Report No. 2662-LBR

Liberia on mmCurrent Economic Situationand ProspectsDecember 28, 1979

West Africa

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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FOR OFFICIAL USE ONLY

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ................................... - v

I. CURRENT ECONOMIC SITUATION ................................. 1

A. Economic Performance 1974-78 .......................... 1B. Investment and Savings ................................ 5C. Public Finance ........................................ 8D. Balance of Payments ................................... 14E. External Debt ......................................... 17F. Prices and Monetary Development ....................... 20

II. DEVELOPMENT PLANNING AND FUTURE PROSPECTS ...... ............. 23

A. First Development Plan ................................ 23B. Planning Process ...................................... 27C. Second Development Plan ............................... 29D. Future Prospects ...................................... 35

III. SELECTED DEVELOPMENT ISSUES ................................ 41

A. Public Administration ................................. 41B. Manpower and Employment ............................... 45C. Income Distribution ................................... 49D. Health, Population and Nutrition ...................... 52E. Rice Policy ........................................... 56

Annex I. Review of Major Sectors

Annex II. Rural Development Administration

Statistical Appendix

This report is written by Mr. Ishrat Husain based on the findings of anEconomic Mission consisting of Ms. Aynur Uluatam and Mr. Ishrat Husainwhich visited Liberia in May 1979.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. IU contents may not otherwise be disclosed without World Bank authorization.

Paae 1 of 2

volI!C.IIC INDICVTO!S - LIBERIA

GROSS NATI0ONAL PRODUC. IN 1978 ANNUAL RATE OF nR0oTm (% 1977 C0NSTANT PRICES)

US$ M2n. _ 1974-77 1978

GNP at Market Prices 807.8 100.0 2.3 6.7

Gross Domestic Investment 253.0 31.3 13.7 6.8

Gross National Saving 101.7 12.6 39 -9.2Current Account Balance -100.1 12.4

Exports of Goods, NFS 500.1 61.9 -6.6 8.0

Imports of Goods, NFS 544.6 67.4 4.3 9.9

OUTTPUT, LAB3R F!ORCE AND.ROXD7171ITY Dn 1978

Value Added Labor For1c / V. A. PA- Wt;rkar

USS O.n. US $ i

Agriculture 283.7 35.0 482.2 70.5 588.3 49.6

Industry 2/ 168.8 20.8 30.8 4.5 5480.5 462.8

Services 358.5 44.2 73.8 10.8 4857.7 410.2

Unallocated 92.2 14.2

Total/Average 810.0 100.0 TM 100.0 1184.2 100.0

GOV=2UrNDO FflANCGeneral Government Central Government

: Mln.) fi of C3P rUSS Mln.) 'r of$ ODP

197 12 196 -7 1_78-79 197T 174_77'-

Current Receipts .. .. .. 190.8 23.5 22.5

Carrent Expenditure .. .. 154.0 19.0 14.4

Current Surplus .. .. 36.8 4.5 8.Capital Expenditures .. .. .. 159.5 19.7 14.4

External Assistance (net) .. .. 60.4 9.4 4.0

W5NEY, CRDIT and PRICES 174 197' 1976 1977 1978

ThilJJ.on US$ o7ltstanding and period)

Money and Quasi MoneyBank credit to Public Sector 4.0 c.2 0.9 4.7 9.4

Bank Credit to Private Sector 72.7 76.8 83.1 109.2 132.1

(Percentages or Index Numbers)

Money and Quasi Money as % of GDPGeneral Price Index (1963 - 100) 3/

Armual percentage changes injGeneral Price Index 19.5 13.6 6.o 5.8 8.6

Bank credit to Public Sector . _45.0 -59.1 422.2 100.0

Bank credit to Private Sector .. 5.6 8.2 31.4 20.9

NOTE: All corTversions to dollars in this table are at the average exchange rate prevailing during the period

covered.

1/ Total labor force; unemployed are allocated to sector of their normal occupetion. "Unallocated" consists

mainly of unemployed wcrkers seeking their first job._! Over 80, is accounted for by iron ore.3/ Consumer Price Index (Sepe, Nov. 1964-100)

not available.tot applicable

PaKe 2 of 2

TRADE PAXMZNTS AND CAPITAL FW0RS

MERCHANDISE EXPORTS (AVERAGE 1976-78)BALANCE OF PAYMENTS US $ Mln %

1976 1977 1978(Millions US$)

Iron ore 292.2 62.8Exports of Goods, NFS 467.1 459.0 500.1 Rubber 60.5 13.0Imports of Goods, NFS -446.2 -521.9 -544.6 Diamonds 22.7 4.9Resource Gap (deficit=-) 20.9 -62.9 -44.5 Lugs 6r Lumber 29.5 6.3Coffee 25.0 5.3Interest Payments (net) -4.7 -6.7 -10.1 Palm Products 3.7 0.8Workers' Remittances -25.0 -27.5 -32.5 Cocoa 8.2 1.8Other Factor Payments (net) -86.0 -80.0 -79.0 All other commodities 13.1 2.8Net Transfers 34.9 29.4 32.2 Total 464.9 100.0Balance on Current Account -59.8 -148.8 -134.7

Direct Foreign Investment 91.4 51.3 13.3 EXENAL DEBT, DECE'2ER 31.1978Net MLT Borrowing 17.5 37.6 63.3 US $ MlnDisbursements 32.6 57.5 76.8

Abortization -15.1 -19.9 -13.5 Public Debt, incl. guaranteed 341.5Subtotal 108.9 88.9 76.6 Non-Guaranteed Private DebtOther Items n.e.i. -11.1 51.1 30.0 Total outstanding & Disburse; 341.5Increase in Re_erves (+) -38.0 8.8 28.1 DE1 SERVICE RATIO for

Gross Reserves (end year)Net Reserves (end year).. .

Public Debt. incl. guaranteed 6.1Fuel and Related Materials 59.5 68.8 84.6 Non-Guaranteed Private DebtImports Total outstanding & Disbursedof which: Petroleum

Exportsof which: Petroleum

.,RD/IDA TZNDING. (DECEIJ3ER 31, l978) CMILLI0N US3):

IBRD IDARATE OF ZX1{ANGE

Outstanding & Disbursed 43.8 13.1Through - 197L Since - 1971 Undisbursed 55.9 22.8US i 1.00 ' 1.00 UT $ 1.o00 1 00 Outstanding incl. Undisbursed 35.91.00 US $ 1.00 US $

1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. August 1979

not available

not applicable

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SUMMARY AND CONCLUSIONS

1. For a relatively small nation Liberia is very well endowed withnatural resources. Economic growth rates in the sixties and until the earlyseventies have been moderately high. However, the recent years have wit-nessed a weakening of Liberia's economic and financial position. Economicgrowth has almost stagnated with per capita incomes actually declining overthe last five years. Real GDP has grown at an annual rate of 0.7 percentbetween 1974-78 compared to 4.2 percent between 1970-74. The decline in ironore mining and rubber exports in the wake of recession in the industrializedcountries has had profound effect on GDP, balance of trade, public financesand the external debt situation of Liberia. A small country with heavydependence on primary products sold in the international markets is particu-larly vulnerable to external factors; at the same time the Liberian difficul-ties were further compounded by heavy public outlays on buildings and otherfacilities constructed in connection with the 1979 OAU conference at theexpense of investment in other production activities. Despite these seriousstrains the Liberian economy showed some resilience in the agriculturesector. While real GDP growth was sluggish the agriculture sector (includingthe subsistence economy) continued to grow at an annual rate of 4.6 percent.It could not however compensate for the losses in mining once again under-scoring the need for a broader economic base. The experience gained fromBank-assisted projects in Lofa and Bong tend to show that diversification isfeasible provided adequate financial and manpower resources are channelled,appropriate institutions are set up and proper incentives are provided. Anincrease in investment in the non-enclave production sector would help tomoderate the ill effects of heavy dependence on enclave structure.

2. Real consumption per capita increased by 8 percent over the 1974level by 1978. This took place mainly due to large increases in publicconsumption which almost doubled the last two years. In the context of adeclining GDP per capita the increase in consumption was at the expense ofdomestic savings. At the same time public investment also increased its sharein GDP from 6 percent to 11 percent. This increased public investment hadtherefore to be financed mostly from private and foreign savings as publicsavings were minimal. This upsurge in public investment and public consump-tion took place at a time when the domestic savings ratio declined from 38percent of GDP in 1974 to 21 percent in 1978. The increase in demand did nothave a major impact on production in the short-run because the structure ofproduction did not fit the demand pattern.

3. The foreign trade balance was characterized by a surplus until1976. In 1977 it showed^a deficit of $16.1 million and preliminary estimatesfor 1978 suggest a negligible surplus of $6 million. This surplus hasresulted mainly from slowing down of import growth. The adverse movement ofthe balance of trade in recent years can be attributed to the slower rates ofgrowth of exports which failed to keep pace with the growth in imports. Theweak demand for iron ore exports induced by slowdown of economic activity inthe industrialized countries reduced both the average unit price as well as

- ii -

the quantities exported. As this commodity formed about 70 percent of thetotal export earnings this affected the overall export earnings dispropor-tionately. At the same time the inflation in the Western world, the increaseddemand for machinery and equipment for OAU building projects and the increasein oil prices raised the total imports significantly. The current accountdeficit due to payments for services and unrequited transfers was estimated at$100 million in 1978 compared to $126 million a year ago.

4. As a consequence of the above developments, public finances inLiberia also came under serious pressure in the past five years. Governmentbudgetary expenditure almost doubled in nominal terms in less than threeyears, outstripping the increases in Government revenues. Since 1974 Govern-ment has been facing a growing overall deficit. The deficit in 1975 was only$4.3 million but in 1979 it was estimated at $137.3 million or 68 percent ofthe Government revenues. This expansion in deficit took place despite Govern-ment's introduction of new Tax and Revenue Law in 1977. As a result, Govern-ment tax revenues improved substantially but the beneficial effect of thishigh tax yield was neutralized by a decline in iron ore revenues and a verylarge expansion in Government spending. The increase in Government expendi-ture in recent years could be attributed to: (a) OAU conference relatedspending; (b) adjustment in wages and salaries of public servants; and (c)transfer to public corporations. As a result of changes in tax rates thetotal revenues have attained a higher level but the growth rate in revenueshas also stabilized. Thus the sharp increase in revenues exhibited in FY78is not expected to be repeated unless additional revenue raising measures aretaken. The need for reduced public expenditure appears the most logicaloption for overcoming the current financial imbalance.

5. The performance of public corporations displayed low levels ofprofitability and productivity. Their efficient functioning has recentlybecome an area of serious concern for the Government of Liberia. Thesecorporations have not only become a heavy burden on the meagre Governmentfinancial resources but are also claiming an increased share in the totalcommercial credit at the expense of the private sector. Government is takinginitiatives to improve the functioning of the corporations such as profes-sionalizing and strengthening the management, reorganizing the Boards ofDirectors and disinvesting its share in others.

6. The outstanding and disbursed external public debt of Liberia atthe close of 1978 was $341 million, i.e., 53 percent of current monetaryGDP compared to only $152 million or 33 percent four years ago. The debtcomposition has also undergone a change for worse with an increasing share ofprivate banks and suppliers. The terms of private banks and suppliers areinvariably hard with short-term maturity and higher interest rates. Thischange in the composition of external debt has significant implications fordebt servicing liabilities in medium term. There was a large increase in theamount of new borrowings contracted in 1978. New loans in the amount of$232.1 million or 36 percent of monetary GDP were signed by the Government ofLiberia; of which almost one-half had interest rates above 10 percent perannum and repayment period of less than 20 years. Most of the hard termloans are proposed to be used for projects whose impact on GDP growth,exports, employment and public revenues is not going to be significant

- iii -

at least in the period coincidental with repayment of these loans. Debtservice as a proportion of exports of goods and services is currently about 5percent and about 21 percent of public revenues. Although these ratios haveincreased since 1975 they are not high compared to other neighboring coun-tries. However, these ratios could increase sharply over the next few yearsunless Government takes remedial measures. Liberia should intensify itspublic sector savings so as to increase the domestic contribution to itspublic investment program and minimize its future external debt liability.Considerable caution needs to be exercised in external debt management so asto avoid contracting new commercial loans with short-term maturity and rela-tively high interest rate. Liberia will require continued external assistanceat concessional terms to diversify its economic base in the framework of itsSecond Development Plan.

7. The consumer price index increased moderately during the last twoyears (5.8 percent in 1977 and 7 percent in 1978) but the evidence availablefor the first quarter of 1979 points to a rate of about 14 percent. This rateof increase is expected to level off and should decline after the expansionaryeffects of construction activity associated with the OAU Conference havesubsided. The average producer prices for rubber, coffee, cocoa and oil palmwere higher this year in comparison to past years--both the absolute level aswell as a proportion of average export prices. The current prices do not actas a disincentive for the producers.

8. The First National Development Plan (1976-1980) was revised from$415 million to $585 million. Latest estimates for the first three yearsindicate that about $400 million had been spent so far and the total expendi-ture by the end of the Plan are not likely to exceed $520 million. Up toFY79, one-fourth of development expenditures had been incurred on projectswhose productive impact on the economy was not clearly discernible, i.e.OAU conference related activities and buildings. Agriculture was given 16.5percent of the total allocations while 40 percent went into infrastructure andpublic utilities. Public corporations like AGRIMECO, Air Liberia and NationalHousing Authority who have been showing financial losses also received sub-stantial amounts from the development budget. About 25 percent of expendi-tures were on projects which were not included in the development plan. Thispoints to the need for greater discipline in implementing development projectsaccording to agreed national priorities.

9. The outlook for Liberian economy in the two years--1979 and 1980--appears to be less than promising. Both external influences and internaldemand are likely to force a continuation of the recent pattern. Demand foriron ore and its price are not expected to change significantly. The GDPgrowth in 1979 is unlikely to be more than 2-3 percent. The balance of tradeis projected to be slightly negative. The overall budgetary deficit for FY80is estimated between $60-75 million or about 30 percent of public revenue.The prospects are however likely to improve beyond this period with theexpected upswing in iron ore prices and demand, additional production fromreplanted rubber acreage and increase in tree crops, and timber outputexports.

- iv -

10. While the next year or so is likely to be difficult the Governmentof Liberia can take initiatives, in the context of its Second Development Plan(1980-84), to provide for a resumption of satisfactory growth in income andconsumption in the context of its Second Development Plan covecing the period1980-84. Increased investment and output in non-enclave sectors like non-rubber agriculture, forest products and agro-based industries are, there-fore, all the more necessary for the attainment of the objectives set out inthe first plan including reducing dependence on one or two primary exports.These objectives are still valid today. The Second Plan should, therefore,focus on: (i) completing ongoing productive projects as early as possible;(ii) executing only such new non-enclave projects which can augment productionin short or medium term and provide additional employment opportunities,reduce large income disparities; and (iii) undertaking only those infrastruc-ture and social services which directly support production or improve incomedistribution. Recent studies corroborate the earlier observations that theincome distribution in Liberia is skewed at enclave-non enclave, inter-personal and inter-regional levels. Policies and projects aimed at correctingrural-urban inequities through increased production and incomes in rural areasand among urban poor would also help improve inter-regional and inter-personaldistribution. Increased domestic savings, an explicit clear role and direc-tion for private sector investment and strengthening the planning processare some of the major issues which would require the attention of the plan-ners.

11. The employment situation in Monrovia will suffer a severe set-backafter August 1979. The completion of construction projects and activity inservices and trade subsectors dependent upon the OAU conference would renderapproximately 3-4 thousand persons unemployed or partially unemployed.This addition to an already unemployed or underemployed pool of 15-16 thousandworkers in Monrovia would create a serious strain. Productive employmentcreation at this juncture should be one of the top priorities of the Govern-ment, especially in view of the April 14 disturbances. The labor market inLiberia is characterized by shortage of highly skilled professionals andtechnicians at the top and agricultural workers, like rubber tappers at thebottom. At the same time there is a large surplus of unskilled workers inMonrovia who possess few readily employable skills. This imbalance in theregional demand and supply of labor could perhaps be partially corrected byeffective intermediation by the Government in the form of Employment Exchange;training of these workers, for example, in rubber tapping and other semi-skilled jobs in agriculture.

12. In the field of health and population three experimental and innova-tive projects for primary health care are at present underway at Maryland(with Dutch assistance), Cape Mount (with UNFPA/WHO assistance) and LofaCounty Health project (under USAID). Government is currently evaluating thesethree programs to arrive at a prototype for expansion and adoption throughoutthe country. At the same time the USAID is also assisting the Ministryof Health in the formulation of a Health Sector Plan. The UNFPA is currentlyassisting the Government in a project aimed at strengthening the demographicdata collection and analysis system and in expanding an integrated material

and child health program. The project could promote family planning throughmaternal health program.

13. Public administration has long been a constraint in acceleratingLiberia's economic development. Although substantial progress has beenmade since 1971 in establishing a civil service structure in the countrythe system still needs major improvement in the procedures and methods ofGovernment operations to make it more efficient and responsive to the needs ofthe rural population.

14. An important issue confronting the policy makers in Liberia is todetermine whether the current level of producer price of rice is adequate ornot. This question is analyzed in paras 56 to 59. The available evidenceseems to indicate that both on equity as well as efficiency criteria a furtherincrease in the producer price from the current level does not appear to bewell justified.

I. CURRENT ECONOMIC SITUATION

Economic Performance 1974-78

1. Real GDP remained almost stagnant in the last four years register-ing an annual rate of growth of 0.7 percent (Table 1). This is in contrastto an average annual growth of 4.2 percent during 1970-74 and 6.3 percent inthe sixties. GDP (in 1971 constant prices) went up from $425 million in 1974to $439 million in 1978, i.e. an increase of about 3%. During the same periodpopulation rose by 13-14 percent. The net effect was a decline in per capitareal income by 10 percent to $258 in 1978. The main reasons for the lowoverall growth rate of GDP was a 32% decline in iron ore and rubber valueadded. Crop agriculture including traditional agriculture did much better andgrew by 15% in the same period, but could not fully compensate for the loscaused by iron ore and rubber. Consequently, the value added in Productionsectors (Agriculture, Mining, and Manufacturing combined) registered negativegrowth of 8% in these four years. The Production sectors still form 58% oftotal GDP compared to 65 percent in 1974. The slight overall growth in GDPtook place due to services sectors (trade, transportation, construction,Government and other services) which rose by 27%. Government sector was thefastest growing component expanding by 70% in this period. Constructionactivities due to the construction of OAU conference facilities also played amajor role in the last three years. Construction grew by 25% in 1976 andwhile monetary GDP was declining in 1977 construction value added increased by8% and a still higher growth (11%) took place in 1978. Trade, transport andcommunications and financial services closely linked to trade, have beenexpanding at the rate of 4-5 percent in the last two years.

2. The enclave sector GDP (export-oriented) fell at an annual rate of6.6% between 1974-78 while the non-enclave modern sector increased 5.0% andtraditional economy at 3.5%. The low rates of total GDP growth were attributableto the adverse external factors like recession in world steel demand. While theexternal factors certainly accounted for the negative results, the high growth ofnon-enclave modern sector was largely due to expansion in government sector,other services and construction. The manufacturing sector grew only by 2.5% ayear. In other words, the non-enclave modern sector did not contribute toproduction much. Increase in traditional economy, on the other hand, took placemainly due to higher output of rice and other minor crops grown by subsistencefarmers. Despite some doubts expressed about the subsistence sector's con-tribution to growth there is some evidence now that further emphasis on andinvestment in subsistence sector is defensible not only on welfare and dis-tributive grounds but also from the viewpoint of growth.

Table 1: GDP GROWTH BY SECTORS(Percent per year at 1971 prices)

Annual 2/1/ Growth Rate

1970-74 1975 1976 1977 1978 1974-78average

1. Agriculture (Modern) 4.7 5.2 10.3 - 0.8 10.0 6.1- Rubber 3.1 - 6.5 2.4 - 7.2 - 3.0 - 3.8

- Forestry 16.7 66.7 31.2 - 29.2 29.6

- Other 2.4 - 5.7 5.2 10.0 9.0 4.4Agri.(incl. Traditional) 1.5 9.0 2.6 5.5 4.6

2. Mining 2.2 -13.3 - 6.7 -13.0 - 8.8 -11.7- Iron Ore 2.9 -11.8 - 5.9 -13.7 - 9.7 -11.4

3. Manufacturing 6.5 -11.2 21.2 4.3 - 1.7 2.5

Production Sectors - 6.9 3.0 - 3.6 - 0.6 - 2.1(incl. Traditional)

4. Construction -10.2 25.2 8.4 10.6 7.8

5. Government Services 1.8 8.1 6.1 13.2 31.0 14.2

6. Other Services 6.2 4.2 5.4 4.0 - 9.3 2.5

Service Sectors 3.4 7.4 6.2 5.1 5.5

Monetary GDP (FC) 3.9 - 3.9 4.0 - 0.8 1.6 0.2

7. Traditional Economy 5.6 - 1.2 8.0 5.0 2.3 3.5

TOTAL GDP 4.2 - 3.5 4.6 0.2 1.8 0.7(FC)

1/ Preliminary estimates.

2/ Subject to change after the finalization of 1978 estimates.

Source: Appendix Table 1.2.

3. The resulting changes from this differential growth led to a struc-tural transformation of the economy. Table 2 shows that the relative share ofenclave sector (mining, rubber and forestry) fell from 39.3% to 29.5%, non-enclave modern sector increased from 44.6% to 52.0% and traditional economywent up from 16.1% to 18.5%. Crop agriculture both modern and traditionalimproved its contribution from 19.4% to 26.6%. If forestry were excludedfrom the enclave sector, its share showed more rapid deterioration, i.e. from38.2% to 24.6%. This discouraging performance of iron ore and rubber reinforcesthe need for Government to accelerate its search for formulating and imple-menting alternative policies designed to reduce this dependence on the enclavesector and diversify the country's economic base.

4. Real monetary GDP grew more slowly than the total GDP and increasedby only 1% during the span of these four years. In two years, 1975 and 1977,the monetary GDP actually recorded a negative growth. On the other hand, asdiscussed above the traditional economy grew by 15% in the same period andits relative share in total GDP increased only marginally. The estimates oftraditional economy are closely correlated with rice production and are basedon the results of a survey carried out annually.

