- Economists urge main cuts to authorities to bolster public providers and shield jobs as US – Liberia’s largest bilateral donor – appears set to withdraw most funding
- All sectors of financial system brace for attainable cuts to the World Bank, the biggest general donor – as economists warn of attainable political instability
By Anthony Stephens and Prue Clarke with New Narratives
Economists have warned anticipated cuts to United States help funding will harm Liberia’s progress on improvement and threaten political instability. They have urged the administration of President Joseph Boakai to chop salaries and allowances of officers amongst adjustments they are saying might be wanted to resist the blow to jobs and the general financial system.
One of US President Donald Trump’s first acts when he resumed workplace in January was to pause greater than $US40bn in US Agency for International Development’s annual international help funding, in addition to funding from the State Department, for 90 days. He appointed Elon
USAID alone donated $US80 million to Liberian tasks in 2024 largely in well being, training and agriculture, in keeping with the Liberia Project Dashboard. Other US companies contributed extra. Liberia is without doubt one of the 10 international locations most reliant on USAID in keeping with the Center for Global Development. Overall improvement help to Liberia equals 15 % of the financial system or $110 per particular person every year. USAID funding is about 25 % of that or 4 % of the general financial system.
Critics level out essentially the most USAID by no means leaves the US, the place it pays for overhead, operational prices and consultants with main help gamers together with for-profits comparable to DAI and Chemonics and nonprofits together with RTI International and John Hopkins University. But with an annual authorities finances of simply $US800m – almost ten percent of which stays with the Legislature – and rampant, properly documented corruption, Liberia’s authorities has been unable to supply most public providers by itself.
Economists interviewed by New Narratives/Front Page Africa mentioned the USAID cuts will seemingly imply discount in providers, take tens of millions from the native financial system and deal a blow to the federal government’s bold $US8 billion six-year improvement plan generally known as the ARREST Agenda for Inclusive Development. Government had anticipated 70 percent of ARREST’s finances to come back from improvement companions.
Liberian well being and NGO employees throughout the nation have already been laid off pending the result of the 90 day suspension. Workers mentioned clinics will quickly run out of medicines and vaccines, faculty feeding applications might be shut down, youngsters on scholarships have been despatched dwelling from boarding colleges. They mentioned extra impacts might be felt as cuts go on.
This clearly goes to have an effect on Liberia in lots of sectors, together with well being, training and agriculture,” mentioned Mr. Amara Konneh, Gbarpolu senator and Minister of Finance within the administration of President Ellen Johnson Sirleaf. “We gained’t know but the extent of the impact on us till we will evaluate the information.
There are a spread of authorized challenges to Mr. Musk’s actions and there’s a query mark over how a lot Liberian help could finally be declared important and be allowed to proceed. But repeated opinion polling has proven international help doesn’t have a lot assist amongst US voters and consultants assume a lot of the cuts will stick. The Trump administration has committed to proceed funding one other main multilateral funder in Liberia, the Global Fund, in the meanwhile.
US cuts come because the Swedish authorities, Liberia’s second greatest bilateral donor, decreased its 2025 dedication to Liberia by almost 20 % from roughly $US29 million in every year 2023 and 2024, in keeping with Openaid.se and the December letter of appropriation despatched by the Swedish authorities to the Swedish International Development Agency. That ultimate 2025 funding could change in keeping with Ms. Kerstin Jonsson Cissé, the embassy’s head of improvement, who mentioned Sweden stays dedicated to “supporting sustainable development” in Liberia however cited Sweden’s ongoing dedication to Ukraine’s protection in opposition to Russia’s invasion as a significant component within the authorities’s considering. But greater than 25 % of Sweden’s funding goes on to Liberian companions so it’s adjustments might be felt.
President Trump’s obvious intention to withdraw US assist from Ukraine, signaled this week, will seemingly power extra European international locations to divert funds to Ukraine’s protection. At the identical time right-wing political events are gaining extra assist in European international locations. Like Mr. Trump they’re successful votes with nationalist rhetoric that features criticism of international help.
“Most countries will review their relationship with third world countries,” warned Dr. Lester Tenny, a former dean of the Business College on the University of Liberia. “Their assistance will be based on strategic interest.”
Former presidential candidate Mr. Alexander Cummings, mentioned the cuts have been a get up name to Liberia’s management that it was time to chop its dependence on help and construct a strong financial system, primarily based on the rule of legislation, that pulls international buyers. Mr. Cummings lived within the US for a number of years as a prime government with US company big, the Coca Cola firm.
In the minds of Americans-the greatest financial system within the world-Liberia is positioned as a beggar. We want to alter that notion.
