaf said foreign aid to the country is declining, a fall in commodity prices affected revenue collection and growing public debt could lead to significant spending cuts.

“Liberians must willingly and sincerely pay their just taxes at all times,” she said. “This is the only path to ensured growth and sustainable development.”

The government is struggling to transform Liberia’s economy after an outbreak of Ebola in 2014 lasted for more than a year. At its peak, the virus infected as many as 400 people a week and resulted in the deaths of more than 11,200 in the country and neighboring Sierra Leone and Guinea. At the same time, iron ore exports, Liberia’s largest source of foreign currency, fell by more than 60 percent while an oversupply of rubber cut earnings from the nation’s other major revenue earner.

The country is targeting average annual economy growth of about 6 percent for the seven years starting 2018, after averaging about 8 percent between 2006 and 2013. The economy probably contracted by 0.5 percent in 2016 while it will expand by 3.2 percent this year, the International Monetary Fund said in December.

Public debt is forecast to rise to 34 percent of gross domestic product this year, from 13 percent in 2014.

Liberia is scheduled to elect a new president in October to replace Johnson Sirleaf whose second term ends in January 2018.

    Before it's here, it's on the Bloomberg Terminal.