Table 2: COMPOSITION OF GDP(In Percentage)(At Factor Cost)

Average 1/1962-70 1974 1975 1976 1977 1978

1. Agriculture 8.9 11.1 12.2 12.8 12.7 13.8- Rubber 5.8 6.1 5.9 5.8 5.3 5.1- Forestry 0.9 1.8 3.0 3.8 3.8 4.8- Other 2.2 3.3 3.2 3.2 3.6 3.8

2. Mining 31.6 31.5 28.2 25.2 21.9 19.6- Iron Ore 28.3 29.4 26.8 24.1 20.8 18.5- Other 3.3 2.1 1.4 1.1 1.1 1.1

3. Manufacturing 3.7 6.1 5.6 6.5 6.8 6.5

4. Construction 3.9 3.7 3.4 4.1 4.5 4.8

5. Government Services 6.7 6.3 7.1 7.2 8.1 10.4

6. Other Services 30.2 25.3 27.0 27.2 28.1 26.9

Monetary GDP (f.c.) 85.0 84.0 83.5 83.0 82.1 82.0

7. Traditional Economy 15.0 16.0 16.5 17.0 17.9 18.0

TOTAL GDP (f.c.) $million -425.4 411.5 430.7 431.4 439.0

Net factor payments aborad 85.7 92.8 68.2 41.1 43.1

GNP (f.c.) $ million 339.7 318.7 362.5 390.3 396.1

8. Memorandum items

Enclave - 39.9 37.1 34.8 31.0 29.5

Non-Enclave modern - 44.7 46.4 48.2 51.1 52.5

Traditional - 16.0 16.5 17.0 17.9 18.0

1/ Preliminary estimates.

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Investment and Savings

5. Table 3 sets out the supply and use of domestic resources for1974-78. While GDP at market prices grew at 1.6% annually the total resourcesused by the economy increased by 8.7%. The resource balance was positiveuntil 1976 and has turned negative since 1977. Government consumption expan-sion and increased public investments were the principal underlying factorsbehind this upsurge in real aggregate demand. Per capita private consumptionhas declined. Total consumption now accounts for 78% of GDP as compared to62% in 1975. Government consumption in 1976 was $51.8 million (constantprices) which jumped to $97 million in 1977--a rise of 87% in one year.Although the rate of increase will slow down, there is no reason to expect anydecline in the levels of public consumption in the coming years.

Table 3: SUPPLY AND USES OF DOMESTIC RESOURCES(Constant 1971 Prices)

Growth Rate1974 1975 1976 1977 1978 1974-78

Total GDP (m.p.) 458.4 442.5 466.0 474.0 489.8 1.6

Plus Net Imports ofGoods & NFS -94.6 -24.2 -7.8 +15.1 +18.0 -

Total Supply and usesof Domestic Resources 363.8 418.3 458.2 489.1 507.8 8.7

Private Consumption 241.1 228.5 264.3 255.6 248.6 0.7

Public Consumption 48.3 48.8 51.8 97.0 105.0 28.6

Gross Fixed CapitalFormation 81.1 90.0 118.2 107.8 121.6 10.6

(Public Sector) (16.2) (22.5) (43.6) (n.a.) (49.6)Changes in Stock -6.7 50.0 23.9 27.7 31.6 -

6. Total investment increased in 1975 and 1976, fell in 1977 and thenagain went up in 1978. The weak demand for the ore in the world markettherefore created a slack not only in new investment but even the existingcapacity was not being fully utilized. This explains the relative lowergrowth of private investment. While total investment grew by 10.6% annuallyprivate investment expanded'at the rate of 2%. Public investment moved up ata faster pace, mainly financed by external borrowings, to offset the sluggish-ness of private investment. The net result, therefore, is that despite thefall in 1977 total expenditure on fixed capital formation has grown by 10%annually between 1974-78. As a proportion of GDP it has increased its share

from 18.8% to 28.0% (Table 4). However, this dramatic expansion in publicinvestment activities, (from 20% of total investment in 1974 to 41% in 1978)did not provide the basis for the medium term growth of the economy because of

its composition and the very low productivity of public investment: a largeproportion of public investment is concentrated in construction not related toindustrial or agriculture or mining expansion.

Table 4: EXPENDITURES & SAVINGS AS A PROPORTION OF GDP(% at current market prices)

1970 1974 1975 1976 1977 1978

Consumption 62.5 68.1 61.6 65.8 74.1 78.3

Private 52.5 57.7 51.6 54.1 60.2 62.9

Public 1i.0 10.4 10.0 11.7 13.9 15.4

Investment 19.6 18.8 22.1 27.1 27.2 28.0

(Public Sector)(n.a.) (6.3) (6.7) (10.4) (n.a.) (11.4)

External

Exports 57.8 64.8 54.2 60.0 51.9 53.9

Imports 36.6 46.7 45.6 52.4 53.8 53.3

Savings

Gross DomesticSavings 36.5 31.9 38.4 34.2 25.9 21.7

Gross NationalSavings 12.7 16.8 21.8 23.0 14.8 12.6

7. As late as 1975 two fifths of the GDP went into savings. But the

low levels of public savings set in since 1975 depressed the overall savingsleading to a 16% decline annually. The current ratio in 1978 is only 21% of

GDP compared to 38% three years ago. The other factor for this decline in

savings was the iron ore sector. As the concession sector generates savingsonly to undertake capital expenditure and the recessionary conditions forcedthem to abandon their investment plans their savings rate also became negative.This behavior of the concession sector is also reflected in declining and verylow national savings ratio which is correlated with high factor paymentsabroad.

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8. With declining domestic savings, the massive increase in publicinvestment during the mid-1970s was financed by a sharp rise in the dependenceon foreign savings and through recourse to bank borrowing. Foreign borrowingsnow finance 25% of gross fixed capital formation in Liberia. In the publicsector the ratio is much higher. It is estimated that to finance $160 milliondevelopment expenditure in FY 1979, about $120 million or 75% were raised fromexternal sources--grants, loans and IMF credit. This is, no doubt, an unusualsituation and is not likely to repeat itself in coming years; but it emphasizesthe need for restraint.

9. It is becoming quite clear that given the current commitments of theGovernment sector e.g. increasing debt servicing liability, recurrent costfinancing of recently completed development projects, contribution to newlyintroduced Social Security scheme, newly announced minimum wage of $100 in thepublic sector it would be unrealistic to expect much larger savings from it inthe next few years. Nevertheless it does not rule out the possibility forimproving the productivity and efficiency of public services and publicinvestment and tapping new sources for raising revenues and generating savings.The major effort, however, would have to be mounted in increasing the quantumof private savings. As the enclave sector is not growing fast enough, theonly other potential source is the non-enclave modern sector. There is nojustification at this stage to increase their direct tax liability. Theappropriate course is to help this sector identify promising business andproduction ventures for which they can pool their savings and invest. Theneed for domestic resource mobilization efforts is obvious. On every singlecount--public finance, gross investment, creditworthiness, growth, employment,poverty alleviation, the major stumbling block appears to be non-availabilityof sufficient domestic resources.

Public Finance

Government Revenues

10. A classification of FY 1979 Government revenues into the items whichare highly sensitive to external factors and those which are more domesticoriented is presented in Table 5 and compared with the estimates preparedfor FY 1976 contained in the Basic Economic Report dated March 1975. This com-parison shows that revenues from sources highly sensitive to external factorshave declined appreciably and account for only 15% of total Government revenuescompared to 30% three years ago. This lower share is not so much due to thedecline in iron ore profit sharing taxes but because of a large increase in thereceipts from taxes on personal incomes and profits of non-concession businessesand the taxes on international trade. It shows that the Government is morefirmly in control of its revenue structure than a few years ago and fiscalpolicy can be used as an effective instrument for domestic economic andfinancial management.

Table 5: CLASSIFICATION OF TAX REVENUES

--- $ Million----I. Revenue highly sensitive to external factors 1975/76 1978/79

Iron ore profit sharing 15.6 10.4Rubber sales revenues - 4.3Tax on non-residents 3.7 1.8Maritime revenues 15.6 13.5

Subtotal 34.9 30.0

II. Less sensitive revenues

Taxes on production & domestic consumption 5.2 17.1Taxes on International trade and transactions 36.4 79.5Motor vehicle 2.3 4.3Taxes on property 2.3 2.8Austerity tax 7.5 -Taxes on income and profits 19.3 49.4

Subtotal 73.0 153.1

III. Other revenue 24.2 48.8

Grand Total 132.1 201.9

11. Government revenues have increased at an annual rate of 14.3%between 1974-78, implying a buoyancy of 1.33. The introduction of new Tax andRevenue Law in 1977 proved effective and Government tax revenues went up from$115.6 million in FY 1976 to $153 million in FY 1977 and $176 million in FY1979. This was a bold strategy and brought about greatly desired improvementin the structure of individual and corporate taxes. The new law made theincome taxation in the country relatively more progressive and also improvedthe income elasticity of Government revenues. The individual income tax ratesrange between 9 to 45% and the corporation tax rates between 20 to 50%. Theausterity tax, which was regressive in nature, was abolished. The beneficialimpact of the new tax laws can be gauged by the share of income and profittaxes which has remained stable around 40% of the total taxes despite adrastic cut in receipts from iron-ore profit sharing tax. Corporation andindividual tax receipts have shown remarkable growth in last two years andhave generated 34% of the additional revenues in the fiscal year 1978.Future expansion in revenues should not be expected to follow the sharpincrease of FY 1977 and 1978 and other additional measures such as loweringthe current exemption limit of taxable income, locating eligible tax payerswho are evading tax payments, are recommended. In addition Government ofLiberia should try to strengthen the administrative capacity of tax collectingagencies so that the tax evasion and avoidance can be curbed and the narrowtax base can be widened. The income tax payers consist of a disproportionately

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large number of salaried persons whose taxes are withheld at source. Govern-ment would also be well advised to make concerted effort to bring all self-employed professionals and other non-corporate businesses within the fold oftax assessment through survey of new and potential tax payers.

12. Another area for mobilization of additional resources is the importduties. The effective average rate of tax on imports is currently in therange of 10 to 12% which is quite low in comparison to other developing WestAfrican countries. A wide range of goods and commodities is imported free ofimport duties by the foreign multinationals under the Concession Agreementsand by domestic businesses under the Industrial Investment Code. A roughcalculation of the ratio of import tax on the total value of capital goodsi.e. machinery and equipment for the fiscal year 1978 suggests that thesegoods were, on an average, levied an import tax of 4%. Should the compositionof import bill change over time in favor of capital goods--which is the mostprobable outcome in the context of a developing country--and the currentexemptions are either sustained or increased the relative growth of importduties would decline both with respect to GDP growth as well as the increasein the value of total imports. Government is actively considering the possi-bility of withdrawing the current exemptions which would improve both itscurrent revenues as well as future collections and also reduce the pricedistortions.

13. The low rates of domestic indirect tax incidence are also a sourceof concern. Due to the Government policy of improving the income levels ofsmall farmers and small businesses it would be quite desirable that some partof their incremental incomes is mopped up by the state to increase the margi-nal savings ratio as well as the total quantum of public revenues. As thesegroups would remain outside the purview of direct taxation for quite sometime, a large number of developing countries have resorted to use of domesticindirect taxes on non-food goods and services as an instrument for thispurpose. The total domestic indirect taxes in FY 1978 amounted to $7.2million on a base of non-agricultural GDP of $526 million and non-agriculturenon-mining GDP of $409 million i.e. effective average rates of 1.3% and 1.7%respectively. Thus, there seems much scope for raising these ratios and thuscontributing to the dual objectives stated above.

14. Liberia is not tapping its non-tax revenues sufficiently, that isincome from Government fees, licenses and other uses charges has been declin-ing during the last 5 years. Non-tax revenues now contribute only 7-8% to thetotal budgetary revenues. In 1976, this source accounted for 13% of the totalrevenues. It is recommended that the Government should pay closer attentionto the existing sources and structure of non-tax revenues and take measures toenhance the various rates and charges, license fees so that at least a part ofthe recurrent cost of public services could be recovered from the benefici-aries whose income levels allow them to bear such charges without much diffi-culty. Maritime revenues which have been contributing an average $12 millionannually to the Liberian economy could possibly become extinct if the recentmove by UNCTAD to abolish Flag of Convenience shipping becomes successful.Liberia has so far successfully resisted such attempts but there is a growing

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concern among some developing countries for obtaining a larger share of theshipping trade for their cargoes. The share of Maritime revenues in totalGovernment revenues has been declining since 1975 when it generated $15.6million or 12.5% of total revenues. In 1978 the share was down to 5.8% onlybut was expected to take an upward turn in the coming Fiscal lear. Should theopen registry shipping be restricted, this loss in revenue coupled with thedecline in iron ore profit shares would create a destabilizing effect on theLiberian economy.

Government Expenditure

15. The Government budgetary expenditure is estimated to attain a levelof $340 million FY 1979. This represents almost a doubling of the budgetin less than three years. Total Government expenditure rose from 18% of GDPin 1974 to 42% in 1979 growing at an annual rate of 28.7% between 1974-78.This tremendous growth in Government expenditure in recent years has resultedfrom adjustment in public servants' wage bill, increase in debt servicingliability, transfers to public corporations and the expenditure on OAU Con-ference. An estimate of the expenditure related to OAU Conference has beenprepared and shown in Annex Table 4.7. Approximately $40-50 million can beascribed to this non-recurrent item on an annual basis for FY 78 and FY 79.Excluding this, total expenditure in FY 78 is estimated at $246 million and$290 million in FY 79. The annual growth rate in total expenditure (excludingOAU) between 1974-78 would consequently be reduced to 22%. Extra-budgetaryallocations have also contributed to this jump in Government expenditure.From 15% of the total expenditure in 1974 they presently take away 22-25% ofthe budgetary resources. Normal development expenditure (excluding OAUConference) has remained stable at 15% of the total expenditure which is lowerthan both Ghana and Sierra Leone. Debt servicing obligations have recorded a100% increase during last five years due to higher levels of principal repay-ments and interest on past external borrowings.

16. A functional classification of total expenditure shows that theshare of general services is about 45% and the rate of increase in FY 78 was42% over last year. Wages and salaries to public servants account for 30% ofrecurrent expenditure. The adjustment in wages and salaries carried out inFY 1977 and expansion of work force employed by the Government has doubled thewage bill from $42 million to $80 million in a period of three years. In 1974the total number of employees on the Government payroll was 18,000 which hasrisen to 30,000 by 1979. Expenditure on economic services has risen by only22% in this period.

17. Public corporations have continued to be a serious drain on publicresources. Except LPMC and National Port Authority all other corporations arereceiving substantial sums of transfers from the budget and also borrowingfrom the banking system. Public corporations which are selling goods andservices in the market should be geared to stand the normal criteria ofprofitability. Any non-market functions or social objectives which theGovernment assigns to them should be clearly identified, separated, limited inamount and explicitly subsidized by the Government. At present there is a

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common tendency to mix the various objectives and justify the financial losseson the grounds of blurred objectives. Recently the Government has takeninitiatives to examine the issues related to the improvement of the perfor-mance of Public Corporations such as professionalizing and strengthening themanagement, reorganizing the Boards of Directors and disinvesting its share ina few enterprises to allow private sector participation.

Budgetary Deficit

18. Government revenues contributed 97% toward the financing of totalexpenditure (i.e. recurrent and development expenditure) in fiscal year 1975.But this source has been declining over time and now makes up only 56% oftotal expenditure. Dependence on external borrowing is becoming very visible.Government has had budgetary deficit every single year since 1974 and thequantum of deficit is also on incline over time (projected at US$74.7 millionin fiscal year 1979 but in actual fact ended up around US$137 million).

19. The reasons for this erosion of overall budgetary surplus couldbe attributed to: (a) decline in iron-ore profit sharing revenues; (b) expendi-ture connected with QAU Conference; (c) decline in maritime and non-taxrevenues; (d) increase in wages and salaries of public servants; (e) risein cost of goods and services for Government consumption; (f) extra budgetaryand non-budgeted expenditure; and (g) increased transfers to public corpora-tions. The estimated budgetary deficit of $137 million for FY 1979 can bedisaggregated in a simple manner by these sources: 1/

1! In this decomposition analysis, FY 1974 the year Liberia had an overallbudgetary blance is taken as the 'normal' year and it is assumed thathad these various components increased at an average annual rate of 10%i.e. the growth rate of public revenues the overall budgetary surpluswould have remained at the same level as FY 1974. A more sophisticatedmethod would also take into account the weights of each of these com-ponents and their trend line growth rates.

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In US$ MillionWages and Salaries (+) 16.0Goods and Services (+) 7.0Transfers to Public Corporations (+) 8.0

OAU related exp. 1/ (+) 82.0Decline in iron ore revenues (+) 10.0Decline in non-tax revenues (+) 8.0Decline in maritime revenues (+) 8.0Extra-budgetary expenditures 2/ (+) 27.0

(excl. OAU related)Increase in income tax receipts (-) 10.0Increase in import duties (-) 19.0

Total 137.0

The above picture shows that the OAU related expenditure, extra budgetaryexpenditure and increase in wages and salaries are the main factors for thebudgetary disequilibrium. Had it not been for the increase in import dutiesand income, corporate taxes this gap would have been much wider. Now thatthe OAU Conference is over, the pressures for expenditure outside the normalbudget should be eased and the present size of the budgetary gap reducedsignificantly.

20. To sum up, the fiscal measures required to correct the imbalanceare: (a) strengthen tax administration for widening the tax base; (b)review and rationalize the import duty exemptions available to the currentbusinesses; (c) widen the scope of domestic indirect taxes especially theexcise and sales taxes; (d) revise the structure of various fees and non-tax receipts collected by the Government; (e) maintain the growth in re-current expenditure to a minimum possible level; and (f) effectively curb allnon-budgeted expenditure. The Liberian Government is already seized of theseproblems and is working on some of them with speed and diligence and thelack of success in achieving desired results can be partly ascribed to somefactors beyond their control. There is a wide recognition in the Govern-ment that restraint on spending is the essential key to correct the presentimbalance.

1/ OAU Conference related expenditure ($100 m) has been allocated as follows:Development expenditure $90 billiorCurrent expenditure $10 million

The annual breakdown is assumed as follows:

FY 1977 $5 millionFY 1978 $25 millionFY 1979 $64 million

2/ Extra-budgetary expenditures cover items of expenditure not included inthe normal budget but incurred during the course of the year.

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Stand-by arrangement with IMF

21. In early 1979, the Government of Liberia entered into a one-yearstand-by arrangement with IMF in the First Credit Tranche in the amount ofSbk9.25 million. The agreement was designed to alleviate domestic demandpressures, mainly through a large reductibn in Government expenditure andbalance of paynents deficits and avoiding a further deterioration in the debtprofile. The program also contained a ceiling on public sector borrowing fromthe domestic banking system, intentions concerning income policy for bothagriculture producers and public sector employers. The Liberian Governmenthad agreed to reduce the overall deficit in 1978/79 to about $60 million ascompared to a budgeted deficit of $100 million and limit the deficit to $30million in 1979/80. The overall deficit in 1978/79 was ae $137 million andalthough the recent budget for 1979/80 reduced the level of total expenditurethe overall deficit would still be about $64 million.

Table 6: GOVERNMENT REVENUES AND EXPENDITURES(In US$ million)

Budget Prelim.1974 1975 1976 1976/77 1977/78 1978/79 1978/79

I. Public Revenues 108.6 125.3 149.8 166.5 185.5 190.8 201.9II. Current Expenditure 74.2 78.1 91.7 105.7 121.5 154.0 159.4III. Current Surplus/Deficit 34.4 47.2 58.1 60.8 72.6 36.8 42.5IV. Development Expenditure 15.0 24.0 30.8 30.2 77.0 84.7 179.8V. Extrabudgetary Expenditure 15.3 27.5 59.1 70.7 67.8 74.8VI. Overall Surplus/Deficit 4.1 - 4.3 -31.8 -40.8 -72.2 -122.7 -137.3 1/VII. Financing of Deficit:

Foreign Grants 12.3 11.3 16.0 16.0 16.0 23.0 23.0Foreign Loans (Net) 5.1 18.0 22.0 37.7 14.9 51.6 125.2(Borrowings) (22.5) (34.3) (33.7) (57.4) (35.6) (75.8) (169.8)(Amortization) (-17.4) (-16.3) (-11.7) (-19.7) (-20.7) (-24.2) (-44.6)IMF (Net) -1.1 -0.5 - - 12.2 8.8 -

Other -3.0 -8.2 -6.2 -12.9 29.1 16.3 17.1

1/ IlMF treats foreign grants as part of budgetary revenues and hence theiroverall surplus/deficit figure is invariably lower to the extent of

foreign grants. This table uses foreign grants as financing item foroverall surplus/deficit. The difference in this particular case is $23million. Ii4F shows a deficit of $114.3 million while this table contains

a figure of $137.3 million.

4. Balance of Payments

22. Liberia has been one of the few African countries which has continu-ously enjoyed a surplus balance of trade. This situation changed in 1977when a deficit of $16.1 million was recorded. Estimates for 1978 suggest that

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the trade balance will again have a small surplus of $6 million. This perfor-mance presents quite a contrast to the earlier seventies when the merchandiseexports always exceeded the imports by more than $100 million. Even in 1974the value of exports was $400 million and the imports amounted to only $289million. While exports grew by 5% per annum between 1974-78 the annual rateof growth of imports was 13.6%. Exports which used to account for 65% of GDPin 1974 were down to 54% in 1978. At the same time the imports-GDP ratioinclined from 47% to 53%.

Table 7: SUMMARY BALANCE OF PAYMENTS (US$ MILLION)

1974 1975 1976 1977 1978

I. Goods and Services (Net) - 30.4 - 72.9 - 49.8 -149.8 -134.7

Trade Balance +110.9 + 63.2 + 57.9 - 16.1 + 5.6Exports 400.2 394.4 457.1 447.4 486.3Imports -288.4 -331.2 -399.2 -463.5 -480.8Services (Net) -166.1 -166.7 -142.6 -163.1 -173.4Transfers (Net) 24.8 30.6 34.9 29.4 32.2

II. Capital (incl. errorsand omissions) 32.7 76.2 97.8 140.0 106.6

lIT. St,rpl1is/P-rcrit 2.3 - 3.3 38.0 - 8.8 - 28.1

IV. Financing:

Monetary Authorities (Net) 1.4 - 1.0 07 - 8.4 7.1Deposit money banks 1.4 4.0 -32..z - 19.2 19.4Central Govt. Deposits -0.1 - 6.2 2.0 2.3Abroad

23. The main determinant of the export performance was, of course, thedecline in the iron ore exports. Table 8 shows that iron ore export whichconstituted on an average 70% of the total merchandise exports in the mid-seventies, had declined to 56% by 1978 and the earnings were lower than the1975 level. Rubber exports also suffered a setback in 1975 and 1976 and haveonly started picking up. Among the non-traditional exports, logs and lumbercontributed 11% and coffee, cocoa and palm products 10%. These two groups ofcommodities were able to sustain the growth of the exports. Coffee,cocoa and palm products emerged as the fastest growing exports although thereare uncorroborated reports about smuggling of coffee into Liberia from theneighboring countries. Nevertheless production statistics of coffee clearlypoint out the doubling of the crop and give credence to the Government'sefforts in broadening the agriculture production and export pattern. T'csource of growth among the forestry products groups is the sawn timber whosevalue is higher than the primary products. The steps taken by the Governmentto encourage domestic processing and enhancing value added were in rightdirection yielding larger earnings from this commodity. Although no empiricalstudies are available, expansion of sawn timber appears justifiable on domesticresource Cost Criterion also. The 5% growth rate of total exports is notinsignificant considering that the iron ore exports have remained unchanged.