Alexander Cummings, opposition political chief in a latest assertion
Economists Fear Potential US Cuts to World Bank Funding
A much bigger concern now, mentioned consultants, could also be the way forward for the World Bank. The Bank’s International Development Association, which supplies grants to the world’s poorest international locations, is by far the biggest donor to Liberia. It gave $US190m in funding in 2024. IDA funds a spread of tasks together with a $US90 million photo voltaic challenge launched in October to supply entry to electrical energy to 1.25 million people by 2030.
Estimates are that the US supplies greater than half IDA’s funding. Finance ministers world wide are rising more and more worried that the Trump administration will finish funding to the World Bank. Mr. Trump has not talked about the Bank however Project 2025, a blueprint written by folks now on employees with the Trump administration and which forecast lots of the adjustments the administration is already making, advisable US withdrawal.
That might ship a devastating blow warned consultants. Senator Konneh, who beforehand served on the employees of the World Bank, mentioned a lower to electrical energy tasks would hit laborious.
“This means that we are not going to have the opportunity to expand our ability to increase our energy production, so that could be severe for the economy,” he mentioned. “You’re talking about possible transformative economic actions there. So this is really concerning. Of course, the jobs that will be created as a result of that project may not happen.”
Dr. Tenny, a former advisor with the World Bank, added concern about President Trump’s plans for mass deportations of individuals within the US illegally. Some Liberians have already been detained for deportation. Remittances -payments from Liberians abroad to household at dwelling – equaled the scale of the Liberian authorities finances in 2023 and almost 20 % of the Liberian financial system.
He warned World Bank cuts, on prime of US cuts and a lower in remittances, might have a “ripple effect” on the financial system with “mass dismissals of NGO staff” and, doubtlessly, “social instability.”
“Purchasing power will reduce as a result of reduction in disposable income,” mentioned Dr. Tenney. “Imports will reduce. Taxes will reduce because taxes are contingent on imports. Also, taxes are contingent on disposable income. And then we’ll be caught up in what we call in economics, ‘a liquidity trap.’”
Dr. Tenny suggested the federal government to urgently overhaul tax legal guidelines. “Look at those impediments that reduce your revenue inflow – your tariff law, your tax law,” and “adjust it.”
Liberian Government Scrambles to Assess the Impact
For now the Liberian authorities is racing to grasp how the present cuts will affect the financial system to allow them to devise a response. Mr. Augustine Ngafuan, Minister of Finance and Development Planning, told Voice of America’s Day Break Africa program on Wednesday, that an evaluation had been offered to President Boakai and might be submitted to the Legislature. President Boakai had already ordered a spread of austerity measures for his cupboard, overlaying salaries, advantages, operational prices, and travels amongst others.
The cuts have ignited calls for presidency to reign in spending.
“I think what we need to do here in the Senate and hopefully in collaboration with the House of Representatives, is to review the size of our government,” mentioned Senator Konneh, who chairs the senate’s Public Accounts and Audits Committee, in a Front Page Africa/New Narratives interview. “See how perhaps we can streamline some of the institutions where we see some duplication to cut costs and then direct some of the savings to education and health. Invest directly in the people.”
An apparent lower in keeping with one other former finance minister, is salaries and allowances of public officers, that are among the many highest on the planet and gas a patronage system that consultants mentioned undermines financial development.
Salaries should “align with our income. We can’t spend more than we have. We must cut our coat according to our size,” mentioned Mr. David Fahart, finance minister below the administration of President Samuel Doe.
Senator Konneh refused to endorse wage cuts for now, however agreed, “It’s an important subject, but also a politically sensitive subject which will require a thorough review.”
Food Security a Priority
One of essentially the most rapid issues mentioned consultants, is meals safety. Liberia imports no less than half of its staple meals, rice, which give half of Liberians’ energy. It’s expensive and leaves the nation on the mercy of worldwide exporters’ costs. But growing home provide might be troublesome, mentioned Senator Konneh, with out main enhancements in electrical energy and roads, two funding priorities of the US.
“Unless we can create light manufacturing operations in our country to produce what we consume to meet the demand of our economy, it’s going to be difficult for us to make progress,” mentioned Senator Konneh. “But to create light manufacturing, you need stable electricity, and this is where the frustration comes in with the lousy performance of LEC, because we’ve invested over a billion dollars now rebuilding our energy sector since the end of the war. And dry season after dry season, we see instability in our electricity production and distribution, which affects more businesses, which limits the capacity to expand the economy.”
He shares Dr. Tenny’s issues about political instability.
“As a result, we’re not going to create the jobs to absorb the young people into the economy, which can be very risky.”
For now Liberians throughout the financial system are compelled to attend, like folks in international locations the world over, to see what the brand new Trump administration will do subsequent.
This story is a collaboration with New Narratives as a part of the “Investigating Liberia” challenge. Funding was supplied by the Swedish embassy in Liberia. The donor had no say within the story’s content material.