Home Governance Liberia Losses Economic Freedom …Falls Deeper In “Repressed Category”…As World Bank Releases ‘Stinging’ Report

Liberia Losses Economic Freedom …Falls Deeper In “Repressed Category”…As World Bank Releases ‘Stinging’ Report

by newsmanager

By: E. Geedahgar Garsuah, Sr.

MONROVIA: The Government of Liberia (GoL), has recorded what appears to be a bleak performance score of 25.1% as reflected in the World Bank 2022 Economic Freedom Index report, styled: “Government Integrity.”

Liberia’s overall rating as captured in the report stands at 47.9%, which places African’s oldest nation in the spot of 39th among 47 Sub-Saharan African countries.
Liberia’s score is also ranked as being far below the regional and world averages of World Bank Economic Freedom directory.
The World Bank 2022 Economic Freedom Report also mentioned that “Judicial Effectiveness” accounts for the second lowest mark of 23.4% followed by Financial Freedom at 20.0%.

The low score of judicial effectiveness of the country’s justice system as pointed out in the report immensely contributed to Liberia’s somewhat dismal performance.

According to the report, Liberia’s population currently stands at 5.million with a Gross Domestic Product (GDP) of 7.3billion while the country’s growth rate is at -3.0% with a -7% 5-year compound annual growth.

The index report noted that Liberia’s current inflation rate is 17.0% and that Foreign Direct Investment (FDI) inflow is at US$87.0 million.
Portion of the report states: “Liberia’s economic freedom score is 47.9, making its economy the 159th freest in the 2022 Index. Liberia is ranked 39th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages”.
The report continues: “Liberia’s economy contracted in 2019 and 2020 before are covering some growth in 2021. Economic freedom has lagged over the past five years. With score increases for government spending and fiscal health outweighed by declines in judicial effectiveness and business freedom, Liberia has registered a 1.2-point overall loss of economic freedom since 2017 and has fallen deeper in the “Repressed” category. The economy is not heavily burdened by taxation, but labor freedom and financial freedom are weak”.
The yearly report focuses on twelve thematic spots which include; Tax Burden, Government Spending, Fiscal Health, Property Rights, Judicial Effectiveness, Government Integrity.

Others are Business Freedom, Labor Freedom, Monetary Freedom, Trade Freedom, Investment Freedom and Financial Freedom.
The World Bank pointed out that Liberia’s overall tax burden equals 20.2 percent of the country’s total domestic income. The report also disclosed that government expenditure currently amounts to 56.4 percent of the total output Gross Domestic Product (GDP) over the past three years, while budget deficits have averaged 6.5 percent of GDP as Public Liability is equivalent to 61.8 percent of GDP.
The report noted that expensive and unreliable electricity, poor roads and Internet outside of urban areas, and contradictory government decision-making hold back business freedom. Labor rights violations and child labor abuses are common. There are 20 large and subsidized state-owned enterprises, and the government has no plan to privatize any of them.
Property Rights-32.2, Judicial Effectiveness-23.4, Government Integrity-25.1, Trade Freedom-60.8, Investment Freedom-55.0 Financial Freedom-20.0, Tax Burden-86.1 Government Spending-68.0 Fiscal Health-64, Business Freedom-34.8, Labor Freedom-43.2, and Monetary Freedom-61.7
The report added that Liberia has a single preferential trade agreement in force. The simple average tariff rate is 12.1 percent, and three nontariff measures are in effect. Accordingly, the report noted that some non-tariff barriers have been dismantled, but a lack of transparency persists while foreign investment in several sectors is restricted. The report concluded that Liberia’s overall financial system is underdeveloped, and much of the population remains outside of the formal banking sector.
The World Bank Economic Freedom report noted that while Liberian law protects property rights and interests, enforcement mechanisms remained fragile. The report added that the process for enforcement of contracts is lengthy while less than 20 percent of land is registered.
It highlighted that conflicting land ownership records are common in Liberia as judiciary system is impeded by corruption, backlogs, and funding shortfalls to mitigate these conflicts. “The country suffers from both public-sector and private-sector corruption”, the reported pointed out.
The 2022 World Bank Economic Freedom index pointed out that the impact of COVID-19 as of December 1, 2021, 287 deaths had been attributed to the pandemic in Liberia, and the government’s response to the crisis ranked 99th among the countries included in this Index in terms of its stringency. The economy contracted by 3.0 percent in 2020.

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