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Table 8: ECONOMIC CLASSIFICATION OF EXPORTS(Percentages)

1974 1975 1976 1977 1978

1. Primary Commodities 24.7 18.4 18.4 31.6 36.4

Rubber 16.1 11.7 11.7 13.2 14.2Forestry 4.4 3.2 3.2 5.8 11.3Coffee, Cocoa, Palmproducts 4.2 3.0 3.0 11.8 8.9

Others - 0.5 0.5 0.8 -

2. Fuel, Minerals and Metals 73.0 79.1 76.6 65.9 62.6

Iron Ore 65.5 74.4 71.9 61.1 56.4Diamond 7.5 4.7 4.7 4.8 6.2

3. Manufactured and Re-exports 2.3 2.4 2.3 2.5 2.9

24. The substantial rise in merchandise imports can be attributed toa doubling of food imports, the increase in oil prices, larger inflow ofmachinery and equipment in support of development and construction projectsand the post-1973 world inflation. Oil imports in 1973 were valued at $14.7million only or 7.6% of the total imports. Five years later they had escalatedsix fold to $84.6 million claiming 18% of the total imports. The food importsdoubled in money terms from $30.2 million in 1973 to $66.9 million in 1978 buttheir share was almost constant. Machinery and equipment imports still formone third of the total but their value rose from $68.8 million in 1973 to$156.6 million in 1978. A classification of recent imports by end-use indi-cates that 26% of goods were meant for consumption, 25% for investment goodsand 49% for crude oil, construction materials and other raw materials. Theseshares have remained more or less stable over past five years and have notchanged in any significant manner.

Table 9: ECONOMIC CLASSIFICATION OF IMPORTS(Percentages)

1974 1975 1976 1977 1978

1. Consumption Goods 25.4 22.2 20.8 26.5 26.1

Food 12.1 10.6 9.5 11.2 11.7Other 12.3 11.6 11.3 15.3 14.4

2. Raw Materials 54.3 53.3 56.5 48.9 50.6

Crude Oil 18.4 13.4 13.3 14.8 17.6Other 35.9 39.9 43.2 34.1 33.0

3. Capital Goods 20.3 24.4 22.6 24.5 23.4

Machinery 9.2 11.8 11.7 13.6 10.5Transport Equip. 6.0 5.9 3.5 5.8 7.0Parts 5.0 6.7 7.4 5.1 5.9

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Developments in 1978

25. An analysis of data for the most recent year i.e. 1978 shows thatcurrent account deficit due largely to payments for services and unrequitedtransfers is estimated at $131 million as compared to $144 million in 1977.Although the quantum of deficit has declined it is still larger than $45.7million in 1976 when Liberia had a trade surplus. Official capital inflow of$70 million was the highest recorded so far and helped to offset the lowerdirect private investment. Mining companies' gross investment this yeardwindled down to $13 million compared to $48 million in 1977.

26. On the trade account, the exports increased by 8.7% and the importsby 7.4%. Iron ore and rubber exports both showed significant upward movements-the former in quantitative terms and the latter in value. Iron ore exports,despite lower output and low average prices were higher in quantity by 20%than the previous year as the companies had accumulated large inventories overthe past few years. The volume was almost the same level as 1976 with themain difference that the quantity of pellets exported was lower. The increasein the quantities shipped was insufficient to neutralize the lower averageprice and the total value of iron exports thus remained the same as in thepreceding year. The average price was lower due to a reduction in the quan-tity of high valued pellets exported. Rubber exports benefitted from risingworld prices. A small increase in the volume of exports coupled with favor-able prices resulted in a 17% increment in the value of rubber exports. Thepattern for tree crop prices was mixed during the year. Coffee prices weredown as compared to the previous year but cocoa prices went up by about 40%.

27. The main source of increase in imports this year was again themineral fuel and lubricants ($69 to $84.6 m). Food imports were higher by$10 million but the rate of growth was lower than 1977. There was a declinein the imports of manufactured articles from $97 to $91.9 million. The importgrowth was limited this year largely due to an unchanged level of machineryand equipment and decline in the manufactured articles.

28. The terms of trade had improved for Liberia in 1977 but has worsenedin 1978. The export price index has declined from 119.7 in 1977 to 108.1, butthe import price index moved up from 117.8 to 121.4. The terms of tradeindex consequently dropped down to 89 from 101.6. Currency fluctuations havealso contributed to this worsening of the situation. Liberia is a member ofthe dollar currency block but three-fourth of its imports originate fromcountries other than the U.S. The currencies of most of these countries havemoved up vis a vis the U.S. dollar and hence Liberia had to foot a higher billin terms of US dollars for its imports. Similar trade relationship exists forLiberian exports which result in a lower value due to currency fluctuations.

29. Liberia maintains a liberal system of trade and payments and hasneither restrictions on transfers for current international transactions norany controls on capital transactions.

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5. External Debt

30. The outstanding and disbursed external debt of Liberia at the closeof FY 1978 was $341.5 million; i.e. 53% of current monetary GDP (at factorcost). Four years ago the outstanding external debt was only $152 million or33% of monetary GDP. The composition of the debt has also undergone a change.As of December 31, 1975, suppliers credit and private bank credits accountedfor only 7.5% of the total outstanding debt while 92.5% originated frombilateral and multilateral sources. By the end of 1978 the share of bilateraland multilateral institutions had declined to 75% while private banks andsuppliers owned the remaining 25% of external outstanding debt. The termsof private banks and suppliers are invariably hard with short-term maturityand higher interest rates. This change resulted in the hardening of theaverage terms of external debt. The grant element in the external debtcommitted in 1974 was 36.1% with 5.1 year grace period. The average interestrate was 4.5% and the maturity period was 19.2 years. By 1978 the grantelement was reduced to 21.1% and the grace period was 4.9 years. The interestrate moved up to 7.4% and the maturity period shrank to 16.5 years. The totalexternal public debt outstanding by the end of December 1978 still had a grantelement of 25% and interest rate of 6.6% due to softer term loans contractedin the earlier years.

31. External borrowing on hard term can be justified if it fills in thesaving gap for investment and thus aids consequential future growth of theeconomy. Taking this as a criterion an attempt was made to classify the 1978borrowings made by Liberia according to the end-use i.e. directly productiveactivities, physical and social infrastructure and non-development expendi-ture. Of the total new borrowings 45% have been taken for physical infra-structure projects-Roads, Power, Water Supply and 20% for non-developmentpurposes - Boeing, Hotel Africa and OAU Conference. Only 35% of the borrow-ings are directly related to projects aimed at increase in production, GDP andexports. The direct impact of the latter category of projects on Govern-ment revenues is likely to be minimal given the current revenue structure.Incomes accruing from small holder agriculture, rubber, cocoa and coffeeprojects are not subject to direct taxation. Forestry, oil palm project,large cocoa and coffee and LPRC are the likely candidates for contributing toGovernment exchequer if they are run efficiently and their parent controllingcorporations do not incur any losses in future. Should the latter hypothesishold true and assuming an average rate of return of 10% p.a. on these invest-ments, the net contribution from these projects after they come on stream(without any cost overruns and delay in implementation) would not exceed $5-6million annually. Of course, the Government will receive indirect revenuesthrough monopoly profits of coffee, cocoa and palm product exports originat-ing in smallholder sector.

32. Physical infrastructure projects are usually characterized by longgestation period and although it is true that they facilitate growth ofdirectly productive activities it is unlikely that their impact would befelt by 1985 when most of the short-term loans come up for maturity. Theabove analysis thus suggests the need for restraint in borrowing from private

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banks and suppliers on hard terms. Such a recourse is justifiable if it canbe clearly established that the loan would be applied for a quick yieldingshort maturing project which is capable of paying back the debt withoutserious strain on general revenues. External borrowing should not be relatedonly to exports or Government revenues in aggregate but also to the repayingand revenue-generating capacity of the individual projects for which loan hasbeen contracted. For example, hard term loans can be contrao-ed for projectscapable of generating revenues--directly or indirectly--in short run but softterm, concessional loans are more suitable for investment in Social Servicesand long-gestation infrastructure.

Table 10: SUMMARY - EXTERNAL DEBT AND DEBT SERVICING SITUATION (US$ M)

1974 1975 1976 1977 1978

Total debt outstanding 211.3 276.2 348.4 399.5 656.6(including undisbursed)

Total Debt Outstanding 152.0 169.3 201.2 215.2 341.5(disbursed only)

- As Percentage of Monetary GDP 33.6 30.2 35.4 34.6 52.3

Debt Servicing Obligation 19.3 20.7 20.1 24.5 30.7

- As Percentage of Monetary GDP 4.2 3.7 3.5 3.9 4.8

- As Percentage of Govt. Revenues 17.8 16.5 13.4 14.7 16.1

- As Percentage of Exports 4.8 5.2 4.4 5.1 6.7of Goods and NFS

33. The FY 1978 was also characterized by a large increase in theamount of new borrowings - $232 million ($262 million minus $30 millionloan for refinancing) which was 36% of 1978 monetary GDP and equal to 68% ofthe cumulative outstanding debt. It exceeded the total current governmentrevenues by 22%. An analysis of new loans by term structure of loans is givenin Table 11. Liberia contracted $106 million on hard terms (repayment 1-10years and interest rate above 10% p.a.) while the concessional borrowing wasonly $103 million. Government is fully aware of this adverse situation andthey informed the mission that some of the hard loans were being refinanced atcomparatively easier terms and thus the burden was eventually likely to belower than what was apparent from the foregoing figures.

Table 11: CLASSIFICATION OF LOANS SIGNED IN 1978 BY TERM STRUCTURE

Hard-term (Repayment: 1-10 years;interest rate above10% p.a.) $106.88 million

Medium-term (Repayment 10-20 years;interest rate 5-10% p.a.) $52.628 million

Soft-term (Repayment: 20 years above;interest rate below5% p.a.) $102.607 million

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34. The present debt servicing capacity of Liberia can be considered,in purely quantitative terms, as manageable. It is at present below 25% ofthe Government revenues and 10% of the export earnings but the trend isupward moving and it is time to hoist a 'warning' signal. Debt servicingobligation (as percentage of public revenues) would increase from 16.5% in FY1979 to 21% in FY 1980 and about 28% in FY 1985 (assuming an annual compoundrate of growth of Government revenues of 7% and without including the burdenof additional external debt). An increased debt servicing obligation in thewake of an inflexible recurrent spending stream erodes the base for develop-ment expenditure thus affecting the future economic growth of the country.Considerable caution therefore needs to be exercised in incurring future debtobligations, especially those with short term maturity and high interestrates. The Government of Liberia is committed under the terms of stand-byarrangement with the IMF to avoid further deterioration in the debt profile soas to keep the debt service burden within tolerable limits. The programagreed in early 1979 imposed ceiling on public sector-external borrowings withmaturities of between one and ten years. Government would be advised not toexceed these ceilings for additional hard term borrowings from private banksand suppliers at least during next two to three years. Concessional borrowingsfrom bilateral donors and international institutions should be coordinated bythe Ministry of Planning and Economic Affairs and contracted only for suchventures whose economic and financial viability is undisputed. Liberiawill require continued external assistance at concessional terms to help itdiversify its economic base in the framework of its Second Development Plan.

Prices and Monetary Developments

Consumer Prices

35. The rapid rise in the current public and capital expendituresand slow growth of the directly productive sectors in Liberia should haveculminated in rapidly rising price level and inflationary pressures. But aliberal import policy which allows an unrestricted flow of goods, a sensibleinterest rate structure which discourages speculative practices and freeoutflow of earnings by the migrants and expatriates working in Liberia wereable to restrain these pressures to some extent. It is not obvious that theycan be contained for long, especially if production activities decline. Theaverage annual increase in consumer prices during the past four years has beenbelow 10%. The latest data available for the first quarter of 1979 indicatesthat the current rate of increase is 14% over the corresponding period of1978. This is alarming especially since Monrovia Consumer Price Index wasshowing moderate increases in last two years. The percentage increase was5.8% in 1977 and 7% in 1978. This rate of increase is expected to level offand may decline after the expansionary effects of construction activityassociated with the OAU Conference have subsided. Little reliance can be madeon the index which is no longer an accurate mirror of price movements based asit is on a weighting system developed 15 years ago. The reported resultsshould therefore be interpreted with caution. For example, the mission wasinformed by the Liberian authorities that housing rentals and transportation

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costs in Monrovia had registered significant increases in the past couple ofyears. Because their weights in the overall index are biased downwards theCPI fails to capture the impact of these changes. It is recommended that theMinistry of Planning and Economic Affairs should undertake a revision of theindex to make it more accurate and updated. Notwithstanding the inadequacy ofthe price index the recent upsurge in prices only reflects the growing imbalancein the domestic demand and supply relationships. In 1977 Liberia faced, forthe first time, a deficit in its balance of trade due to large increase in itsimports.

Producer Prices

36. LPMC continued to set the producer prices for cocoa, coffee and palmproducts. Rubber prices are still determined by Firestone based on a formulataking into account fob Singapore RSS1 prices minus processing costs. Theaverage export price for Latex concentrate increased from 36.03 ¢/lb in 1974to 47.51 ¢/lb in 1978. The first quarterly average for 1979 shows it risingto 52.45 ¢/lb. The producer price for latex in the same period was 32.9 ¢/lbwhile the price paid for specification coagulum was 28.0 ¢/lb. This representsan increase of 20% over the prices prevailing in the same period a year ago.Farmers are receiving about 60% of f.o.b. Monrovia price which is an improvementover the past years. The Government have established Liberian Rubber ProcessingCorporation in 1976 to compete with Firestone in processing and marketingrubber. During 1977, LRPC purchased 9% of total private Liberian output.Rubber production decisions by Concessionaires are less sensitive to pricechanges in the short run and follow more closely the long-term productiontargets, replanting schemes etc. and therefore changes in output level inresponse to price movements are not so pronounced.

37. Cocoa price to farmers was increased from US$0.58 per lb for fairaverage quality to US$0.75 in 1977, and US$0.82 in 1978 represent an increaseof 40% in about two years. Coffee price was also doubled in 1977 from 40 ¢

to 78 0 for Coffee Robusta and 30 0 to 78 0 for Coffee Liberia. Theaverage export price for coffee was US$1.53 in 1978, lower than the previousyears average. Palm kernel purchase price was also raised from US$10 to US$12per bag. The LPMC pricing policy does not suggest any disincentive for theproducers. A comparison of producer prices for these commodities shows thatthe prices paid by LPMC are reported to be relatively higher than those paidin Sierra Leone and Ivory Coast. Coffee producer price were 55% of theaverage export price and cocoa prices were 48% of their export prices lastyear. Both these ratios are quite high compared to past years (except 1977).

Money and Credit

38. In the banking sector, the National Bank of Liberia raised theminimum reserve requirements on demand; time and savings deposits in 1978 to 9and 6% respectively. 100% of the obligatory reserves instead of 80% would berequired to be kept with the National Bank. The structure of interest ratewas also changed and the minimum interest payable on savings and time depositswas raised to 8 and 8.5% respectively. These rates yielded positive realgains on savings till recently as the inflation rate was only 7%. Now thatthe inflation rate is in double digits and if it continues to persist overtime, the deposit rates would need upward revision as the interest rates arealready uncontrolled.

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39. The net foreign assets of commercial banks declined in 1978 toUS$4.41 million as compared to US$31.3 million in 1977. The deposits ofdomestic residents were US$117 million by the end of 1978 rising by 13% overthe past year. Total domestic credit to both private and public sector wasexpanded considerably from US$115 million to US$153 million i.e. by 33%. Themajor cause of this was a three-fold expansion in credit made available toGovernment and public corporations (from US$7 million to US$21 million). Inaddition loans and advances made to Government by the National Bank amountedto US$17.3 million, Government was also provided by the National Bank anoverdraft facility of US$18 million in addition to US$30 million for importfinancing. Most of the import financing was used to import refined petroleumproducts for Liberia Petroleum Refining Company when the Company was shut down.

40. Most of the private sector credit was funnelled into commercesector (46%). The share,of agriculture declined from 25.8% in 1976 to 21.5%in 1977 and 16.6% in 1978. In nominal terms the volume of credit available toagriculture was the same as that in the past year and in real terms it wentdown by 7%, quite contrary to the Government's policy of expanding creditfacilities to agriculture sector which is showing buoyancy in the context of astagnating economy. Construction sector received US$12.6 million i.e. 50%higher than the previous year allocation again confirming the evidence alludedto earlier that both,the domestic and external resources were finding theirway, disproportionately, to building projects. Loans for home improvementfigured prominently in commercial bank lending operations for the first timein 1978 and 8.4% of the total credit was channelled to this sector. Inprevious years home improvement loans were insignificant. It is desirablethat credit availability to agriculture sector by commercial banks be increasedand banking facilities be extended to some important rural centers.

Table 12: PRODUCER PRICES FOR MAIN CROPS

------Prices------ As % of Export Price1976 1977 1978 1976 1977 1978

Cocoa (cents/lb 27.5 58.0 82.0 43 36 48

Coffee (cents/lb) 40.0 70.0 78.0 48 60 55

Palm kernel (dollar/bag) 10.0 10.0 12.0 - - -

Rubber (cents/lb) Latex 24.1 30.6 32.9 75 75 70

Sp. Coag. 22.4 23.2 28.0 62 60 64

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II. DEVELOPMENT PLANNING AND FUTURE PROSPECTS

First Development Plan (1976 - 80)

41. The First Development Plan of Liberia came into operation in July1976, constituting the first major policy document by the Government on thedevelopment efforts of the country. It had been prepared under difficultconditions, within a short period of time and with very limited data base. Assuch, the-Plan was a pioneering effort in the Liberian context and signified amajor step in initiating a systematic planning process. The objectives of thePlan were commendable and, given the uncertainty involved in projectingresources, reflected a realistic appraisal of the economic situation and achange in the right direction. The main objectives of the Plan were: (a)diversification of production; (b) dispersion of sustainable socio-economicactivities throughout the country; (c) total involvement of the entire popula-tion in the development effort; and (d) equitable distribution of the benefitsof economic growth and diversification so as to ensure an acceptable standardof living to people throughout the country.

42. The Plan dealt with public sector investment only and the privatesector was left out of the analysis even as an indicative framework. However,even viewed simply as a public sector investment program, the plan did notpresent a clear and consistent expression of inter-sectoral or intra-sectoralpriorities. It did not provide the important link between investment decisionsproposed and the attainment of the Plan objectives, i.e., the identificationof specific policy instruments and how those policies could help achieve thegoals set in the Plan. The Plan, therefore, essentially comprised a compila-tion of the various development projects in the public sector.

43. Because the bulk of resources for planned investment are generatedby sources outside the direct Liberian control, e.g., foreign aid, or revenuesfrom iron ore exports, themselves subject to the vagaries of internationaleconomic fluctuations, the Liberian approach to planning needs to have specialfeatures. It is obviously important to produce a plan document that relatesthe expected resources to proposed policy decisions and project choices.Given the Liberian circumstances, however, it is even more important to focuson the process of planning, revising and adjusting policies in response tochanging conditions while keeping the basic objectives constantly in mind.

44. The original plan envisaged an outlay of US$415 million over theperiod 1976-80. Of this amount, US$164 million was proposed to be provided bypublic savings and US$251 million from external sources. 54 percent ofthe plan allocations was devoted to physical infrastructure--transport andcommunications and public utilities--20 percent to agriculture and ruraldevelopment and 18 percent to social services (education, health, housing,etc.). The plan was revised in March 1978 and the investment target wasincreased to US$585 million. While the percentage shares of agriculture andrural development remained unchanged, miscellaneous projects and General

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Government (mostly for OAU Conference) were allocated US$121.8 million orabout 20 percent of the revised total outlay. This reduced the share ofphysical infrastructure (excluding OAU Conference buildings) from 54 to 43percent. The Government is well aware of the limitations of the Plan documentand of the fact that events may already have overtaken the Plan targets.

45. The latest review of the plan progress by the MPEA (Table 13) showsthat by the end of FY 1979 an amount of US$410 million (in nominal terms)would have been spent on the plan 1/. It is estimated that an additionalamount of US$120 million would be spent during 1979-80. The total planexpenditure would thus approximate US$510 million 2/ or 87 percent of therevised target and 123 percent of the original plan in monetary terms. Out ofthis expenditure one third of US$175 million would have been incurred onprojects and activities not included in the plan. The remaining US$335million is likely to be spent on Plan projects.

Table 13: FIRST DEVELOPMENT PLAN - REVIEW OF PROGRESS(US$ Million)

Total Per-Original Revised Estimate Expenditure centage

SECTOR Allocation Allocation 1976-77 1977-78 1978-79 1976-79 Share

Production 97.0 118.8 15.963 33.077 32.160 81.200 (19.77)Agriculture 80.0 102.8 14.785 25.119 28.003 67.907 (16.54)Manufacturing 17.0 16.0 1.178 7.958 4.157 13.293 ( 3.23)

Infrastructure 210.0 256.4 45.310 52.084 62.792 160.186 (39.02)Roads 138.0 141.1 22.125 29.904 41.536 93.565 (22.80)Communications 34.0 41.2 13.645 9.895 3.986 27.526 ( 6.70)Public Utilities 48.0 74.1 9.540 12.285 17.270 39.095 ( 9.52)

Social Services 74.0 9.1 7.797 18.931 36.423 63.160 (15.37)Education 35.0 24.0 2.143 7.995 13.351 23.489 ( 5.72)Health 22.0 23.5 2.311 5.164 6.170 13.645 ( 3.32)Housing 9.0 21.9 1.250 0.263 12.500 14.013 ( 3.41)Social Welfare andRural Community 8.0 19.7 2.093 5.509 4.402 12.013 C 2.92)

General Servicesand Miscellaneous 22.0 121.8 12.730 41,273 51.909 105.912 (25.80)

TOTAL 415.0 585.0 81.800 145.365 183.284 a/ 410.458

Source: Ministry of Planning and Economic Affairs.

a/ See text footnote on page 23.

1/ The figure of US$410 million furnished by MPEA includes the FY 1979allocation level at US$183.2 million which is higher than US$159.5million shown in the budget documents. The mission estimates thatthe actual expenditure would be closer to the budget estimate thanthe plan allocation.

2/ US$510 million is derived by taking US$159.5 million as actualexpenditure for FY 1979 instead of US$183.2 million. The planexpenditure for 1976-79 on this basis would therefore be US$390million rather than US$410 million furnished by MPEA.

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46. An analysis of total development expenditure for the first threeyears of the plan indicates that 25 percent of the expenditure has beenincurred on general and miscellaneous projects whose links to specific eco-nomic and financial benefits are not very obvious. The only exception is theexpenditure on construction of a village including and around Hotel Africawhich could be justified if the Government expectation of turning this complexinto a tourist center are realized. However, Liberia faces competition inWest Africa from Sierra Leone, Ivory Coast and Gambia as potential touristresorts. Agriculture was given 16.5 percent of total allocations (the actualexpenditure is likely to be lower). Thirty-nine (39) percent of the expendi-ture went into infrastructure including public utilities. The largest singlesector to claim development resources was roads which received an allocationof US$93.5 million. Social services received the remaining 15% of the Planfunds. Education was allocated US$23.5 million. Expenditure on health wasabout 3% of the total expenditure. Housing schemes in Monrovia were allocatedUS$14 million but their impact on easing the housing shortage for the lowincome families is likely to be minimal.

