Residents of Rivergee County want relevant authorities to address the rising inflation that is causing a massive spike in the prices of basic commodities on the local market in the country.
Howbeit, it is not known whether the country’s economic management team, made up of the Finance and Development Planning and Commerce Ministries, Liberia Revenue Authority (LRA), and Central Bank of Liberia (CBL), amongst others, will address the matter.
Until then, Rivergeans claim to be at a loss as to the causal factor of the high exchange rate between the Liberian Dollar and United States Dollar, thereby causing the soar in prices of basic commodities on the local market at the moment.
According to the report, a 25 kilogram bag of rice is sold at L$5, 000; 1 gallon of gasoline is L$1, 500; Scratch cards, whether Orange or Lonestar cost L$350; and the exchange rate of L$194 to US$1 has resulted in the increase in transportation fare from Rivergee to Maryland, despite the paved road.
However, the situation is not only unique to Rivergee or Liberia, but a global affair, as public service workers in both developed and developing countries go on the rampage, striking daily and demanding for pay raise, due to the high cost of living.
Inflation rate in the country increased to 9.43 percent in April from 6.10 percent in March of 2023, Central Bank of Liberia (CBL) sources have said.
Despite the above mentioned, Liberia and South Sudan are the least in the world in term of countries with low inflation rate.
Venezuela is leading the countries being hit by food inflation, with 466 percent, followed by Lebanon at 352 percent; Argentina, at 115 percent; Zimbabwe, 102 percent; and Iran, 71.5 percent, making up the top five.
Liberia (2.6 percent), Niger (1.1 percent), and South Sudan (5.60 percent), rank the least nations globally, with lower rates of inflation. In West Africa, Ghana (53.6 percent) and Sierra Leone (38.48 percent) top the inflation rate at the moment.
Notwithstanding, Liberia’s Gross Domestic Product (GDP) is projected to grow by 4.3 percent in 2023 and 4.8 percent in 2024, driven by the expansion in mining, services, and agriculture.
Inflation is projected to edge to 8.2 percent due to election related speculation in 2023, but will ease to 6.5 percent in 2024, due to a stable exchange rate and calm after the election.
The country’s fiscal deficit is projected to be 4.1 percent of GDP in 2023 and to stabilize at 4.0 percent in 2024, on account of fiscal consolidation.
The current account deficit is projected to be 16.7 percent of GDP in 2023 and 16.2 percent in 2024, due to higher exports. Public debt is projected to rise to 55.3 percent of GDP in 2023 and 56.9 percent in 2024.
The exchange rate and financial market are projected to remain stable. Headwinds include the prolongment of Russia’s invasion of Ukraine and a deterioration of terms of trade on gold and rubber. Possible mitigation measures include stepping up support to the vulnerable.
Liberia’s Green Growth Index stagnated in the 49 percent to 53 percent range during 2010 to 21. The country is highly vulnerable to the adverse effects of climate change, with a vulnerability score of 0.606.
This requires huge financial needs. The government needs an estimated US$490.6 million to achieve its climate and green growth ambitions through 2025 and faces a gap of US$460 million based on its Nationally Determined Contribution, with zero financing yet from the private sector.
Some of the main reasons are difficulty accessing financing to pay for adaptation actions, lack of financial incentives to motivate private actors to invest in new products or markets that support adaptation, and lack of de-risking opportunities in investments particularly large-scale infrastructure investments that support green growth.
Liberia has great potential as a carbon sink for the world, given its huge forest reserves. In 2018, natural capital was worth US$24.7 billion or US$5,134 per capita, including forest capital per capita of US$1,035.
Natural capital could therefore serve as a potential source of climate action and green growth financing with private sector involvement.
The GDP growth fell to an estimated 4.0 percent in 2022 from 5.0 percent in 2021, driven largely by growth in mining and construction on the supply side and increased infrastructure spending on the demand side.
Growth was slower due to the impact of Russia’s invasion of Ukraine, including higher commodity prices and tight fiscal space. Inflation eased from 7.9 percent in 2021 to 7.4 percent in 2022 on a steady decline in domestic food prices.
The fiscal deficit widened to an estimated 4.8 percent of GDP in 2022 from 2.4 percent in 2021 due to higher spending on infrastructure and wages.
As of October 2022, public debt had increased to 54.6 percent of GDP from 53.2 percent in 2021, reflecting increased borrowing.
The current account deficit narrowed to 17.4 percent of GDP in 2022 from 17.7 percent in 2021 thanks to a smaller trade deficit, as export receipts increased, driven by gold exports.
International reserves stood at US$691 million in December 2022 (4 months of import cover), down from $700 million (4.2 months) in 2021.
The exchange rate appreciated 4.6 percent against the United States Dollar, from 159.34 Liberian Dollars per United States Dollar in December 2021 to 152.38 in December 2022, due to higher net remittances and export receipts.
The financial sector remained sound, with a capital adequacy ratio of 34.03 percent in September 2022 compared with the 10 percent target, although the nonperforming loans ratio remained high, at 23.43 percent, compared with the 10 percent target.
The share of people living below the international poverty line (US$2.15 a day) remains high, at 35.4 percent. Unemployment was an estimated 4.1 percent in 2021.
