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Home Business News Economy

Liberia’s Economy Grows 4.8% in 2024, Bolstered by Agriculture and Monetary Reforms

by Lennart Dodoo
December 16, 2024
in Economy
Reading Time: 4 mins read
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Liberia’s Economy Grows 4.8% in 2024, Bolstered by Agriculture and Monetary Reforms

Monrovia — Liberia’s economy expanded by 4.8% in 2024, driven by growth in agriculture, fisheries, and proactive monetary policies, the Central Bank of Liberia (CBL) announced. The Bank’s annual report highlighted progress in economic resilience and financial sector stability despite global challenges, positioning the country for sustained development.

The CBL credited the growth to robust activities in agriculture and fisheries, with increased production of domestic rice, rubber, and cassava playing a pivotal role. “The economy’s primary, secondary, and tertiary sectors exhibited mixed performances, but the overall trajectory supported the 4.8% growth target,” the report noted. The growth rate is a slight improvement from the 4.6% recorded in 2023.

Inflation was contained within single digits, dropping to 6.8% in the third quarter from 7.4% in the second quarter, thanks to effective monetary interventions. The CBL projects inflation will remain stable at 7.6% in the final quarter, with reduced prices in essential categories like transport, clothing, and education contributing to economic stability.

Monetary Reforms Strengthen Confidence

The CBL’s shift from an exchange rate-targeting framework to an interest rate-based monetary policy has enhanced liquidity management, stabilized the Liberian dollar, and bolstered public trust. The monetary policy rate was reduced from 20% in early 2024 to 17% by the year’s end, reflecting the Bank’s adaptability to evolving economic conditions.

“These measures reflect the CBL’s commitment to stabilizing the financial system and addressing inflationary pressures,” the report stated. Public confidence in the Liberian dollar has grown, with increasing use of the currency in business transactions, further demonstrating the impact of the Bank’s monetary strategy.

Support for Private Sector Growth

The private sector saw notable support, with credit rising to 11.0% of GDP in 2024. Targeted loans were directed to key sectors, including trade (28.6%), personal (16.6%), services (15.1%), and construction (6.8%). Through the Liberia Investment Finance and Trade (LIFT) initiative, supported by a $6 million World Bank Line of Credit, the CBL began disbursing affordable financing to micro, small, and medium enterprises (MSMEs) in October, aiming to spur job creation and economic activity.

Looking ahead, the CBL plans to align its policies with the government’s ARREST Agenda (2025–2029), prioritizing agricultural productivity, food security, and enhanced financial intermediation.

Banking Sector Resilience

The banking sector demonstrated resilience despite global and domestic challenges. Total deposits in the system surpassed L$200 billion, and post-tax profits reached L$7 billion by October 2024. Nine commercial banks, along with fintech and mobile money operators, continued to expand their services. New licenses for microfinance and remittance entities were issued, reflecting growing investor interest.

While the sector grappled with high non-performing loans, the CBL enforced compliance with the Financial Institutions Act of 1999 and maintained profitability across financial institutions. The Bank also strengthened regulatory oversight during the festive season to ensure liquidity and stability.

External Sector Sees Improvement

Amid geopolitical tensions, Liberia’s trade deficit narrowed from $134.3 million in the second quarter to $47.9 million by October. Net remittance inflows grew by 14.7%, and the Liberian dollar appreciated by 1.8% (end-period) during the same period. However, international reserves remain below the benchmark for import coverage, underscoring the need for continued progress.

“The CBL remains committed to rebuilding reserves to cover 3.5 months of imports in the medium term,” the report added.

Operational Reforms and Accountability

Internally, the CBL implemented cost-saving measures, including streamlining personnel and addressing 55% of recommendations from the General Auditing Commission’s Compliance Audit. To combat fraud, the Bank introduced transaction thresholds after uncovering a $961,777 incident involving three staff members. A full system audit is ongoing to strengthen internal controls.

The Bank also reported significant progress in currency reform, with $47.06 billion in new banknotes printed and 69% infused into circulation by November. Additionally, L$1.67 billion in coins were minted, with 28.5% issued.

Vision for the Future

The CBL’s five-year strategic plan (2025–2029) aims to build on the achievements of 2024 by focusing on digitization, decentralization, and de-dollarization to increase the use of the Liberian dollar. Proposed amendments to the Financial Institutions Act of 1999 seek to enhance the regulatory framework and establish a Deposit Insurance Scheme.

Outlook

Despite external risks, including global conflicts and weak commodity prices, Liberia’s economy is on a promising trajectory. “Liberia’s economy is showing resilience, with efforts to sustain growth and maintain inflation within single-digit limits,” the report concluded.

Tags: Central Bank of Liberiaeconomy
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Lennart Dodoo

Lennart Dodoo

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