47. The latest report of the Bureau of General Accounting for the periodJuly 1978 to March 1979 indicates that a total amount of US$79.5 million outof US$103.9 million provided in FY1979 had been paid so far out of thedevelopment budget. Seventy-five percent of these payments were made toGeneral Government (for construction of public buildings), Ministry of PublicWorks (for roads and bridges) and public corporations. The investment of $7.8million in Agrimeco, a public corporation dealing with land clearance andoperating at a loss since its inception, $4 million in Air Liberia and $3.5million in the National Housing Authority would have very little positiveimpact as these allocations were made mainly to finance their deficits andclear some of their past liabilities. Furthermore, construction of publicbuildings and special projects at a cost of $16.1 million would also make nosignificant contribution to the future growth of the economy. Roads andbridges in Monrovia were allocated $11.5 million for construction, while therural feeder roads got only $0.5 million.

48. The overall impact of first four-year development plan on GDPgrowth, additional employment opportunities, exports expansion or balance ofpayments improvement, increased public revenues or more equitable incomedistribution is also not likely to be very significant at least in short andmedium term, due to the investment mix of the plan i.e. 25% of the alloca-tions spent on buildings and facilities developed for OAU Conference, 40%invested in roads, highways, power, water and sewerage projects most of whichwill be completed in the next plan period and 15% on social services whoseimpact on the above variables will become obvious only in the long term.Positive contribution would be made by the agriculture development projectslike Lofa, Bong, Rubber, Forestry, Oil Palm on their completion. Similarly anumber of infrastructure projects would also help facilitate productionactivities. But other projects require a careful analysis.

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Rural-Urban Investment Allocations

49. One of the objectives outlined in the First Development Plan was toachieve equitable distribution of the benefits of economic growth and diversi-fication so as to ensure an acceptable standard of living to people throughoutthe country. The Plan further stated that the cornerstone of the diversifica-tion strategy was integrated rural development involving comprehensive pro-grams for raising agricultural productivity and providing social and physicalinfrastructure so as to improve the quality of life in the villages where mostLiberians lived. To make headway in this direction the main instrument underthe direct control of the public policy makers was the investment program. Itis therefore of some interest to test this proposition by looking at thedistribution of public investment (undertaken between 1976/77-1978/79) amongthe urban and rural areas. The projects among various sectors were dividedamong these. two areas either on the basis of their location or likely benefi-ciaries. Some of the projects did not fall under either of these two cate-gories and were lumped as 'unallocable'. Where the projects provided partialbenefits to both. areas, the investment costs were broken down to reflectthese benefits. The results of this exercise only represent broad orders ofmagnitude. (Table 14). The total expenditure of US$410 million was dis-tributed in the proportion of 2:1 among the urban and rural areas respec-tively (6% being unallocable). It also shows that the per capita investmentin the urban areas during these three years was about US$500 while the ruralareas got only one fifth of this amount or US$100 per capita. The average percapita investment for the whole country was US$230. The differential invest-ment pattern in the first plan period resulted mainly from the large expendi-tures incurred on infrastructure, utilities and public building projects inand around Monrovia. Expenditure on such kind of activities is quite easy toundertake but expenditure on rural development involves a complex meshing ofinstitutions, innovations, administrative skills and attitudes. Such anintegration involves, .time and extraordinary efforts. A span of four years isinsufficient for the purpose.

Table 14: PUBLIC INVESTMENT ALLOCATIONS BY RURAL-URBAN AREAS 1976-79(US$ million)

Rural Urban Unallocable Total

Agriculture 67.9 - - 67.9Manufacturing - 13.3 - 13.3Roads 23.0 70.5 - 93.5Education 8.5 10.0 5.0 23.5Health 3.6 9.0 1.0 13.6Public utilities 5.6 33.4 - 39.0Housing - 14.0 - 14.0Communications 1.5 26.-0 - 27.5Social Welfare &Rural Community 12.0 - - 12.0

Miscellaneous andGeneral Government 5.0 80.9 20.0 105.9

127.1 257.1 26.0 410.2

Population (Million) 1,259 0,519 1,778Per CapitaInvestment US$100.9 US$495.4 US$230

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Sources of Financing

50. The revised plan expenditure of US$585 million was proposed to befinanced in the following manner:

Domestic Revenues US$164 millionExternal Assistance US$326 millionGap US$95 million

The Ministry of Finance has projected, in the light of the experience gainedduring the first three years, that the financing gap would increase from US$95million to US$129 million if the Plan target of US$585 million was to beachieved. Domestic resources would remain at the same level but externalassistance was revised downward by 9 percent to US$290 million. To fill thisgap, the Ministry of Finance has already contracted commercial borrowingsfrom abroad amounting to US$104 million.

51. In view of the stabilization program agreed with IMF the Governmentis committed to reduce both its recurrent and its development expenditures andincrease its revenues thus minimizing the need for external borrowing inFY 80. Therefore the estimated total plan expenditure of US$510 millionis likely to be financed in the following manner:

Domestic Revenues US$170 millionExternal Assistance US$340 million

(including commercial borrowings)

Total US$510 million

Thus in the final analysis only 33% of plan investment would be financed outqf domestic resources and 67% from external sources--bilateral donors, inter-national institutions, commercial banks and suppliers. At the beginning ofthe Plan period only 3% of public investment was financed by externalagencies. This growing dependence upon external assistance for developmentfinancing, unless it is reversed in the second plan would add a furtherdimension of uncertainty and strain its debt servicing capacity.

Planning Process

52. The experience gained during the first three years of the plan hasmade the Government increasingly aware that in addition to the availability offinancial resources to fund the projects and the absorptive capacity of theeconomy, a more serious problem was the apparent lack of plan discipline andattention to the planning process itself, i.e. the formulation, preparation,selection, implementation and follow-up of development projects.

A3. At present, lack of coordination among various ministries andagencies responsible for economic management creates, at times, conflictingresults. Steps need to be taken to create a coherent economic policy makingapparatus. It is not the absence of appropriate institutions, but the

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lack of their effectiveness which is a matter of concern. Legal and adminis-trative structures and institutions have already been established. Theproblems are more in the nature of developing the necessary discipline andsense of responsibility and effective day-to-day functioning of these institu-tions. For example the National Planning Council--the highest economiccoordination body in the country which has not met for quite a few yearsshould meet more often. The Executive Committee of NPC should play a moredominant role in economic policy making. To avoid economic policy decisionsof conflicting nature the Ministries/agencies should invariably consult otherrelevant Ministries.

54. This fragmented approach to economic management is no where moreobvious than the budgetary process itself. At present, fiscal administration,revenue raising and debt management are the responsibilities of MOF, recurrentexpenditure control and budget formulation fall within the realm of the Bureauof Budget and the task of appropriation and control over development expendi-ture belongs to the MPEA. In actual practice, transfers from approved on-going plan projects to new projects, new expenditure on unfunded projects,extra budgetary expenditures, expenditures of recurrent nature being financedout of development funds and excess expenditure are quite common and have beena major force in contributing to internal financial imbalance. Again, aBudget Committee consisting of the representatives of the three agencies doesexist on paper, but it has not been very successful in curbing the deviationsfrom the budget. Lack of coordination, despite the existence of institutions,is probably due to the fact that the responsibilities for mobilizing revenuesare separated from controlling expenditure and an obvious alternative forconsideration is to place the Bureau of Budget under the Ministry ofFinance--a practice quite common among a number of neighboring West Africancountries. This would at least eliminate the present dichotomy and perhapsencourage strict expenditure control within the budget and plan framework.

55. A second important problem is non-existence of a formal mechanismwhereby development projects are scrutinized, screened and approved. In theabsence of such a mechanism, it is not possible to establish either thefinancial or economic viability of the projects independently. Neither canthe planners quantify and aggregate the benefits accruing from these projectsto discern their impact on GDP, balance of payments, employment, publicrevenues and income distribution. It is important for Liberia to adopt aformal appraisal and approval procedure with the Executive Committee ofNational Planning Council taking decisions on all important projects (e.g.costing more than US$1 million) on the recommendations of the TechnicalCommittee. The Executive Committee should not only be entrusted with theapproval, but also with the periodic review of the projects and plan imple-mentation. Projects costing less than a specified amount (e.g. less than US$1million) may be approved by the Technical Committee itself. Of cburse, inboth these events, the Technical Committee would follow pre-determinedappraisal guidelines and criteria set up ln accordance with the plan objec-tives. Once the projects have been appraised, approved and included-in theplan or annual development budget, they also need to be monitored at periodicintervals by the MPEA to ensure that their implementation is proceeding

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unhindered and the approved targets are being fulfilled and there are no majordeviations. If the project face some serious bottlenecks which could not beremoved by the executing agency itself, the MPEA should initiate the correc-tive steps to remove these bottlenecks in active collaboration with theconcerned ministries.

56. A related but equally relevant issue has to do with the raising ofinternal and external debt to finance the resource gap, their composition andterms. While the MOF is the most suitable agency to negotiate, shop aroundand raise the debt, a prior decision needs to be taken jointly by the MPEA andMOF about the kind of projects for which such borrowing is to be resorted. Inaddition to the aggregate debt servicing capacity of the country--both interms of exports as well as public revenues--another factor which meritsserious consideration is the pay-back or revenue generating capacity bothdirect as well as indirect of the individual projects for which such loans arecontracted, the precise contribution of these projects toward the fulfillmentof the stated national objectives and their recurring burden on publicfinances. Such an analysis is necessary before the loans are authorized to beraised. The same recommendation holds true for mobilizing external technicalassistance. Technical assistance should be coordinated at a focal point withthe ultimate purpose of supporting the objectives of the plan and the projectsincluded in it. Unfortunately, the current environment whereby ad-hoc assis-tance is solicited by the executing agencies based on their own perception orinspired by the objectives of the different donor agencies for projectswithout reference to their economic and social implications is not encouragingthe accumulation of appropriate technical skills required by Liberia. TheMinistry of Planning and Economic Affairs and the Technical Committee of NPCwould have to assume a more active role in coordinating and utilizing externaltechnical assistance prescribing the fields in which technical assistance isto be sought, the number and level of personnel to be trained, the kind ofexpertise needed from foreign donor agencies, and the future tasks for whichthese trained personnel would be utilized.

Second Development Plan (1980-84)

57. The MPEA is currently engaged in the formulation of preliminaryguidelines for the Second Four-Year Development Plan (1980-84). The objectivesof the first plan are still relevant for Liberia as further progress needs tobe made towards achieving these objectives during the next four years. Thefirst and foremost task before the planners right now is to clearly identifythe physical benefits and achievements which have accrued from the implemen-tation of the first plan, e.g. additional road mileage built, increase inagriculture production especially non-traditional crops, growth in the incomesof households outside Monrovia, etc. Having accomplished that, it would beuseful to screen the ongoing projects which have not been completed in thefirst plan period and are likely to spill over in the next plan in twocategories: (a) those projects which are likely to have positive impact onthe GDP growth, diversification of production, better income distribution,exports, public revenues, productive employment (b) those projects whosecontribution towards these objectives is not quite clearly discernible.

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Completion of the projects in category (a) must obviously get first priorityas the marginal benefits would certainly exceed the marginal costs required tocomplete them. The overflow of these projects would thus constitute thefirst claim upon the plan resources. The projects in Category (b) whoseeconomic and social justification is not established could either be graduallyphased out or slowed down.

58. Infrastructure facilities require considerable outlays and preempta large proportion of resources due to their indivisible nature. Some ofthose facilities proposed in the First Plan may have very little impact oneither production or investment or even improvement of regional distribution.These projects are the most obvious candidates for elimination. Similarly,in the agriculture development sector, large-scale mechanized farming projectslike rice and operations like AGRIMECO are not producing the kind of benefitswhich were expected. Small-farm development with mixed farming patternsappears to be a more viable alternative and is cost effective. In education,relocation of University of Liberia does not seem to be such an urgent projectthat it could not be staggered. MATADI project in housing may be picked up byprivate sector if suitable incentives are provided to them. Similarly, alarge number of such ongoing projects may be dropped from the next plan. Theresources made free from such an exercise may be appropriated towards projectswith potential production impact.

59. After aggregating the cost of completing the on-going projects inCategory (a), the second step for the MPEA should be to sum up the financingrequirements of the externally financed projects including the loans/grantscommitted or in the pipeline. Some of these projects are already underimplementation and hence included in the list of on-going projects. There arequite a few others in which commitments have been made or the projects havealready been appraised and agreed upon by the donor agencies and the Govern-ment of Liberia. This category should claim the second priority providedthere is no doubt in the minds of the planners that these projects fit in thePlan objectives. Again within this category, preference should be given toproduction-oriented projects which could yield quick returns in short run.

60. Although the objectives of the Plan are still very much validand desirable, the strains imposed upon the Liberian economy in the pastfew years due to poor performance of iron ore sector and enormous growthin demand caused by the government sector dictate an early expansion inthe production capacity of-the country. The commodity producing sectorsfailed to grow commensurately with the domestic demand in the last Planperiod. Therefore, the focus of the Second Plan should be to choose apackage of projects and programs which would maximize returns in thecommodity producing sectors in the short run. Improvement in agriculturaloutput through increased productivity, promotion -of small and medium-scaleenterprises and improving the productivity of existing assets would not onlyhelp in reversing the current trend of slow growth but also work in the same

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direction as the other Plan objectives. It may be emphasized that thisapproach does not deny the need for investment on physical infrastructureand social services. What it attempts to do is to advocate a change in thecomposition of the latter. Only those physical infrastructure and socialservices which can directly support and sustain production plans and projectsshould be included in the Plan. The composition of the public investment Planshould, therefore, be biased in favor of:

(i) on-going projects of Category (a) from the First Plan;

(ii) short-term, quick yielding production projectsespecially in the non-enclave sector which can provideadditional employment or reduce income disparities;

(iii) projects for which external assistance has been committedand which are within the Plan objectives;

(iv) infrastructure and social services in direct support ofproduction.

61. The need for higher domestic savings to finance domestic invest-ments was never so great in Liberia as it appears today. A part of increasedincomes resulting from the Plan investments would have to be siphoned offeither as public or private savings. Additional domestic savings can bechannelled through appropriate cost recovery mechanism e.g. public utilitytariffs, taxation policies, incentives to private sector, public corporationprofits and control on inefficient and wasteful public expenditure.

62. This leads to another question about the relative roles of publicand private sectors. Unlike the past plan, the ensuing Plan should alsospecify the role of private sector in the national development effort and setout the policies and instruments required for playing that role. This recom-mended approach is in no way in conflict with other objectives like diversifi-cation of production, improved income distribution, participation of totalpopulation in development efforts and dispersion of socio-economic activitiesthroughout the country. On the contrary, each of these objectives can beachieved by a careful design of projects assigned to and policies aimed atprivate sector.

63. Finally, success in achieving the Second Plan objectives and targetswill depend crucially on strengthening development administration includingplanning process, the coordination of economic policies and decision-making,and on ensuring consistency between various public policy objectives. TheMPEA is currently assisted by a planning assistance advisory team jointlyfinanced by UNDP/EEC/USAID and IBRD and it is hoped that this assistancewould help institution building capacity for development planning and admin-istration in Liberia.

Size of the Plan and its Financing

64. The second plan preparation is currently underway and is expectedto be completed by April 1980. As pointed out earlier (para. 43), estimatingthe likely future domestic resource availabilities presents, in the case ofLiberia, special difficulties and calls for particular caution. First, it

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should -be possible to arrive at reasonably safe estimates of the cost ofongoing projects that will be completed during the second plan period, thusproviding a benchmark for estimating the realistic scope for new projects.Second, as the size of the current budgetary surplus will be one major elementin determining the domestic resources available for investment, the estimatesof this surplus should be based on firm policy decisions concerning the

-Government's future wage bill; consumer-subsidies for rice; and upgrading ofeducation and health services. Finally, as realistic as possible assumptionsshould be made about the real imponderables: the-outlook for iron ore markets,magnitudes and composition of foreign aid disbursements, and of foreigninvestment. Taking into account the country's absorptive capacity, likelydomestic resource-availabilities and a feasible flow.of external resources,there will be:limited scope for having a second plan of a size that differssignificantly, in real terms, from the First Development Plan. Assuming agood performance on the current expenditure side, and should the marketoutlook for iron ore-improve during the next couple of years, it may bepossible to increase investment by 10-20 percent.

65. From the public revenues side, the sharp increase recorded followingintroduction-of 1977 Tax and Revenue-Law is not likely to repeat itself unlesssome additional measures are taken. Although there is scope for improving thetax performance, the-growth in public revenues is probably unlikely to bespectacular and-may range between 7-10 percent per annum in current terms.Liberia would; therefore, continue to require substantial concessionaryborrowing -from bilateral and multilateral institutions in support of itsdevelopment plan. The changing debt servicing profile would permit Liberia tocontract only a limited amount of non-concessional borrowing. In additionsome of these external resources would also be partly pre-empted by theongoing development projects and other projects in the pipeline. Thus thequantum of free external resources would be limited to this extent and wouldpresent itself as a constraint. Liberian planners are aware of these con-straints and expect -to be able to formulate a plan which is realistic in itssize and at the, same time consistent with the country's development objectives.

Policy Issues for the Second e'lan

66. However important the formulation of investment program is, itseffectiveness will be largely conditioned by the overall policy framework.Following are policy issues that the Liberian policy makers will be facing inthe three-most important sectors of agriculture, infrastructure development,education,and training. This list of issues is not intended to be-exhaustive;it merely reflects the,.Bank's experience in its involvement of these sectorsand is intended as a summary of ongoing dialogue with the Government atvarious levels.

Agriculture

67. (a) The experience with-integrated agriculture projects-like Lofa andBong shows that such,.an-integrated approach in a.specific area with-mixedfarming pattern, i.e., combination of food and tree crops appears to be a more

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suitable alternative for agriculture development than large scale mechanizedcommodity production projects. Extension of such an approach to other areaslike Nimba, southern counties, Lofa II is recommended for implementation in

the Second Plan period.

(b) Adaptive research and farm studies on upland rice, swamp rice

and irrigated. rice could be accelerated to find out the most practicableand cost-effective methods to improve the productivity of rice cultivation

and thus affect the economics of rice production in Liberia. A related

and important action is the improvement of the support services and inputdeliveries.

(c) If it is found that the present land tenure system does not provide

adequate security to the farmers to improve the land or undertake investmentin medium-term farm investments, legal and institutional measures could be

taken to develop a rational land tenure system, commensurate with the objec-tives of maximizing agricultural output and more equitable distribution ofrural incomes.

(d) While the small farmer development would be handled by the inte-

grated agriculture projects private commercial farms owned by Liberiansalso deserve encouragement and support. These farms can contribute a lotto meet the rice requirements of Liberia as well as contribute to increasedexports. The assistance required by them is only marginal in nature and

should be provided by the government agenices and corporations. Discrimina-tory policies or practice against them would cause a set back to higheragriculture output and GDP.

Infrastructure

68. (a) The development of national highway system consisting of

(i) Kolahun - Gbarnga - Ganta - Tapeta - Zwedru - Tatuke -and (ii) Monrovia - Kakata - Totota - Ganta - Sanniquelliecould be given priority. The studies for sectors not com-pleted in the First Plan could be undertaken and constructioncould begin on the sectors for which studies have been com-pleted and economic feasibility clearly established. Feasibil-ity studies of southeast development and Buchanan-Greenvilleroads deserve priority.

(b) Adequate attention and resources could be provided for establishingan effective and rational system for the maintenance of the existingand completed road network.

(c) The feeder roads and farm-to-market roads could be linked to thenational highway system.

(d) The feeder roads and farm-to-market roads could first be estab-lished in the area undergoing intensive development activities.

(e) Tlransport sector planning needs to be integrated and coordinatedwith executing agencies at a central point.

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(f) Construction of feeder roads and their maintenance could be theresponsibility of the country superintendent and his technicalstaff, but the standards and design should'be developed by theMinistry of Public Works. The MPW should also monitor the prog-ress of construction and enforcement of standards.

(g) The decision to operate a public transport system in Monroviamay be examined in the light of its implications for recurrentbudget and displacement of private sector transport services.

(h) The current infrastructure facilities maintained by the con-cession sector and their future investment in such facilitiesshould be taken into account while planning sector investment.

(i) Future development of ports in Liberia should take into con-sideration the growth in container traffic, evacuation of Woligisiiron ore and the likely transportation of the Mifergui-Nimba Ore.

Education and Training

69. (a) The existing education and training system should be mademore relevant to priority manpower requirements by gettingexisting programs and institutions to (i) operate at theleast possible cost required to achieve their objectives,(ii) operate effectively with capable teach'ers, necessarymaterials and qualified students,'and (iii) produce highquality graduates.

(b) The Government should formulate a more comprehensive long-rangeprogram for Liberianization based on coherent information aboutthe jobs which could be Liberianized and on the quality andtypes of skills needed to replace particular expatriate positionsindicating how Liberian workers will be trained to fill targetedpositions.

(c) The incentive system should be restructured to attract peopleto train and work in priority fields. The pay system forcivil service structure should reflect more adequately thanthe present the demand for and scarcities of particularskills, especially those in the fields of education andtraining.

(d) To promote effective utilization of manpower and careerdevelopment of workers and to upgrade the quality of staffopportunities for. on-the-job training-should be well exploited.

SHORT AND MEDIUM TERM PROSPECTS

70. The prime determinants of the rate of economic growth during thenext five years will be the iron ore and rubber production. Investment in newiron ore mines is not likely to mature in this plan period and hence maximum

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utilization of the existing capacity, re-opening of the pellitising plants andfavorable world prices would contribute to increases in iron ore sector. Theaverage unit price of iron ore is projected to be higher than the past fouryears' level and the higher valued pellet production of LAMCO is expected tobe resumed in the next one to two years. The replanted acreage under rubberwith high yielding varieties should be able to boost the agg- gate output andgiven the prospects of rising world prices for natural rubber there is suffi-cient likelihood of a buoyancy in rubber production and exports. Prospectsfor agricultural growth depend mainly on the successful implementation of someon-going and other projects under preparation of integrated area developmentand tree crop development. Both the absolute volume and the share of timberand tree crop exports in the total export earnings are expected to be muchhigher than the current level. Monopoly profits from tree crop exports andtaxes on timber products would, in turn, also contribute to increased Govern-ment revenues. The probability of recession in the U.S. and other industrial-ized countries with consequential slowing down of primary exports, the contin-uing inflation in the Western world resulting in higher prices of imports andthe impact of rising energy costs generate do uncertainties. However, ifWoligisi iron ore mine gets on production stream and the world market for oretakes an upswing Liberia may get back on the track of higher growth rates.

GDP Growth

71. The 1979-80 period is going to be difficult for the Liberian econ-omy. Both external influences and internal demand created by Governmentexpenditures and current consumption are likely to force a continuation ofthe recent growth pattern. Demand for iron ore in the world market andconsequently domestic production are not expected to change significantly andan upswing is not in the offing until 1981. Past investments in mining sectorwould not be able to generate any incremental output as these operations arekept dormant. Value added in iron ore is projected in 1979 to be the same as1978 and 5% higher in 1980. Agriculture production -- both monetary andsubsistence -- would keep up the positive trends thus partially offsetting thedecline in mining value added. Rubber, coffee, cocoa and forestry productsare all expected to perform better than in the previous year. Agriculturesector is assumed to grow by 4% in both years. Contribution of constructionsector would be much lower than 1978 due to completion of OAU conferencebuildings while Government sector would not expand as fast as it did in thepast five years as no substantial increase is envisaged in the Governmentbudgetary expenditures.

72. The outlook for real GDP growth in the coming two years is thuslikely to be around 2 to 3% unless the predictions about iron ore sector areinvalidated. Any predictions beyond this short-term horizon are shrouded byso many unknowns that it is difficult to make any meaningful assessment. Oncethe Government's initiatives after the OAU Conference become clear and the newdevelopment plan is announced it will be easy to develop the projectionsbeyond 1980. Table 16 below presents macro-economic projections for 1979 and1980.

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Table 15: MACRO-ECONOMIC PROJECTIONS FOR 1979 AND 1980($Million, 1971 Constant Prices)

Actual 1978 Estimate 1979 Projected 1980

Iron Ore Value Added .81.0 88,.O 90.0Agriculture Value Added 139.4 145.0 150.0Manufacturing Value Added 28.7 30.0 32.0Services Value Added 184.9 186.0 190.0GDP (f.c.) 439.0 449.0 462.0Investment 121.6 112.0 117.0Consumption 274.6 270.0 282.0

Balance of Trade

73. As iron ore exports constitute the single largest element of thebalance of trade projections, assumptions regarding their likely behaviorin 1979 and 1980 would largely influence the outcome. Inventories of iron oreaccumulated in the past have already been used up for shipments in 1978 whenthe volume of iron ore exports exceeded the actual production by about 3million tons. Domestic production in the next two years will increasefrom the current level, of 17.8 million tons to 19 million tons. As theinventories-piled up.during the past few years have already been shipped in1978 (domestic production was 17.8 million while exports were 20.8 million)the quantities available for exports in 1979 and 1980 would be lower than the1978 level. The average unit f.o.b. price is, however, projected to be higherin the next two years. .The net result is that iron ore export earnings areassumed to increase slightly in the projections.

74. Rubber prices are expected to be higher in the. period under reviewbut the volume of domestic production, especially output from Liberian-ownedfarms appears to be declining or at best stagnant. Should the total outputlevel remain the same as 1978 export earnings from rubber will increase by 8to 9x.

75. Forestry products are assumed to maintain-their past performancewhile the recent failure of Brazilian coffee crop has given an unexpectedboost prices. If'LPMC'is able to capitalize on this temporary upsurge theearnings from coffee could be substantially higher than the past year and helpthe total export earnings to record a jump.

76. Merchandise imports in Liberia consist mainly of imports of crudeoil, rice, machinery and equipment which are essential for consumption andinvestment purpose's.' In respect of oil, Liberian Refinery has resumed, produc-tion and this may diminish the import demand for refined petroleum productsbut the recent hike in crude oil prices by OPEC may more than counteract this.Oil imports are -expected to rise by 40% in value. Rice imports depend. uponthe domestic production and the international price. The domestic productionwill be sufficient to keep pace with the population growth while the landedcost of imported rice in Liberia appears to be slightly higher than 1978. Theimport bill for rice would therefore be higher than the current level. Thereis another direction through which import demand could be lower i.e., equip-ment and machinery brought in for OAU Conference buildings project.

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77. Taking the above factors into account the trade balance is projectedto be negative (Table 17) but only slightly. This projection may not holdtrue if the earnings from coffee exports record a significant increase.Should the Government go ahead with withdrawal of exemptions of import dutyfrom concession sector and incentive code investments, major decline willoccur in the total imports resulting in a sizeable surplus of the tradebalance. AlLernatively, if the favorable price trend of iron ore and rubberexports continues unabated Liberia would end up with a trade surplus.

Table 16: BALANCE OF TRADE PROJECTIONS(Current $ Million)

Actual 1978 1979 1980

Exports

- Iron Ore 274.3 285.0 295.0- Rubber 69.1 75.0 80.0- Others 142.9 150.0 160.0

486.3 515.0 535.0

Imports

- Food 66.9 75.0 82.0- Oil 84.6 126.0 135.0- Others 80.8 80.0 90.0- Manufactured Goods 91.9 90.0 95.0- Machinery and Transport

Equipment 156.6 144.0 150.0480.8 515.0 557.0

Trade Balance +5.5 -5.0 -17.0

Public Finance

78. The following Table shows the likely behavior of the various com-ponents of the Government budget for FY1980.

Table 17: PUBLIC FINANCE FORECAST FOR FY1980-81

FY80 FY81

Government Revenues $215 m. $230 m.Current Expenditures

(including interest payments (-)$165 m. (-)$177 m.Current Surplus $ 50 m. $ 53 m.Development Expenditure (-)$125 m. (-)$125 m.Overall Budgetary Deficit (-)$ 75 m. (-)$ 72 m.

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The key assumptions made in the above forecast are:

(a) Government revenues would grow by 7% annually derived from thetax buoyancies, for the period 1970-78.

(b) Current expenditure would initially be reduced in FY1980 by $10 m.(the operating cost of OAU Conference) and then allowed to grow at5% per annum.

(c) Development expenditure would remain stable at an annual levelof $125 million.

79. The budget for FY1980, recently announced by the Government, esti-mates revenues at $214 million representing an increase of 7% over the pastyear. The current expenditure estimates correspond closely to our forecastswhile the development budget is lower by $5 million. The overall budgetarydeficit is $80 million. Government has already lined up external financing tothe tune of $80 million (including debt amortization of $22 million) and mayrequire US$18 million of additional borrowing unless some other cut is imposedon expenditure. According to the understanding reached with IMF the overallbudgetary deficit will not be allowed to exceed $30 million.

External Borrowing

80. The external debt servicing obligations of Liberia are presentedin Table 19 based on the total outstanding debt at the end of December 1978.Two alternate sets of projections are presented differing only in the growthrates of public revenues. Alternative 'A' assumes the base line publicrevenues in 1979/80 to be $215 million and builds up the estimates for thesubsequent years up to 1983/84 on an annual compound rate of growth of 7%.Alternative 'B' starts with the base line figure of $225 as the public reve-nues and allows it to grow by 10% annually. Thus the two alternatives repre-sent the range within which the public revenues are likely to move. Theprojections clearly demonstrate that the debt servicing liability wouldcross 25 percent in 1981 under both alternatives and would be below 252only if the optimistic projections about publ-lic revenues hold ground.Otherwise by 1983, the debt servicing obligations would be as high as 27percent. As a proportion of export earnings,' the debt servicing ratio wouldmove up from 9 percent to 12.5 percent in 1983 assuming that the exportearnings rise at least by 5 percent per year (alternative A). If the iron oreexports turn out to be more optimistic and the timber and tree crop exportsattain a larger share,than the present the export earnings would be muchhigher consequently lowering the debt servicing ratio to 11.5 percent in 1983(assuming export-growth rate of 8 percent per year after 1980 - alternativeB).

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Table 18: EXTERNAL DEBT SERVICE PROJECTIONS

1979 1980 1981 1982 1983

1. Total Outstanding Debt 656.6 634.2 606.0 569.1 526.0

2. Total Disbursed andOutstanding Debt 341.5 429.7 495.8 511.7 496.7

3. Service Payments 44.2 58.4 68.5 72.0 77.0Amortization 22.3 28.1 36.9 43.1 51.2Interest 21.9 30.3 31.6 28.9 25.8

4. Public RevenuesAlternative A 215.0 230.0 246.0 263.0 281.0Alternative B 225.0 247.0 272.0 299.0 329.0

5. Exports and N.F.S.Alternative A 508.0 533.0 558.0 585.0 615.0Alternative B 508.0 533.0 575.0 621.0 671.0

6. Public Debt Service as% of Public Revenues:Alternative A 20.5 25.4 27.8 27.4 27.4Alternative B 19.6 23.6 25.2 24.1 23.4

7. Debt Service as % ofExportsAlternative A 8.7 10.9 12.3 12.3 12.5Alternative B 8.7 10.9 11.9 11.6 11.5

The above projections are, of course, based on the initial assumption (para 62c) that the Government is expected to pursue a cautious policy and will notcontract any new short term external loan in the Second Plan Period whichwould come up for repayment or interest payment by 1983 i.e. the new loanswould be long-term maturity, low interest rates with grace period of at least3 years. If these assumptions do not remain valid and the Government borrowsfrom private banks and suppliers then the debt servicing ratios would behigher than shown in Table 19.

Monetary Situation

81. Credit allocation to public sector from the banking sources shouldbe lower than 1978 because the Government has already contracted externalborrowings to tide over the resource gap. Private credit expansion forconstruction sector would also be reduced and given proper directions andguidance by the National Bank the resources thus released could be channelizedtowards agriculture sector. The inflation rate, which picked up momentumsince the last quarter of 1978, is likely to average 14 to 15 percent for theyear 1979.

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Employment

82. Employment situation in Monrovia will suffer a severe setback afterAugust 1979. The completion of construction project and increased activityin services and trade subsectors due to the OAU Conference is likely to renderapproximately 4 to 5 thousand persons unemployed or partiall- employed. Someof these workers have migrated from the neighboring countries and in allprobability may return to their home countries but a lot of others from therural areas of Liberia who have tasted the 'good' life of Monrovia would bereluctant to do so. The proposed urban development project and small scaleenterprise projects are timely interventions from employment and incomeenhancement viewpoint. Some of the on-going development projects which weremoving slowly should also get a flip as some of the skilled workers releasedfrom construction sector should be able to get absorbed. Proper schedulingand careful organization should be able to remove some of the bottlenecks fromthe implementation of these projects slowed down in the past due to skilledlabor shortages. Continued external assistance on concessionary terms wouldbe contingent upon effective utilization and proper implementation of pastprojects. Scarce development management capacity of Liberia needs not only tobe expanded but also utilized efficiently and effectively.

Conclusion

83. The analysis presented above shows that domestic resource gapwould be the binding constraint on the future economic growth of Liberia.Large flows of external finance, especially on less than concessionary termsare not feasible: as they would impose burdens on the future debt bearingcapacity of the country. In more specific terms, current expenditureswould have to be restricted to the present level for a period of next twoyears. This will mean avoiding consumer subsidies on rice or raising thewage levels of public servants (except those at the lowest tiers if someother components of recurrent expenditure can be curtailed to offset thisraise) and freezing public sector hiring. Non-tax receipts and indirect taxeswould have to be raised above their present levels. Direct tax administrationneeds strengthening to curb tax evasion. Incentives to private investors(both large and small) require a major review and restructuring to align themwith the development objectives and to boost industrial production and employ-ment. Liberia has a sound economic environment. There is an awareness thatthe events of the recent few years dictate an austerity in the short term ifthe shared objectives of the majority of the population are to be realized.

84. There is a-growing awareness of these issues and problems especiallyby the Ministries of Planning and Finance and purposeful efforts by them torestore the momentum of economic growth prevailing in Liberia in the earlyseventies blended with equity and distributive justice. It is the mission'sexpectation that the Second Development Plan would not only take a cognizanceof these important issues but also devote considerable attention to the actualmechanics whereby specific policies and instruments would be developed toattack these issues in a medium- or long-term perspective.

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III. SELECTED DEVELOPMENT ISSUES

85. The following paragraphs attempt to focus on some important issueswhich are crucial to Liberia's future development. They have been selectedfrom a wide variety of issues primarily due to the concerns expressed aboutthem by the Liberian policy makers and their intimate link with developmentplanning efforts underway in the country.

PUBLIC ADMINISTRATION

86. Since 1960, when the Special Commission on Government Operations(SCOGO) was established to improve personnel management in the civil serviceand strengthen the administration of government agencies, considerable prog-ress has been made to improve the system, but the results in improved effi-ciency and output are still not very encouraging. The Civil Service Agency(CSA) was revitalized in 1973 and headed by a Director General responsibledirectly to the President. A Civil Service Act was introduced in the same yearreflecting Government's intention to have a merit system -- development of auniform position classification plan, pay plan, personnel action system,employee rights programs. The CSA drafted a set of Civil Service Rules in 1976to implement and operate a uniform Civil Service System. The rules lay downthe procedures for assigning a position to the correct class, for having aperson appointed to a job or dismissed and providing for protection of employ-ees' rights. The rules provide that recruitment to the Civil Service will beheld on the basis of a competitive examination. However, 'provisional'appointments by the appointing authority are permitted in certain cases.Grounds for disciplinary action are also specified and a requirement todocument in writing official reprimands, suspension, dismissal, etc. isincluded to insure that consistent government-wide standards are maintainedand that employees are treated fairly. Security of tenure is also attemptedthrough a grievance and appeal procedure providing employees with a regularand equitable process through which they can file grievances and appeals to aseven-member Board of Appeals. The Board was set up to act as a check againstarbitrary dismissals of civil servants and ensure responsible behavior bycivil servants.

87. Jobs in the Civil Service were divided into five categories --administrative, fiscal, professional, general and clerical. Positions in eachcategoty were grouped according to the nature of the work performed, theeducation and experience required to perform the work and the relative levelof difficulty and responsibility of the work. These classes were created withthe main purpose of minimizing the tendency to give salary differentials forjob differences that were not significant. A uniform pay plan for theseclasses has also been prepared and implemented for the clerical category. Theplan for the professional category is under review prior to implementation.The highest class in the Civil Service is 'Principal' level classes (PrincipalDirector) above which the positions of Assistant Minister, Deputy Ministerand Minister are political appointments made by the President.

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88. The Civil Service Agency has also instituted several tests forpromotion in both clerical and administrative category to guard againstpromotions based upon political, parochial or personal considerations. It hasassembled personnel records on 22 thousand civil servants.

89. The recently implemented National Social Security Scheme has alsobeen extended to all government employees. The scheme provides for a retire-ment pension, an invalidity pension, survivors benefits and compensation foremployment injury. The Government and employees will each contribute 3percent of the salary.

90. In-service training for middle level civil servants was started in1974 by Liberian Institute of Public Administration (LIPA) set up with theassistance of USAID. The training programs consist of courses on generalmanagement, supervision/skill building and program/project management besidesa number of specialized courses such as financial management. The LIPA has 17young Liberians trained abroad and is one of the few institutions where localtalent is available in adequate supply. Another and potentially usefulactivity initiated by the LIPA in 1975 is the rural development trainingprogram aimed at correcting some key administrative and managerial weaknessesamong county level middle managers. The institution could easily handle someof the training needs of the rural administrators provided its contents,materials and methods were sharply focussed.

91. As a result of the above reforms and almost parity between thesalary structure of the public and non-concession private sectors, the CivilService has tended to become attractive to young qualified professionals inrecent years. At the same time they also work outside the Government forsupplementing their incomes. However, this divided loyalty and time is one ofthe many factors inhibiting the growth of Civil Service professionals.

92. The catalog of reforms introduced in the Civil Service structuresince 1973 and outlined above is a significant step in the right directionwhich has laid down the groundwork for an efficient and effective system ofpublic administration in Liberia. However, the actual implementation of thesereforms is still hampered by institutional and personal resistance. Thevestiges of the old patronage based system are still seen in requests forexecutive commissions to the appointing authorities for filling in positionswithin the Civil Service. This shortcircuiting of the established proceduresby its operators could unsettle the system and thereby neutralize its bene-ficial effects in the long run. Instances of lack of adherence to salaryscales developed for categories of the Civil Service are still common under-mining the concept of uniform pay structure. Steps are still needed to evolvea performance evaluation system for the civil servants and to use this as aninstrument for improved efficiency, motivation and morale. The contents ofthe normal training programs, with a few exceptions like project managementcourse, should be geared at specific skill acquisition for upgrading thecapacity of the Civil Servants and be less general and academic in nature.Further, as there are no rewards for undergoing training, there is littlemotivation for regular attendance and interest in the training courses.

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93. While the basic structure of a Civil Service system has been set upin Liberia efforts should be made to identify and recruit good public adminis-trators, train them on-the-job, upgrade their capacity continuously andstrengthen the incentive system. In other words, the enforcement of thesystem continues to be a priority need for Liberia. Both the Civil ServiceAgency and the LIPA appear quite responsive to the need but they requiresupport and assistance from all the agencies and ministries in the Executivebranch to accomplish the tasks assigned to them.

94. Besides strictly enforcing the structure of the Civil Service asevolved since 1973, the next step for careful examination of the Governmentis the procedures and methods of government operations. The financial manage-ment, procurement and supply of goods and services, delegation of powers withina functional unit, dispersal of government units with sufficient authority inrural areas, coordination and interrelationships with other government agenciesand ministries are some of the key elements which need careful review andcorrective measures. The structure by itself cannot lead to efficiency unlessthe organization, procedures and methods for disposing government business arealso streamlined. The present practice of concentrating all the decisionmaking in the hands of the Ministers and Deputy Ministers is also strainingthe management capacity. Ministers and their Deputies are not only heads oftheir Ministries, but also Chairmen of all the Board of Directors for thepublic corporations under their respective Ministries, members of a largenumber of ad-hoc and standing committees and commissions and responsible forliaison with the legislators and public and finally accountable to the chiefexecutive.

95. The present concentration of power has two distinct disadvantages.Firstly, the non-political civil servants are not involved in major decisionmaking and are not exercising sufficient authority in the day-to-day operationsof the Ministries and thus their capacity remains limited and is not growingover time. Secondly, Ministers are unable to devote sufficient time andattention to the major problems and policy issues upon which they are calledupon to take decisions. In the event that a Minister, a political appointee,ceases to enjoy the confidence of the chief executive and his subordinatestaff are not trained to take decisions, discontinuity in policy formulationand decision making surfaces creating a void till such time as his successorbecomes acquainted and comes to grips with the problem. A more rationaldistribution of authority at various tiers of hierarchy within each Ministryis urgently called for. This would not only relieve the Ministers from lessimportant and routine matters and allow them sufficient time to review moreimportant issues in greater depth but also help impart training to the middlelevel civil servants. This group would then be able to provide the continuityin the Ministry's work and transfer this knowledge and perception to the newincumbents whenever a change takes place at the top.

96. The present system also generates a lack of responsiveness tothe felt needs of the rural population. The current concern in Liberia withdecentralization of the operations of Ministries from Monrovia to the ruralareas is laudable, but a meaningful decentralization at county level is only

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possible if it is accompanied by delegation of authority and deconcentrationof power i.e. a conscious and deliberate transfer of power from the center tothe counties. Without the latter, the movement for decentralization would bereduced to a mere expansion in the number of Civil Servants located at thecounty level unable to peform a useful service to the local people. As isshown later most of the Ministries have their representatives-already locatedat the County level. Despite their presence there is a persistent demand fordecentralization which clearly points out that the problem is more than justthe representation at the County level.

97. The two essential ingredients missing from the present system ofLiberian administration are the appropriate procedures and methods of finan-cial management and procurement of goods and services. Adequate safeguardsare necessary for proper accountability of the public funds'and any move todilute such accountability should be resisted. But at the same time, account-ability in the form of a long chain of signatures, approvals and authoriza-tions, extended paper work and innate delays in the actual procurement of goodsand services is detrimental to the efficient functioning of a development-oriented economy. The Government may be well-advised to request the LIPA(which has the staff and competence) to look at their systems and proceduresand recommend necessary changes.

98. Public Corporations were established in Liberia with the primarypurpose of expediting the disposal of business especially in providing econ-omic goods and services and circumventing the circuitous procedures inherentin the functioning of'the Government departments. The decision-making of theCorporations was vested in the Board of Directors whose Chairman is invariablythe Minister in-charge of the Corporation. The Corporations have, unfortu-nately, been unable to establish the necessary equilibrium between publicaccountability and corporate autonomy. This lack of equilibrium is creatingadverse repercussions on the financial performance of the corporations. Asizable proportion of development resources is being diverted to these auton-omous bodies but the inadequate returns and financial losses from them haveonly weakened the public finances of Liberia. The Bank's proposed Missionin Public Corporations would, inter alia, examine the existing relationshipsof these Corporations with the Government ministries,'the composition, powersand functioning of the Boards and the internal working procedures of theCorporations. This study, it.is hoped, would h'elp the Government in revamp-ing and restructuring this important segment of public sector activity.

99. To sum up, the priority'needs in the area of public administrationare enforcement of the Civil Service System, building up institutional capac-ity at various tiers, reviewing and revitalizing the operating procedures andmethods of Government business and examining the structure and functioning ofpublic corporations. -

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MANPOWER AND EMPLOYMENT

100. The labor force of Liberia is estimated at 508,000 1/ in 1979. Thisestimate is derived from the County specific Labor Force Participation ratesrevealed in the population census of 1974.

OPEN UNEMPLOYMENT ESTIMATES FOR LIBERIA 1979

Total Population (1979) 1.778 millionLabor Force (1979) (A) 0.508 million (B) 0.684 millionLabor Force Participation Rate (A)28.6 (B) 38.3Estimated Employment 2/ (1979) 0.426 millionUnemployment (1979) (A) 0.082 million (B) 0.158 millionUnemployment rate (A)16.1 percent (B) 23.0 percent

On the basis of the above estimates, the open unemployment rate 3/ in Liberiaranges between 16 to 23 percent. The modern sector (excluding monetaryagriculture) employed about 155,000 persons in 1978 and the remaining 261,000

1/ There appears some confusion about the concept of "labor supply."The Ministry of Planning and Economic Affairs in their paper uses afigure of 910,000 people as being the "potential labor supply" ofLiberia. This encompasses the entire population between the ages of 15and 64. A more appropriate and standard definition of the labor forcesupply used by ILO is the economically active population including thoselooking for work. The economically active population excludes thehousewives, students, retired persons and others who are not seekingactive employment. Thus, the labor force participation rate (LFPR) isdefined as the proportion of economically active population to totalpopulation. The LFPR for Liberia, according to ILO estimates, is 38.3while that derived from the 1974 Population Census is 28.6. Estimate Ain Table 26 is based on ILO rates while estimate B is drawn from theCensus figures. The higher activity rate results mainly from the adjust-ments made by ILO by including unpaid family workers and members of thearmed forces in the labor force. If the concept of labor force isfurther broadened to include those who are not part of economicallyactive population in census figures but are above age 10 years andshown under "others" in non-working population, the labor force partici-pation rate is 50.1 and the estimated labor supply in 1979 is 0.890million. This approximates the figures used in the MPEA paper which isperhaps a more meaningful figure for the Liberian situatton.

2/ Estimated employment see Annex Table 8.2. The 1978 figures are adjustedupwards by 2.2 percent -- the annual growth rate of employment.

3/ Open unemployment is calculated here as the residual i.e. the differencebetween the labor force as revealed in the Census or ILO estimates andthe recorded employment. Thus this rate should be interpreted withcaution.

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were "employed" in subsistence farming. The number of persons without jobs is82,000. As the data on employment is not very accurate, the above figuresrepresent broad order of magnitude. In the modern sector, monetary agricul-ture (including forestry and fishing) provided the largest number of jobs,i.e. 54,000 or one-third of total modern sector employment. Most of thesejobs were for tapping rubber. The Government was the second largest employerand 27,000 people were on government payroll. Commerce and trade providedwork to about 16,000 people and mining sector was able to employ only 14,000persons.

101. An analysis of modern sector employment by occupation level showsthat 13 percent of those employed were occupying managerial, professional,technical and teaching positions. An additional 7 percent were clericalworkers and 11 percent belonged to the skilled worker category among produc-tion workers. An indication of the qualifications of the labor force can begauged by the fact that one third of the employed labor force in the modernsector had some secondary or higher educational qualification and the remain-ing two-thirds possessed primary or no formal education.

102. The more burning problem which has attracted the attention of theGovernment of Liberia in recent years is the problem of urban unemploymentin Monrovia. An estimate of open unemployment in Monrovia is presentedbelow.

OPEN UNEMPLOYMENT ESTIMATES FOR MONROVIA

Population (1979) 281,000Labor Force (1979) 71,000Labor Force Participation Ratel/ 25.2Estimated Employment 1979 2/ 56,000Unemployment 15,000Unemployment Rate 21 percent

The above estimate of 21 percent is considered conservative by all thosefamiliar with the situation in Monrovia.

103. The unemployment situation is believed to be worsening over time dueto rapid flow of migrants into Monrovia (about 8 percent annually) 3/ whilethe growth in employment opportunities in Monrovia has been roughly in the

1/ LFPR of 25.2 is generated from the census figures. However, if adjustmentsare made and the ILO concept is used for Monrovia, the LFPR is 33.0and the labor force is 92,000. The unemployment rate on that basis worksout at 39%. Therefore the range would be 21 to 39%.

2/ Total employment is estimated at 60,000 but 4,000 jobs created due toOAU related activities are eliminated for arriving at this estimate.

3/ LFPR among the rural migrants is believed to be much higher than theaverage.

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order of 10 percent during past five years or less than 2 percent annually.The employment situation in Monrovia is highly dependent upon the movement ofpublic sector employment. Government of Liberia and public corporationstogether employed 38,718 persons of which at least 30,000 were in Monroviaalone. One half of the total employment in Monrovia is concentrated in thepublic sector and most of the growth in urban employment durl:. past fiveyears can also be attributed to expansion in public sector. With the conclu-sion of OAU conference construction and service sector activities, a non-growing government budget due to public saving constraint and slow economicgrowth in general, the scope for further growth in employment opportunitiesis severely limited. A recent Bank urban sector mission estimates thatabout 18,000 persons are earning their livelihood through the "informalsector". The earning capacity of this group is also lower than the othersworking in the modern sector.

104. What are the main reasons for such worsening employment situation?It is only possible to conjecture about some of the factors involved:

(a) Agriculture and rural areas have only recently been givenpriority in the government development plans. In the absenceof any productive activities in the rural areas, a large influxof rural migrants continues to take place in Monrovia.

(b) The output from educational institutions has not closely matchedwith the requirements of the literate and trained manpower forLiberian economy and even with recent improvements it will beseveral years and considerable inputs before the availabilityof certain categories of skilled Liberian workers improves. Thisdisequilibrium gives rise to a paradoxical situation where there isa shortage of skilled and trained personnel in certain categoriesand excess supply in other more general fields.

(c) The concession sector which contributes one-third to thevalue added in the economy is capital intensive employingvery few people directly. Their impact on Monrovia isvery limited -- they make few purchases from the local-firms, import machinery and equipment from abroad and thusthe multiplier effect in the rest of the economy is quitesmall.

(d) The distortions in exchange rates in neighboring WestAfrican countries (Liberia uses dollar as its currency),the "open door" policy pursued by the Liberian Government andeasy availability of imported consumer goods induce a largeinflow of migrants into an already surplus labor market ofMonrovia.

(e) The highly paid professional and managerial positions in theprivate industry, financial institutions and concessions areoccupied by expatriates from Western Europe and North Americaand the trend shows an increase in their numbers over time(4,575 in 1973 and 5,635 in 1979).

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105. What can be done to alleviate the situation? While measures tocorrect urban-rural imbalances between excess supply in urban centers andexcess demand in the rural areas, especially where the development projectsare in full swing, are implemented short term measures such as active inter-mediation by the Government and training of workers in fields such as rubbertapping and other semi-skilled jobs could partially correct the situation.Employment exchanges could be set up in Monrovia in which all the prospectivejob seekers should be registered and all the employees -- private as well asgovernment -- provided information on job openings all over the country.

106. A useful byproduct of OAU conference construction activities hasbeen accumulation of skills by a large number of Liberians in masonry, car-pentry, brick laying, plumbing, electric fitting and other building trades.This reservoir of skills can be profitably employed in a large number ofconstruction activities going on all over the country. Perhaps some adequateincentives would be required to make them move out of Monrovia in additionto registration and mobilization efforts by the Government.

107. Another area which is already under active review by the Governmentis the promotion of labor intensive small and medium scale enterprises.Liberians have not been particularly successful in business in past and henceit is not simply a question of funnelling financial resources to them but amore complex issue of changing their attitudes and motivation towards busi-ness, upgrading their skills in accounting, sales, inventory control, etc.through strong practical training and supervising, advising and counsellingthem from time to time. The Partners for Productivity (PFP) project in Yakepahas demonstrated that invoking Liberian participation in business and commerceis a time consuming process in which supervised credit and advice are bothequally important. A carefully designed project for promotion of small-scaleenterprises has a lot of potential for employment creation, but the necessarysafeguards would be required to ensure that the ultimate beneficiaries of theproject are the poor Liberians.

108. Liberia, being a strong currency area and relatively more openin international trade has been attracting a large number of migrants toMonrovia. This trend will be exacerbated by the recent decision to theEconomic Community for West African States (ECOWAS) which has recentlydecided to allow free movement of West Africans into the countries of themember-states. On the other hand, the Liberianization policy apparently aimsat replacing the expatriates by Liberians. Under the present circumstances,if only the expatriates from the developed countries are replaced by Liberians,the impact upon the total employment would be minimal. As a means of creatingjobs the policy of replacing expatriates at higher professional and technicalpositions is not-sufficient to tide over the unemployment problem.

109. Finally, the revival of productive activities and stimulationof economic growth in general would create additional employment opportunitiesin the non-enclave modern sector due to relatively high employment elasticityin this sector.

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110. The Bank has recently discussed with the Government an EducationSector Memorandum which reviews among other topics the major issues improvingthe linkages of the education and training system with future manpowerrequirements. The review concludes that the GOL has made significant progressin recent years in expanding access to education and establishing educationand training programs to meet priority manpower requirements. The enrollmentin preprimary and primary education grew from about 120,000 to 190,000 andenrollment in secondary education increased from about 13,000 to 46,000. Inaddition, the Government raised the annual output of trained primary teachersfrom about 100 to 250, established agricultural education and training programsat the lower and technician levels, and set up new vocational education andtraining programs at every level. However, it was recommended that to furtherimprove Liberia's manpower development program, the Government will need toaddress the following issues:

(a) The planning and management of education and training programsis not well coordinated and this is limiting the efficient useof financial resources allocated to manpower development;

(b) Access to basic education is limited, distributed unequally,and is insufficient to support the country's rural developmentobjectives;

(c) The formal education system has serious problems of quality suchas shortages of textbooks, materials and qualified teachers whichlead to major inefficiency reflected in dropout and repetition,the need for remedial education, and graduates who often lackthe knowledge and skills in which they were trained;

(d) The Government has no agricultural training policy to supportits rural development efforts, and agricultural, vocational andtechnical education and training require strengthening throughimproved coordination, program development, the setting andmaintaining of standards, and teacher training;

(e) The Government's financing for education and training will haveto be increased substantially in real terms and used more effi-ciently if the Government is to meet its sectoral objectives; and

(f) Unemployment is growing, but Government has no coherent employmentpolicy, operational program for Liberianization nor incentivesystem to encourage people to work in priority fields.

111. Wages. Data on wages in Liberia is not compiled regularly by anyagency. The only reliable sources of information are the last EmployersDirectory of June 1977 published by the National Social Security and WelfareCorporation for the private sector and the budget documents for the publicsector. According to the Directory, the gross monthly salary in MonetaryAgriculture was US$50.8 in 1977 while the average salary in the privatenon-agriculture sector was US$177.2 i.e. a differential of 1:3.5. The average

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monthly salary in the Government sector in the same period was US$232.4leading to an inevitable pressure for further expansion of employment oppor-tunities in the public sector. This large differential in the salaries ofpublic sector employees has resulted from several upward revisions in thesalaries of Government employees since 1974 e.g. 10 percent increase foremployees earning less than US$200 per month in 1974; a general increase of12.5 percent in 1975, a selective increase ranging between 10 to 20 percent in1976 and an increase in salaries due to abolition of fringe benefits in 1977.More recently, the minimum salary in the public sector was raised to US$100per month. In the private sector the minimum daily wage rate has been raisedin 1979 by 60 percent to US$2 per day or 25 cents per hour from US$1.25 perday. The widening of this gap between rural and urban wages may act as afurther stimulus for migration to Monrovia, especially from those rural areaswhere development activity is not very significant. It may also have someadverse effect on the profitability of the mining companies which are alreadyincurring heavy losses and the rubber production.

INCOME DISTRIBUTION

112. The distribution of national income in Liberia can be analyzedat several levels. First, approximately 20% of the GDP finds its way outof the country as net factor payments abroad in the form of profits, remit-tances, interest payments and dividends earned by the multinationals who haveinvested in and expatriates who work in Liberia. Thus the national incomeavailable to Liberians is only 80% of what the domestic economy produces.Secondly, GDP could be broadly divided among those attached with concessionsector, modern non-concession sector and the subsistence sector. A preliminaryand rough estimate for 1978 of income distribution based on this division ispresented in the following table:

1974 1978Per Capita GDP Population Per CapitaGDP ($) ($ Million) ('000) GDP ($)

1. Traditional economy 120 170.0 1,032 1642. Monetized economy 870 640.0 688 930

- Foreign concessions 2,390 194.6 120 1,621- Non-concessions 546 445.4 568 784

Total 420 810.0 1.720 471

Source: Mission estimates on the basis of Statistical Appendix Tables 1.1;7.2; 8.2.

113. This estimate shows that the differential between the traditionaleconomy and monetized economy was reduced between 1974-1978. The per capitaincome in the monetized economy was 7.2 times the income in the traditionaleconomy in 1974. This has decreased to 5.7 by 1978. It may be cautioned here

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that the decline in monetized economy income in general and the foreignconcessions in particular in 1978 reflects the current downturn in the worldmining market situation. At the same time it must also be noted that thetraditional economy has been performing relatively better than the monetizedeconomy and some narrowing of the gap may represent the real gains made by thetraditional economy. A more meaningful judgment can only be :-ssible when themining sector output assumes its normal trend line movement. To illustratethis point, if mining value added had risen even at an annual rate of 2% theper capita GDP of foreign concession sector would have been $2,350 in 1978.

114. The third level of disaggregation for purposes of studying incomedifferences can be the size distribution of income i.e. differences amongthe various households. The 1974 Census of Population provides such infor-mation which is reproduced below.

MONTHLY HOUSEHOLD INCOME DISTRIBUTION 1/

HouseholdsNumber Percentage

Under $50 229,018 73.6$50 - $99 52,404 16.8$100 - $199 18,439 5.9$200 - $399 7,140 2.4Above $400 3,989 1.3

Total 310,990 100.0

115. The monthly household income distribution shows that nearly threequarters of the households in Liberia earned in 1974 less than $50 per monthin 1974. Assuming an average size of the household to be 5 persons, theannual per capita income of this segment of the population works out to be$120. This evidence is further corroborated by the findings of a study doneby Prof. Akfa (Consultant to the Ministry of Finance) who constructed anincome distribution profile from 1974 Census and an Income Tax Survey of 1977.His study shows that 50% of the total household income in Liberia is claimedby the top 5% families and the remaining 50% of income is shared among therest of 95% households. In fact the top 2% receives as much as 34% of thetotal income. This study reinforces the popular belief about the skeweddistribution pattern in Liberia and its concomitant concentration of economicand social power.

116. Another way of looking at income distribution is by regions. Anotherstudy done by Prof. Emmanuel Akfa for the nine Counties based on 1974 Censusof Population reveals that the per capita income on Montserrado County was$232, more than twice as high as Maryland ($100), Gedeh ($103), Lofa ($105),Sinoe ($108). He also calculated Gini coefficients for Liberia and each county

1/ Household Income is defined as total household income before taxincluding income received in-kind.

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separately. His findings indicate that household income was more concentratedin Montserrado (0.467) while intra-regional disparities were much lowerin the poor counties -- Lofa (0.33), Maryland (0.331), Gedeh (0.334) andSinoe (0.354). Gini coefficient for Liberia was 0.452 and although all theother eight counties had coefficients lower than the national average thelarge share of Montserrado County in the national income moved the value ofcoefficient in an upward direction. This analysis applies only to householdincomes and does not include the corporate retained earnings and undistributeddividends. The distribution would be more skewed if the latter are added tothe household incomes. Although separate data is not available for rural andurban areas the information on regional distribution could be used for makingsome indirect inference about this phenomenon also. As Montserrado is heavilyurban in character both its high level and concentration of income and therelative differential with respect to other counties tends to suggest thatthe regional disparities also manifest the acute rural-urban disparities.Within Montserrado the rural areas are as poor as the rest of the country.Thus a policy package aimed at correcting regional inequalities would, also toa great extent, reduce the rural-urban differentials.

117. An important issue which is engaging the attention of the Governmentis the meagre salary of the public sector employees at the lowest tiers.An examination of the salary distribution of the Government employees for1978 demonstrates that as many as 40% of them receive less than $100 permonth. The continuing erosion of their purchasing power through risingrentals, transport costs and food prices in Monrovia has reduced their realincomes in the past two years. Their income levels are proximate to the urbanpoverty threshold and there is persistent pressure on the Government toincrease their salaries. While from the distributional viewpoint sucha step is justifiable its consequences on public finances and the wage levelsin other modern sector employment deserve a closer scrutiny. The recurrentbudget is unable to absorb any additional burden without a correspondingreduction in the development spending, or increase in revenues. Secondly,the public sector is the largest single employer in Monrovia and the wagespaid by them act as pace setter for the rest of the modern sector. Any risein the wages at this particular juncture when output is growing sluggishlymay perhaps trigger off inflationary tendencies. However, if the Governmentis able to cut down some of the unproductive expenditures then there is apossibility for raising the salaries of the public employees within thegiven budgetary ceiling.

118. The cumulative thrust of the evidence presented in the foregoingparagraphs is to suggest that inter-personal and inter-regional income dis-parities constitute a serious problem. The Liberian authorities are not onlyaware of the intensity of this problem but are engaged, in the context of theformulation of the Second Development Plan, in designing appropriate policymeasures to address this issue. Their prescription of improving the produc-tivity of urban and rural poor through technical assistance, credit and inputsupplies to small farmers and small businesses rather than siphoning offtransfers to them deserves the support of international development community.

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HEALTH, POPULATION AND NUTRITION

Population

119. The population of Liberia is estimated at 1.78 million in 1979 basedon the census population in 1974 and an average annual growth rate of 3.3%(see Table 7.1). The regional distribution of population shows that 44% ofthe country's population is located in three coastal counties - Grand Bassa,Cape Mount and Montserrado.

120. Montserrado is the most populous county and contains about one-thirdof the country's population. The urban-rural proportions are 30:70 andone-half of the urban population lives in Monrovia. The city of Monrovia isattracting a large number of migrants - both from the rural areas of Liberiaand the neighboring African countries resulting in a high population growthrate estimated to be 6 to 7% annually. Population density in Liberia islow (39 persons per square mile) even by African standards. The sex ratioreported in the 1974 Census was 102 males per 100 females - signifying a shiftfrom the 1962 census when the ratio was reported as 98 males per 100 females.The literacy rate has increased from 10% in 1962 to 22% in 1974. The propor-tion of young population under 15 years of age is 47.4% 1/ and consequentlythe dependency ratio is very high (80 and 90 dependents per 100 persons inthe working age).

121. High fertility, high infant mortality and low life expectancycharacterize the population dynamics of Liberia. In 1970/71 the crude birthrate was estimated at about 50 per 1,000 population, the crude death rate is18 per 1,000 and the infant mortality rate is 160 deaths per 1,000 births.The average life expectancy is about 48 years. Females of reproductive ageform 48.2% of total female population. The total fertility rate is estimatedto be 6,900 2/ per 1,000 women while the gross reproduction rate of at least 3births per woman. Since high fertility and growth rates accompanied by ayoung population structure and high dependency ratios present problems whichare likely to offset the favorable man-land ratios of Liberia over time. Eventhe man-land ratios are not uniformly low for all the regions within thecountry. There are some areas which can be opened up for cultivation but theywould require expensive investment in infrastructure. The high fertilitytrend is likely to be reinforced by the young population structure as a largenumber of young women enter the reproductive age. Given the present rates oftotal fertility and gross reproduction, the trend for high population growthwould continue unabated until deliberate policy action is taken to control thebirth incidence - by spacing of births, postponing the age of marriage orother family planning measures. The uncontrolled population growth gives

1/ The proportion of young population under 15 years of age is based on thenew 1978 UN Projections and is consistent with the CBR of 50.

2/ The total fertility rate of 6.9 is based on the new 1978 UN projectionsand is consistent with the CBR of 50.

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rise to increased demand for education and health facilities, need for addi-tional job opportunities for the new entrants to labor force, increased foodavailability and more housing. Rapid migration to urban areas resulting fronhigh population growth also requires large investments for urban infrastructureand urban services.

122. Government is at present aware of the deteriorating situation ofurban facilities and living conditions in Monrovia. The acute demand onhousing arising from the population growth and migration from rural areas inabsence of matching supply of dwelling units, has culminated in a numberof slums in the city. Such slums would continue to grow creating healthhazards, productivity losses and breeding social and political discontent.The capacity of the urban economy to generate employment opportunities has notkept pace with the addition to the labor force. Liberia has to maintainat least an annual compound rate of GDP growth of 3.3% in the long run tosustain the present living standards. If the composition of investment, onthe other hand, is shifted in favor of social services and physical infra-structure in response to the pressures of population growth, the GDP growthwould be lower than the desired target as the incremental capital-outputratios of such investment are high and the resources available for produc-tive investment are also reduced consequently. However, the likelihood of anuncontrolled population growth acting as an impediment to economic and socialdevelopment of Liberia in the long run is very strong.

123. Liberian Government, however has no official policy on populationcontrol, presumably with the belief that given the small size of the popula-tion and favorable man/land ratio on average the country should not indulge inany such policy. It is crucial for the Government of Liberia to examine theconsequences of high population growth on its future capacity to sustainadequate social and economic development of the country and in the light ofsuch analysis, consider adoption of policies and programs aimed at spreadingthe knowledge and methods available for population and family size planning.

Nutrition

124. Nutrition is a key element in meeting a basic human need and invest-ment in nutrition is further justified on the grounds that reduction orprevention of malnutrition adds to human capital and potentially increasesoutput. Inadequate food availability, inadequate purchasing power and in-appropriate food habits are considered the main determinants of malnutrition.Information about nutritional status of all segments of Liberian population isnot adequate enough to analyze the situation. A limited national nutritionsurvey carried out on children and lactating women in Liberia in early 1976under the USAID assistance is the only source of information on nutritionalstatus of the Liberian population. The survey reported that at least 60% ofall children aged 6-59 months were anemic and 16% of children 6-11 months oldwere not receiving food apart from milk. Acute protein-calorie malnutrition(PCM) did not appear to be a problem but milder degree malnutrition was aproblem in the rural areas of the country especially during the second year oflife where approximately 10% were affected. This suggested that the problem

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of acute PCM in this age group lay under the surface and any deteriorationdue to poor environment such as the hungry season or the onset of increasingdiarrhea might be sufficient to tip the balance. Stunting also presentsa problem and 20% of all children in the rural areas had impaired growthreflecting environmental factors. 32% of all survey children 12-23 monthsreceived no milk and 16% received milk without any added food. The percentageunderweight for rural Liberia was 24. The survey did not fti sufficientevidence to indicate that maternal undernutrition was a public health problemin rural Liberia. A further survey of a sub-sample of the population attemptedto relate the acute and chronic PCM with the socio-economic indicators -- andfound that there was relatively a higher prevalence of chronic PCM in familiesnot acquiring their water from a well or tap. Thus, for nutritional statusimprovement, projects aimed at clean drinking water supply may be necessary.

Health

125. As in most developing countries the highest incidence of ill healthis found in children and women of reproductive age. Children under 5 accountfor 73% of the patient population while 15% come from among the women ofreproductive age. The major diseases are pneumonia, gastroenteritis, anemiaand respiratory ailments. Among children malnutrition, measles and diarrheaare most common. A survey undertaken by the Ministry of Health reveals thatinfant deaths form 30% of the total deaths while 44% pertain to children under5. Malnutrition among children is often due to frequent pregnancies of themothers and thus the spacing of the children becomes important.

126. Health delivery system is at present organized around the 32hospitals, 24 health centers and 276 health posts scattered around the coun-try. The health centers are run by physician assistants while village healthworkers manning the health posts perform the basic environmental sanitation.Health centers and health posts are supposed to integrate curative and preven-tive services. County hospitals are referral centers to which cases from thehealth centers and health posts are sent and which supervise the activitiesof the centers and the posts. At the apex is JFK Medical Center which providesreferral purposes of last resort and specialized services. The regional dis-tribution of health facilities is uneven with 14 out of 32 hospitals locatedin Montserrado County (including the apex institution). Bassa and Cape MountCounties do not have a single health center while Bong, Lofa and Nimba have15 out of 24 health centers. There is a chronic shortage of physician assis-tants and this shortage is not evenly distributed. Most of the positions inless developed counties remain unfilled. Although the population/hospitalbed ratio of 635 is better than some of the neighboring countries, the hospitalbeds are unevenly distributed among the regions e.g., the counties of Nimbaand Grand Gedeh have ratios that are one half of the national average. Amongthe health personnel employed at Government hospitals and clinics about 50%are employed in Montserrado County - mainly Monrovia - although the number ofall health facilities is not as high. The situation in respect of highlyqualified professionals - surgeons, physicians and dentists is even worse. Of91 such persons, 76 were working in Montserrado County. The above picture ofhealth facilities and health personnel in Liberia tends to indicate that notonly there is a quantitative imbalance in the distribution of these facilities

and personnel, but the quality of services is far from satisfactory in areasoutside the capital and concessionaire towns.

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127. Expenditure on health services out of current budget and its break-up among preventive and curative is given below:

PUBLIC EXPENDITURE ON HEALTH SERVICES($m)

1976/77 1977/78 1978/79

Preventive and others 1.6 1.9 2.0Curative 12.8 14.6 17.6JFK (6.8) (713) (9.6)

Total 15.4 16.5 19.6

128. Health expenditure forms 15-16% of the current expenditure. Devel-opment expenditure has been around $3 million on an annual average. The shareof health in total expenditure in FY79 was about 7.6% and has remained at thislevel for at least last three years. As a percentage of GDP it is about 3%which is above average if compared with other developing countries. It is notthe level, but the composition of expenditure in Liberia which raises theissue. The composition of health expenditure is clearly biased in favor ofthe country's largest medical establishment - JFK Medical Center. In FY79,almost one half of the total expenditure on health was claimed by the Center.Both the Ministry and the donor agencies are taking steps to lay down anetwork of institutions, personnel and logistic support for primary healthcare and preventive services in the rural areas. The search for a cost-effective approach to this problem is on and at present Liberia is experiment-ing with three innovative programs in the field of primary health care withdiffering contents and emphasis:

(a) Maryland Village Health project with Dutch Governmentassistance. The main ingredient is a network of locallyrecruited and trained village health workers in 50 villages;

(b) Lofa County Rural Health project under USAID emphasis thetraining of physician assistants as the primary source ofhealth care needs; and

(c) Cape Mount County Health project under UNFPA/WHO whichaims to promote community participation and develop anew category of health personnel.

129. Government is currently evaluating these three programs to arriveat a prototype for expansion and adoption throughout the county. At thesame time the USAID is also assisting the Health Ministry in the formulationof a Health Sector Plan. The other promising field in which some exploratorywork is under way is the village drinking water supply scheme under UNICEF.The possibility of Bank investment in rural water supply and sewerage sub-sectors needs further study.

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RICE POLICY

130. Currently Liberia is domestically producing an average of 80-85% oftotal rice consumption (240 to 250 thousand tons of rice) and importing theremaining balance of 15-20%. Producer price of paddy is 12 cents/lb or US$396per ton of rice equivalent while imported rice costs US$350 per ton cif in1978. Consumers pay a retail price of US$485 per ton. 1/ The Ministry ofAgriculture argued that the producer price was below the cost of productionand hence there was a disincentive towards rice production. As the currentlanded cost of imported rice is lower than the domestic cost of producing andprocessing rice it is advantageous in terms of domestic resource cost, atleast for the present, to allocate the incremental land and labor resourcestowards coffee, cocoa and other export crops and utilize these export earningsfor purchasing low-cost rice from abroad. From the allocative efficiencyviewpoint also, the 'protected' encouragement of rice production (in the sensethat equivalent amount of rice could be obtained at relatively lower cost fromabroad) would attract resources away from 'unprotected' activities which aremore efficient (export oriented) creating some distortions in the allocationof resources. Since rice is the main staple food of Liberians, rice self-sufficiency is one of the declared objectives of the Government policy andrice production would continue to be encouraged, the relevant questions are:a) is the current producer price really acting as a disincentive?; b) howmuch additional production would be forthcoming if the producer price isincreased?; c) who would benefit from increased domestic price -- largecommercial farms or small subsistence farmers?; and d) who should pay theresulting higher consumer price -- the urban dwellers or the Government?

131. The available evidence about the area under rice cultivation andrice production (Table A.2) does not suggest any signs of existence ofa price disincentive. Both the area and production have been growing since1975 when the producer price was raised to 12 cents/lb. The total areaunder rice has expanded from 472,000 acres to 510,000 acres and productionrisen from 229,000 tons to 270,000 tons in 1978 - an inrease of 18% over thelast three years. But as most of the rice (90%) is grown for subsistencepurposes a more meaningful indicator to judge the price responsiveness shouldbe the production of commercial farmers only. An indirect estimate shows thatthe commercial rice production has grown faster than the subsistence rice.While the subsistence sector output increased by 15% (i.e. from 211,000 tonsto 243,000 tons), the monetary sector rice expanded by 50% (i.e. from 18,000to 27,000). This evidence, though not direct, tends to suggest that thecurrent price level has not acted as a disincentive. An additional factorinhibiting the use of these cost of production estimates is the wide divergencein the treatment of imputed cost of family labor. Different assumptionsabout the imputed wage rate of the family labor could make the outcome quite

1/ The difference between the landed cost of imported rice and the fixedretail price accrues to a Price Stabilization Fund. In 1977 an amount of$5 million accrued to this Fund.

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sensitive to an agreed set of estimates. Similarly the method of rice produc-tion -- whether one takes upland, swamp or irrigated rice also makes a dif-ference. Finally the kinds of soil type of land available for cultivation andthe mixed pattern of cropping on the same piece of land also have to be takeninto account. Given such a large number of variables a nationally valid costof estimate is difficult to arrive at.

132. Although an empirical estimate of the overall supply elasticity ofrice in Liberia is not available there are reasons to believe that it is quitelow. The output produced for the market is only a small proportion of thetotal production (about 10%). The majority of the rice growing householdsbelong to subsistence sector and 90% of total domestic production is grownfor self-consumption. It is the households growing for commercial transac-tions who are generally known to be responsive to price signals even in theless developed countries. Even under highly optimistic assumptions aboutsupply elasticity and marketable surplus the quantum of increase in domesticproduction under a favorable price rise is not going to be significant enoughto help attain the goal of self-sufficiency. The low overall supply elas-ticity is more symptomatic of the technological constraints, poor infrastruc-ture facilities and inadequate access to capital and inputs presently facedby a large spectrum of subsistence farmers rather than indicative of lackof price responsiveness. Should these constraints be relaxed, the subsistencefarmers would be induced to increase their output and enter the market.

133. Thus given the very low level of participation of small and sub-sistence farmers in the marketable surplus of rice it becomes evident thatif the producer price of rice is raised the benefits would largely accrueto the large commercial farms. The subsistence farmers, under the presentimperfect marketing systems, would continue to receive a lower return fortheir produce even when the producer price is raised and would pay a higherprice when they enter the market for consuming it. A higher producer pricewould widen the existing income disparities between the two groups.

134. The higher producer price can only result from raising the retailprice to urban consumers or from Government subsidy. A higher retail pricefor rice has serious repercussions on the welfare of the urban poor and iscertainly beyond their means. The Government of Liberia is also not in aposition to subsidize the rice price. None of the two alternatives appears tobe plausible at this particular period of the Liberian economy.

135. The above analysis seems to suggest that both from the efficiencyand equity viewpoints there is little justification for increasing the priceof rice. The main beneficiaries of such a policy would be large commercialfarmers and the main losers would either be the urban poor or the Government.

136. It is felt that the problem of adequate price incentive does notstem from current producer price level, but the effective return which thefarmer actually receives for his produce. LPMC, which is a public corpora-tion, processes only 10% of the marketable surplus of rice while the remaining

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90% is channelled through a network of private agents, intermediaries andtrades. The mission was told that a farmer was able to receive, on anaverage, only 8 or 9 cents per pound for paddy and the difference betweenthe fixed price of 12 cents and the payment to farmer goes to these inter-mediaries and agents. It is argued that part of this payment also reflects,in many cases, the return for various other services rendered by the traders --credit, pick-up, haulages. Even a liberal estimate for imputing these chargescannot justify such low payments. The agents representing LPMC (exceptthe Cooperatives) also work for the private traders and get a much largershare from them for purchasing rice than the 6% commission paid by LPMC tothem. As they are interested in maximizing their total profits they wouldnaturally push the purchases for private traders at the expense of LPMC.This also partially explains the slow growth in LPMC's share of domestic ricemarket. Thus, a more effective and widespread procurement, marketing, storageand transporting operation by LPMC could raise the effective returns to thefarmers and offset any possible effect of price acting as a disincentive orinadequate incentive.

137. Besides improving the marketing facilities of LPMC to ensure a fairreturn to producer an important step lies in increasing the physical pro-ductivity of resources allocated for growing rice. The experience gainedunder Lofa project points to the potential available for expanding the yieldper acre of even upland rice through improved seeds, fertilizers, extensionand technical know-how. A desirable rice policy, in the context of the statedobjective of self-sufficiency, calls for improved productivity measureswhich would also change the cost-return relationships vis-a-vis imported rice.

138. Rice imports which have been growing over time as a proportion ofdomestic consumption (Table A.2), however, have implications for Liberia'sbalance of payments. Widening gap between domestic production and consumptionwould entail large inflows of rice imports. An explanation for continuingimports of rice lies not on the supply side but in the preference of urbanconsumers -- especially the upper income groups -- for imported parboiled rice.It has been suggested that the processing and milling of domestic rice isunsatisfactory and a lot of foreign-materials and stones are found in thelocal milled produce. To avoid this inconvenience the busy urban dwellersfind it desirable to use the cleaner imported rice. The LPMC has recentlyinstalled two modern mills and is proposing to order another two such mills toimprove the quality of their processing. Until such time as the quality oflocal rice becomes palatable to the urban consumers the need for imports wouldcontinued unabated -- even if the country achieves 'self-sufficiency' inrice production.

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REVIEW OF MAJOR SECTORS

A. Mining

1. The share of mining sector in 1978 GDP has gone down to 19.6% from30.6% in 1974. Iron ore value added was $105 million in nominal terms com-pared to $147.5 million four years ago and declined by 11% annually duringthis period. The iron ore sector continued to suffer from the prolongedrecession of the steel industry in Europe and Japan. All the threecompanies--Liberian-American Company (LAMCO), National Iron Ore Company (NIOC)and Bong Mining Company (BMC) --incurred losses in 1978 totalling $30 milliondue to lower production, and increased cost for equipment imports. Productioncapacity of the existing mines in operation is about 22.8 million ton perannum while both in 1977 and 1978 the actual production was around 17.8million tons (Table'A.l). The production of LAMCO--which accounts for half ofthe country's capacity declined by 9% in 1977 and 4% in 1978. It sells itsoutput mainly to Western European steel producers who were facing a slump inthe demand for,steel. Bong Mining Company enjoys a captive market and thusits production and sales have not been affected as much. Its output was 7.08million tons--13.6% above its 1977 level. NIOC has negotiated a long-termsupply contract which enabled it to maintain its production level at 2.5 to2.6 million tons. The fourth company, Liberian Mine Company (LMC) closed itsoperations in 1977 due to the exhaustion of its Bomi Hill iron ore body. Theiron ore concessions provide employment to about 10,000 persons including1,000 expatriates.

Table A.1: PRODUCTION AND EXPORTS OF IRON ORE(In million of long tons)

1974 1975 1976 1977 1978

1. Bong 6.50 5.70 6.34 6.23 7.08

2. LAMCO 12.86 11.21 9.42 8.57 8.22

3. NIOC 3.39 2.82 2.72 2.67 2.54

4. LMC 2.06 1.83 1.57 0.39 -

Total Production 24.81 21.56 20.05 17.86 17.84

Total Exports 24.97 18.09 20.12 17.72 20.80

Source: Concessions Secretariat, Ministry of Finance.

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2. Prices of washed fines last year were $12.3/LT - down by 25% from1975. Similar decline in prices took place in case of pellets and concen-trates also. The prices of pellets declined by 21%, concentrates by 11% andfines by 13% in 1978 compared to the previous year. The price prospectsfor iron ore are likely to improve in 1979 and 1980 but a major upswing isexpected to take place in 1981 or 1982 with an increase of about 50% over 1979prices in current terms. The Liberian mines would be able to improve theirprofitability and cut their past losses under this price structure.

3. NIOC which is 50% owned by the Government of Liberia is running ata loss for past several years and is drawing on a $1.5 million overdraftfacility from the commercial banks. Unless some quick measures are takento rehabilitate the company both technically and financially by reschedulingits existing debt and infusing new equipment, the close of the mine may be animminent possibility. The railroad bridge needs immediate strengthening andis causing grave concern to the company and the Government. The cash flowsqueeze is being faced by the company despite a 12% increase in the price ofits ore negotiated within framework of a long term agreement. The companyestimates that it would require at least $20 million for capital investmentin coming five years to keep itself afloat.

4. The pellitizing plants of Bong and LAMCO came on stream in 1977doubling the pellet output capacity of Liberia to 4 million tons. But thelack of demand for pellets forced both Bong as well as LAMCO to shut themdown. These plants are not expected to resume operation for at least next12 months. Other expansion programs undertaken by BMC at the cost of$120 million were completed in 1977.

5. The main ore body of LAMCO in Nimba will be depleted by 1983 andunless investment decisions are firmed up for exploiting Mt. Takadah mine,the possibility of a severe setback to the sector as well as the economycannot be ruled out. The Government should pursue this matter so that thealternative course of action could be charted out in event of the closure ofNimba mine. LAMCO is, obviously, awaiting future developments in the ironore market before taking the decision about future investment. LAMCO'snegotiations with Guinea for transporting Mifergui Nimba iron ore through itsrail and port facilities in Liberia haven't reached a conclusive phase.

6. A Japanese consortium headed by Woligisi is preparing a feasibilitystudy on Woligisi deposits of iron ore and if the study establishes a profit-able rate of return it is expected that by the time the world outlook for ironore improves in the middle eighties the Woligisi should be entering theproduction stream. The original project investment has been reduced to$300 million and the feasibility study is examining an output of 4 milliontons per year. The feasibility study for Bie Mountain deposits was completed

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by Arthur D. Little in June 1977 based on an expected output of 2 million tonsof pellets per annum. The required investment for this project is estimatedat $100 million. Due to recessionary conditions in iron ore demand, nofurther headway could be made in negotiations about this project.

7. Diamond and gold mining have been stimulated by the Government andthree concession agreements were approved in 1978. Diamond exports in 1978were valued at $30 million or 6% of the total merchandise export earnings.The U.N. was negotiating an agreement for a gold exploration program covering9,000 square kilometers in eastern Liberia.

B. Agriculture

8. One of the encouraging features of Liberian economy, despiteits overall bleak performance, has been buoyancy in agriculture sector--bothmonetary and traditional. Agriculture has emerged as the single largestcontributor to total GDP i.e. 31.8% in 1978 (13.8% for monetary and 18% fortraditional). Unlike mining which is owned mostly by foreign-owned concessionsthree fourths of the value added in this sector originates from Liberian ownedfarms. Rubber and forestry are primarily in the domain of the concessionswhile rice, cocoa, coffee, palm oil and some rubber production are grown bythe Liberians.

9. The mixed pattern of farming--rice as well as tree crops--is emergingto appear as a promising strategy. The current projects in Lofa and Bong anda similar project by West Germany in Nimba and a proposed rural developmentproject in three Southeastern counties based on this strategy have the poten-tial of diversifying the economic base of Liberia increasing agricultureproduction and exports, improving the rural income distribution and acting asa deterrent to migration to Monrovia. One of the areas of concern is whetherthe momentum generated by these projects under foreign donor agencies andexpatriate management can be sustained over time, even after the withdrawalof donors and expatriates. The Lofa project, which is widely acclaimed as asuccess in Liberia, will shortly meet this test when the expatriate manage-ment phases out by the end of this year. Careful design of post-implementa-tion management system in Lofa could pave the way for other agriculturedevelopment projects.

10. Rice is the mainstay of the subsistence economy and almost 90% ofall agriculture households grow rice. The acreage under rice in 1978 expanded

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by 6% as compared to 1974 (Table A.2) while production went up by 6% (from549 million pounds to 581 million). The average yield per acre has remainedstagnant as 92% of rice acreage is under upland rice. As more area comesunder swamp rice or irrigated rice or improved varieties of rice are sownunder upland the average yield is likely to improve from the present level of1,100 lbs. per acre. Rice imports have been filling the gap between domesticproduction and consumption and have averaged about 45 to 50 thousand tons inthe recent years. The per capita availability of rice actually declinedsince 1974 but improved in recent years.

Table A.2: PRODUCTION AND AVAILABILITY OF RICE

1974 1975 1976 1977 1978 I/

1. Area Under Rice 497 472 495 509 525

(000 Acres)

2. Domestic Productionof paddy (mill.pounds) 549 504 540 564 581

3. Domestic riceequivalent 2/ 332 304 325 340 370(mill. pounds)

4. Imports (mill.pounds) 76 67 82 123 134

5. Total available(mill. pounds) 408 371 407 463 504

1/ Preliminary estimates2/ Calculated by deducting 10% of paddy production as waste and seed

and multiplying the residual by the milling rate of one lb. paddy=0.67 lbs. clean rice.

Sources: Ministry of Agriculture; Economic Survey of Liberia (various issues)

11. Production of rubber by Liberian farmers has been declining overthe past five years (Table A.3). In 1974, one third of the total output ori-ginated from the Liberian producers but by 1978 this share had declined to25%. The total output of rubber is also lower than the level attained inthe early seventies. The rubber exports had maintained a fairly steadylevel between 170 to 180 million pounds annually or about 14% of the total

export receipts but the latest estimates for 1978 indicate 163 million poundsonly. This downturn has resulted from a reduction in producing acreage andlower yields. The average yield per acre from a concession farm was 1324 lbs.in 1973 but was less than 1,200 lbs. in 1978. Similarly, the Liberian ownedfarms which yielded 642 lbs. in 1973 deteriorated to 580 lbs. in 1978. TheLiberian farms are using a high proportion of overaged trees and old clones

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which account for low and decreasing yields. The downward trend in the caseof concessions can be attributed to the on-going replanting schemes whichremove the lower-yielding but still productive trees.

Table A.3: PRODUCTION OF RUBBER(In millions of pounds)

1974 1975 1976 1977 1978 1/

1. Foreign-owned 122.9 128.1 132.3 123.0 111.3

Firestone 75.6 73.5 73.1 64.8Others 47.3 54.6 59.2 58.2

2. Liberian-owned 64.1 53.4 55.7 49.6 54.9

Total Production 187.0 181.0 188.0 172.6 166.3

Total Exports 172.3 182-.4 176.7 178.1 163.3

1/ Preliminary estimates. -

Source: Concessions Secretariat, Ministry of Finance.

12. Firestone has, in addition to replanting, also expanded its culti-vated area by 22,500 acres. Other concessions have also embarked uponexpansion programs which would increase production in future. The Liberianfarmers' production is expected to be boosted up by the Bank-assisted RubberDevelopment Project whose primary thrust is to replant higher yielding varie-ties on an area of 40,000 acres and to rehabilitate another 23,500 acres.The expected increase in Liberian farmers' production by 1982 would be about20%.

13. The main source of high agriculture growth in the recent years hasbeen the forestry sector. Physical production increased by 90% in the lastfour years, from 406,000 cubic meters to 774,000 of logs in 1978 (Table A.4).The average annual rate of growth of Forestry value added over this period was30%. Its share in the GDP doubled from 2.5 to 5%. Export earnings fromforestry products increased from $17.6 million to $54.9 million and theircontribution to total export earnings rose from 4.4% to 11.3%. The Govern-ment policy to encourage exports of sawn timber rather than logs paid divi-dends as the volume of sawn timber exports has recorded an appreciableincrease in the recent years. Revision of stumpage fees from $3 per cubicmeter to $19 in 1977 generated $5 million of additional revenues to theGovernment. The total forest revenues in FY were $9.0 million. The exploita-tion of forest products is mainly done by 35 concessions. The ForestryDevelopment Authority was established in 1977 and is being strengthenedunder a Bank supported Forestry Development Project. The project also intendsto establish a pilot pulpwood industrial plantation which may eventually leadto a full scale industrial plantation and a pulp mill in later stages.

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Table A.4: PRODUCTION OF LOGS AND LUMBER

1974 1975 1976 1977 1978

Production(thousand cubicmeters) 406.3 456.8 606.0 598.5 774.6

Exports(thousand cubicmeters) 232.5 122.3 248.7 226.2 346.6

14. The other major agricultural products are coffee, cocoa and palmoil. The Liberian Produce Marketing Corporation (LPMC) continued to be theexclusive agent for purchasing and exporting these products. Coffee produc-tion reached a peak level of 10,566 tons in 1977-a threefold increase since1974. This change occurred mainly due to an expansion in the acreage plantsin response to high export and producer prices prevailing in the previousyears. The number of households planting coffee increased by 15% and theacreage plants rose by 32% between 1974-77. Cocoa production did not showsuch phenomenal changes although the acreage planted rose by 25% and thenumber of households growing cocoa went up by 18%. Production was adverselyaffected during the intervening years by plant disease. Producer prices werequite favorable and did not act as a disincentive.

Table A.5: PRODUCTION OF TREE CROPS(In long tons)

1973/74 1974/75 1975/76 1976/77 1977/78

PRODUCTION

Coffee 3,644 4,200 4,600 10,566 10,108Cocoa 3,164 3,200 2,900 3,099 3,351Palm Kernels 15,486 13,797 11,918 9,181 8,779

EXPORTS

Coffee 3,402 4,128 4,362 7,276 10,108Cocoa 3,312 3,176 2,752 2,733 3,351Palm Kernel Oil 5,844 6,226 15,000 4,508 3,418

Sources: 1. Coffee and cocoa production data are derived from theMinistry of Agriculture production estimates of majorcrops.

2. Economic Survey of Liberia 1975, 1976, 1977.

3. LPMC Annual Report

ANNEX 1- 65 - Page 7

15. The important new and emerging issues in this sector, besides RicePolicy (discussed separately) are land tenure and shortages in the rural labormarket. The land tenure system in Liberia has several major forms. The firsttype is the freehold under which land is held by individuals who can transfer,sell, gift, mortgage it as their personal property. The second form of tenureis the tribal trust. A person must secure a certificate from a tribal autho-rity before he purchases it. This certificate does not entitle him to owner-ship as this type of land continues to be owned by the State despite thepurchase. The purchaser has no rights of transfer, mortgage, etc. Thecertificate just states that no one is presently farming on that piece of landand the purchaser would be able to "live in peace and harmony". The thirdform is the national land. All land not held in free-hold or tribal trust isnational land and belongs to the Government. National land can, however, bepurchased if it is unencumbered. Some part of national land has been leasedto concessions, both foreign and domestic. The total area under varioustenure forms in Liberia according to 1971 Agriculture Census is 903,587 acres.Of this 43.3% or 391,691 acres is under the tribal tenure type. The distribu-tion of land holdings, show a marked tendency for small holders to have theirparcels of land under the tribal tenure. To illustrate this point, whilelarge holders (above 125 acres) had only 5% of their land under tribal tenure,the smallholders (below 5 acres) had about 75% of their land under thiscategory. It is believed by many observers in Liberia that the tribal tenuredoes not provide adequate motivation to small farmers to undertake improvementsand investments on their land or cultivate long-gestation crops. The farmersare not certain if they would be able to reap the fruits of their labor. Thislack of rights it is argued, would continue to discourage small farmers'participation in the production of cash crops and limit them to the subsistencesector. The conferring of a title deed or private ownership to these smallfarmers would therefore go a long way in eliminating their insecurity andinduce them to grow tree crops like coffee, cocoa and palm oil which are anintegral part of the diversification strategy. As no detailed studies are yetavailable to substantiate the above observations, the Government may wish toexamine this matter carefully and, if these observations are found to becorrect, take appropriate steps to improve the existing system.

16. A paradoxical situation seems to exist in the rural labor markets.Labor shortages are being experienced in most of the agriculture developmentprojects including rubber which is so closely located to Monrovia while openand underemployment of high magnitudes characterize the Monrovian labormarket. This mis-matching of labor demand and supply is one of the seriousproblems facing Liberia. The reasons for such a situation may be traced tolack of information or inadequate incentives. An Employment Exchange underthe Ministry of Labor where information on job vacancies in rural area iscompiled on a regular basis and unemployed job seekers are registered, pro-vided with such information and encouraged to work in these areas may be oneof the several means of facilitating labor mobility. Before embarking upon

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such a project it may perhaps be advisable to investigate this issue ingreater depth and understand its extent and causal mechanism. ILO/UNDP mayperhaps be able to provide the necessary assistance.

17. Other important issues which have been discussed in the previousreports are (a) strengthening agriculture extension services and establishingits link with research (b) providing adequate Credit to agriculture sector andespecially small farmers (c) promoting increased use of fertilizers and im-proved seeds (d) Coordination and reorientation of agriculture researchactivities with emphasis on Upland Rice. These issues have engaged the atten-tion of the Liberian Authorities and some of the Bank-supported projected arealso attempting to come to grip with them

C. Manufacturing

18. Manufacturing sector experienced rapid growth in the early seventies(6.5% per annum), but has not fared well in recent years (2.5% annual growthbetween 1974-78). Its real output was $26 million in 1974 and $28.7 millionin 1978 and consequently its share in GDP has continued to remain between 6 to7%. Manufactured exports account for about 1% of the total exports whileemployment in this sector is 1.6% of total employment and only 4% of modernsector employment. Two-thirds of the value of manufacturing productionoriginiate from the refinery and cement and the balance is distributed amongfood, beverages and tobacco. Most large-scale firms are foreign-owned andmanaged.

19. A recent study of the structure and performance of the manufacturingindustry carried out by UNIDO reveals that the industry was characterized by(a) high capital intensity ($18,800), (b) low net value added ratio (14%),(c) high dependence on external supply sources, especially imports, (d) in-significant intersectoral linkages, (e) production of primarily consumer goodsfor the domestic market, (f) low rates of capacity utilization (less than50%), and (g) satisfactory profit rates. Industrialization in Liberia hasthus been essentially an import substitution process producing light consumergoods with capital intensive techniques catering to the tastes and demand ofhigh income groups. The skewed income distribution pattern favored the growthof such a production pattern.

20. Further impetus for such kind of industrialization came from theGovernment's investment incentive code which also encouraged import substitut-ing consumer goods and creating oligopolistic or monopolistic markets for them.Although the code specifies employment generation, expansion and diversifica-tion of production, contribution to economic growth and improvement of balanceof payments as its objectives, the actual results point in a different direc-tion. High import propensity and almost non-existent export capacity affectedthe balance of payments adversely. High capital-labor ratios have generatedvery few employment opportunities. The share of profits in the gross value

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added is quite high (50%) and if these profits accrue to foreign owners whoremit them to their parent companies the scope for reinvestment and consequentcontribution to economic growth becomes severely limited. The pattern ofproduction 'has remained primarily consumer goods oriented for domestic marketand very little attempt has been made to diversify the production. AlthoughLiberia generally follows a relatively less restrictive import policy, theGovernment has instituted quantitative control and embargo on imports of 24commodities which are locally produced. Before these products can be imported,import orders must be submitted to the Ministry of Commerce and Industry andMinistry of Finance for obtaining written authorization. In practice, theministries verify with local manufacturers if the product to be imported isproduced locally. If not, authorization is given; otherwise it is withheld.Thus these industries are protected and their efficiency can be tested only inthe face of foreign competition. On the other hand, import exemptions, andincome tax holiday, are reducing the Government of Liberia's potential revenuebase. Tariff protection and oligopolistic/monopolistic market structures haveconferred large "non-economic" profits to the owners of these firms. The high"profits" could have been defensible, at least in the short run, if they werebeing reinvested in Liberia generating employment and production, but this isalso not happening. The available evidence seems to indicate the need for arevision of the code and its incentive structure to make it more consistentwith the objectives spelled out in the code itself.

21. Liberia, despite its limited domestic market, continues to be apotential attraction for foreign investors in West Africa and this advantagecould be profitably exploited given a proper policy mix. The two new develop-ment projects--Liberia Industrial Free Zone (LIFZA) and Industrial Park--arebeing implemented as part of the First Development Plan. The Free Zone isdesigned to induce foreign investment in manufactured exports while the Parkis aimed at attracting large import-substitution industries. LIFZA is beingfinanced out of BADEA loan and so far three firms have decided to locate inthe zone. Eleven more applications have been received. Liberian DevelopmentCorporaton (LDC) which was until recently managing the Industrial Park hasbeen able to locate 13 firms in the Park--most of them being large scaleconsumer goods producing enterprises. A closer look at both these projectsand their scope and future potential is required before further resources areallocated to them during the next plan period especially if the investmentcode is proposed to be revised.

22. The main institutions providing finance to manufacturing sectorare the five commercial banks and the Liberian Bank for Development andInvestment (LBDI). Commercial banks have in recent years increased thequantum of credit to manufacturing but it still averages about 8 to 9% oftotal credit. Most of these loans are for short-term working capitalrequirements LBDI is the only source of long-term finances to the sector.Between 1967-78, it has approved 310 loans amounting to $26.3 million. Itdisbursed $4.4 million to 26 parties in 1978. 85% of its approved loans were

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for the amounts above $200,000, but only a small fraction of the total loans(6%) was approved for manufacturing sector. The current lending rates are:(a) 10% for loans under 3 years; and (b) 11% for loans over 3 years. The LBDIadds 1.5% service charge, a commission of 1.5% and a commitment fee of 1.5%.Most of its loans were granted to agribusiness and services sectors. LBDIcan, in principle, make loans to small entrepreneurs, but it has not been verysuccessful in reaching the group and most of its loans are for establishedlarge-scale enterprises.

23. As far as industrial promotion activities are concerned, the onlyinstitution charged with this responsibility was, until recently, the LiberianDevelopment Corporation (LDC). The Project Research and Evaluation Unitof the Corporation was responsible for preparing feasibility studies forpossible investment projects, but the Corporation remained mainly involved inthe management of the Industrial Park, operation of National Tourist Officeand a hotel. It is not clear if the Corporation in fact had any success inpromoting new ventures either large scale or small scale. There was a generalfeeling that the LDC had diffused responsibilities and was not paying suffi-cient attention to its original goal for which it was set up. More recently,the Government decided to abolish the LDC and merge its functions with thenewly set up National Investment Commission (NIC). The Commission is headedby a full-time chairman and includes both the Ministers of Finance and Planning.It has a broad mandate for attracting private investors and streamlining theexisting procedures affecting private investment. The autonomous character ofthe Commission and vesting of sufficient authority in it raise hope that thisarrangement may provide a stimulus to private investment in Liberia.

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Rural Development Administration

1. Liberia is divided among nine counties and six territories for admin-istrative purposes. Each county is headed by a county superintendent who isappointed by the President. The head of the territorial administration isTerritorial Superintendent. Each county or territory is composed of severaldistricts. A District Commissioner is the administrator in charge of districtadministration. The next tier under a district is the town/city which isgoverned by Mayor (for city) or Township Commissioner. The towns/cities arefurther divided among several chiefdoms. Each chiefdom is headed by a Para-mount Chief whose responsibilities consist of collection of taxes, maintenanceof law and order and adjudication within tribal disputes. The chiefdom, inturn, has several clans under it whose head is the clan chief. Thus the hier-archical set up of rural administration can be represented by the followingdiagram.

COUNTY

DISTRICT

TOWNS/CITIES

CHIEFDOMS

CLANS

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Page 2

2. At the national level, the Ministry of Local Government, Rural Devel-opment and Urban Development is assigned the task of supervising the work ofthe County Superintendents. The various Ministries are represented mostlyat the County level and a list of their Ministries and their _presentativesis compiled in Annex Table 10.2. Counties or other lower tiers do not haveany independent powers to raise financial resources or levy any local taxes.They are dependent upon annual grants from the National Government. The FiscalYear 1979 budget, for example, allocated $250,000 to each County for develop-ment projects. However, the current procedures of release of funds and itsutilization are cumbersome and slow. The development projects out of this grantare approved by a County Council consisting of the Superintendent as its Chair-man, representatives of all development Ministries, paramount Chiefs andDistrict Commissioners. The council is assisted in its technical work by aCounty Development Committee headed by the Assistant Superintendent and com-prising the representatives of all development-oriented Ministries. Theserious problems affecting the smooth functioning of these existing Committeesas well as the Ministerial representatives at the County level is lack ofinter-ministerial coordination, lack of authority vested in the local repre-sentatives and exclusion of the County development projects from the frameworkof the national development plan. The Government is seriously consideringways and means to tackle the problem and the report of the Rural DevelopmentTask Force was useful in highlighting these problems and suggesting possiblesolutions. However, given the constraints presently facing the country, themanpower and related financial implications of establishing a national struc-ture of local administration on the lines recommended by the Task Force needscareful review. Although the recommendations contained in the report mayconstitute a long-term framework for restructuring the rural administrationand rural institutions the present inadequacy of financial and trained man-power resources in Liberia would dictate a more selective approach whichplaces minimum strain on these scarce resources.

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STATISTICAL APPENDIX

TABLE NO.

1. National Accounts

1.1 Gross Domestic Product 1970-78 (Current Prices)1.2 Gross Domestic Product 1970-78 (Constant Prices)1.3 Resources and Uses 1970-78 (Current Prices)1.4 Resources and Uses 1970-78 (Constant Prices)

2. Balance of Payments

2.1 Summary of the Balance of Payments - 1974-782.2 Value of Exports - 1970-782.3 Structure of Exports - 1970-782.4 Value of Imports - 1970-782.5 Structure of Imports - 1970-782.6 External Trade Balance by Country - 1970-772.7 Terms of Trade2.8 Production and Exports of Iron Ore - 1970-782.9 Production and Exports of Rubber - 1970-782.10 Production and Exports of Logs and Lumber - 1970-782.11 Production and Imports of Rice - 1970-78

3. External Debt

3.1 Total External Public Debt as of December 31, 19783.2 Historical and Projected Service Payments on External Debt3.3 Average Terms of External Debt3.4 External Borrowing during 1978

4. Public Finance

4.1 Central Government Budget 1970-784.2 Central Government Revenues 1970-784.3 Tax Revenues - 1970-784.4 Functional Classification of Budgetary Expenditures - 1970-784.5 Functional Classification of Budgetary and Extra Budgetary

Expenditures - 1970-784.6 Capital Expenditures of Public Corporations - 1977 and 19784.7 OAU Related Expenditure4.8 Development Expenditure July 1978-March 1979

5. Money and Credit

5.1 National Bank of Liberia Assets and Liabilities 1974-785.2 Domestic Accounts of the Commercial Bank 1974-785.3 Commercial Banks Consolidated Balance Sheets 1974-785.4 Deposits of Commercial Banks 1974-785.5 Commercial Banks Credit to the Private Sector 1977-785.6 Commercial Bank Loans to the Private Sector 1974-785.7 LBDI Summary of Operations 1967-78

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TABLE NO. (Cont'd)

6. Prices

6.1 Monrovia Consumer Price Index 1975-786.2 Monrovia Consumer Price Index - Rates of Change6.3 Monthly Producer and Export Prices for Rubber 1974-786.4 LPMC Producer and Export Prices6.5 LPMC Purchases of Cocoa, Coffee and Palm Kernels 1972-796.6 LPMC Purchases of Coffee, Cocoa & Palm Kernels

7. Population, Health and Nutrition

7.1 Population Estimates of Liberia by County 19797.2 Population by Broad Age and Sex 1962, 19747.3 Population of Liberia by Sex and County 19747.4 Urban Population of Liberia by Sex and County 19747.5 Rural Population of Liberia by Sex and County 19747.6 Literacy Rates 19747.7 Vital Birth/Death Statistics and Rates 19777.8 Health Facilities - Population Ratio 19787.9 Medical and Paramedical Staff in Liberia 19787.10 Public Expenditure on Health 1976/77 - 1978/797.11 Hospital Beds/Population Ratios 19787.12 Distribution of Health Facilities

8. Manpower and Employment

8.1 Labor Force Estimates 1974 and 19798.2 Employment in Liberia by Major Sectors 1977 and 19788.3 Employment in Liberia by Occupational Groups 1977 and 19788.4 Structure of Employment in Rural and Urban Areas by

Industry 19748.5 Structure of Employment in Rural and Urban Areas by

Occupation 19748.6 Structure of Employment in Monrovia by Occupation 19748.7 Structure of Employment in Monrovia by Industry 19748.8 Expatriate Employment 1977 and 19788.9 Government Employment by Agency 1977 and 19788.10 Public Corporation Employment 1977 and 19788.11 Avera2e Mouthly WaRes in Liberia by Sector 1977

9. Income Distribution

9.1 Monthly Household Distribution by Income 19749.2 Regional Distribution of Income 19749.3 Income Distribution in Monrovia 19749.4 Income Distribution of Government Employees in Liberia 1978

10. Public Administration

10.1 Organization Chart of a 'Typical' Ministry in Liberia10.2 Rural Administration in Liberia

Table 1.1: GROSS DOMESTIC PRODUCT BY SECTORAL ORIGIN

(In $ million currellt prices)

1970 1971 1972 1973 1974 1975 1976 1977 19781/

Agr-culture 40.4 40.2 38.2 57.4 73.5 62.6 78.2 96.2 113.7

libber 23.0 24.0 24.1 37.1 (47.9) (29.6) (39.5) (40.2) (42.0)Forestry 4.1 6.4 6.4 6.0 ( 6.4) (13.8) (18.2) (25.0) (35.0)Other 13.3 9.8 7.7 14.3 (19.2) (19.2) (20.5) (31.0) (36.7)

2. Mining 120.3 124.8 142.1 129.8 159.0 231.8 182.6 144.4 117.6

Iron Cre 109.3 113.7 1L7.6 110.9 (147.5) (224.7) (176.3) (136.1) (105.0)Other 11.0 11.1 12.4 18.9 ( 11.5) ( 7.1) ( 6.3) (8.3) ( 12.6)

3. Manufacturing 15.2 17.1 18.0 22.6 34.6 36.3 45.2 50.2 51.2

4. Construction 16.2 14.4 17.6 15.0 21.4 28.8 37.9 44.1 *

5. Wbnolesale & Retail Trade,Hotels and Restaurants 42.5 45.6 49.4 35.0 43.4 49.2 54.5 82.9 *

6. Eleccricity and Water 5.5 5.8 7.1 6.1 7.2 8.5 10.4 7.0 7.8

7. Trairsport, Storage endCommunication 31.8 34.7 36.3 32.5 32.5 40.7 45.1 53.7 *

8. Fi-ancial institutions, Realestate8 Business Services 23.7 24.7 27.3 33.1 35.4 40.2 45.5 49.3 *

9. Co=nunity, Social & PersonalServices 12.4 11.6 13.0 16.7 21.8 21.9 24.4 26.9 *

!0. Producers of Coverneent Services 23.0 27.0 26.7 31.2 36.0 43.8 51.5 70.6 82.0

li. Imputed Batik Charges - 3.4 - 3.4 - 3.5 - 4.2 - 5.1 - 4.7 - 6.7 - 3.8 *

12. Monetary CDP(at factor cost) 323.1 342.5 372.2 375.2 459.7 559.1 568.6 621.5 640.G

13. Traditional Economy 55.3 57.5 58.9 78.2 110.6 117.3 130.2 155.0 170.0

i4. Total GOP (F.C.) 378.4 400.0 431.1 453.2 570.3 676.4 698.8 776.5 810.0

'5. indirect taxes (net) 30.0 29.9 35.4 39.4 47.5 50.5 63.0 84.7 103.0

16. '-otal GDP (m.p.) 408.4 429.9 466.5 492.6 617.8 726.9 7(I.S 861.2 913.0

- ,-eu-rina-v estimates 441E: The above estimates are based on a new series of national accounts originated bythe Ministry of Planning and Economic Affairs rerently end are therefore different

7: = a;.'; a;2ilable from those reported in Report No. 1642e-LBR kFeb. 28, 1978)Source: 'fin'stry of Planning & Economic Affairs

Table 1.2:GROSS DOWSTIC PRODUCT BY SECTORAL ORIGIN(In $million constant 1971 prices)

1970 1971 1972 1973 1974 1975 1976 1977 1978

Agriculture 36.2 40.2 40.0 49.2 47.6 50.1 55.3 54.9 60.4

Rubber 23.0 24.0 24.1 25.7 (26.0) (24.3) (24.9) (23.1) (22.4)Foiestry 4.1 6.4 6.4 9.8 ( 7.5) (12.5) (16.4) (16.4) (21.2)Otner 9.1 9.8 9.5 13.7 (14.1) (13.1) (14.0) (15.4) (16.8)

2 Mining 121.1 124.7 130.8 130 5 134.0 116.2 108.4 94.3 86.0

Iron Ore 109.3 113.7 117.6 118.2 (125.0) (110.3) (103.9) (89.7) (81.0)Other 11.8 11.0 13.2 12.3 ( 9.0) ( 5.9) ( 4.5) ( 4.6) ( 5.0)

Manufacturing 15.7 17.1 18.2 20.9 26.0 * 23.1 28.0 29.2 28.7

14. Construction 15.2 14.4 15.0 12.8 15.7 14.1 17.7 221.

5. Wholesale & Retail Trade,Hotels & Restaurants 40.4 45.7 48.5 28.2 28.8 27.6 27.6 29.5 *

6. Electricity & Water 4.9 5.8 6.4 6.7 6.9 6,6 7.3 7.7 7.9

7. Transport. Storage &

Communication 32.7 34.8 36.5 32.5 31.5 35.5 40.1 41.0 *

8. Financial Institutions, Realstate& Business Services 24.1 24.7 25.0 24.8 25.6 26.7 26.2 27.2 *

9. Connunity, Social & PersonalServices 12.5 11.5 12.8 6 17.3 13.7 19.3 20.0 *

10. Producers of GovernmentServices 25.2 27.0 24.2 24.5 27.0 29.2 31.0 35.1 46.0

11. Imputed Bank Charges - 3.3 - 3.4 - 3.4 - 3.0 - 3.8 - 4.3 - 3.7 - 3.9 *

12. Monetary (CDP et factor cost) 324.8 342.5 354.0 343.4 357.4 343.5 357.2 354.2 360.0

13. Traditional Economy 57.2 57.5 60.1 60.8 68.8 68.0) 73.5 77.2 79.0

14. Total GDP (F.C.) 382.0 400.0 414.1 404.2 425.4 411.5 430.7 431. 439.0

15. Indirect taxes (net) 27.8 29.9 33.6 33.4 33.0 31.0 35.3 42.6 50.8

'S. ~otal GDP (n.p.) Q09.8 429.9 447.7 437.6 458.4 442.5 466.0 474.0 489.8

1/ Prelim.inarv estimates

* = .o; 2v2.aiI1e

S:urce: "Inistr:7 of Planning and Economic Affairs

Table 1.3: RESOURCES AND USES

(In $ million current prices)

1970 1971 1972 1973 1974 1975 1976 1977 1978 t

GDP (m.p.) 408.4 429.9 466.5 492.6 617.8 726.9 761.8 861.2 902.0

imports of Goods & NFS 159.0 174.3 184.2 240.9 332.1 371.9 446.2 521.9 544.6

TOTAL RESOURCES 567.4 604.2 650.7 733.5 949.9 1098.8 1208.0 1383.1 1457.6

Gross Domestic Investment 80.0 75.7 91.2 85.5 116.7 161.2 206.4 234.3 253.0

Consumotion 259.2 289.8 304.7 333.6 420.9 448.1 501.2 638.1 706.1- TJ51hiC 45.1 53.1 55.4 56.9 64.5 73.2 89.3 120.0 139.0- Private 2/ 214.1 236.7 249.2 275.7 356.4 374.9 411.9 518.1 567.1 uExports of Goods & NFS 216.9 228.0 247.3 329.9 407.2 403.7 467.1 459.0 500.0

Changes in Iron Ore Stocks) 10.6 10.7 7.5 -15.1 -4,1 55,5 -4.6 1',0 -48.6Statistical Discrepancy ) 1.2 9.2 30.3 38.0 40.7 47.0

TOTAL EXFEN'DITURES 567.4 604.2 650.7 733.5 949.9 1098.8 1208.0 1363.1 1457.6

Nemo ItemsDomestic Savings 149.2 140.1 161.8 159.0 196.9 278.8 260.6 223.1 195.9National Savings 37.9 36.5 41.2 78.3 85.2 125.5 150.4 110.8 101.7

I,nGDP (%) 19.5 17.6 19.5 17.3 18.8 22.1 27.1 27.2 28.0

:3D/GDP (%) 36.5 32.6 34.7 32.2 31.8 33.3 34.2 26.0 21.7

Sources: Data provided by Liberian atithcrities / Preliminary estimatesand staff adJustment / includes subsistence sector consumption also

Table 1.4: RESOURCES AND USES(In $ million constant 1971 prices)

1970 1971 1972 1973 1974 1975 1976 1977 19 78 -L/

GDP (m.p.) 409.8 429.9 447.7 437.6 458.4 442.5 466.0 474.0 489.8

Imports of Goods &NFS 164.4 174.3 176.8 184.3 183.8 187.5 221.0 219.2 222.0

TC'TAL RESOURCES 574.2 604.2 624.5 621.9 642.2 630.0 687.0 .6932 711.8

Gross Domestic Investment 708.9 75.7 89.0 68.5 81.1 90.0 118.2 107.8 121.6

Consumption 257.5 289.8 274.5 275.3 289.4 278.3 316.t 352.6 353.6- Puolic 50.4 53.1 53.4 44.6 48.3 48.8 51.8 97.0 105.0- Private 2/ 207.1 236.7 220.7 230.7 241.1 229.5 264.3 255.6 248.6

Exports of Goods & TFS 224.2 228.0 237.3 288.3 278.4 211.7 228.8 204.1 204.0

Changes in Iron Ore Stocks) 13.5 10.7 50.8 -15.4 -2.9 26.6 -2.1 3.7 -28.2Statistical Discrepancy )15.2 -3.8 23.4 26.0 24.1 60.8

IOTAL EXPENDITURES 574.2 604.2 624.5 621.9 642.2 630.0 687.0 693.Z 711.8

Memo ItemI/GDP 19.2 18.4 19.8 15.6 17.7 20.3 25.3 22.7 24.8

Source: Data provided by Liberian authorities / Preliminary estimatesand staff adjustment ncludes subsistence sector consumption

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Table 2.1: BALANCE OF PAYMENTS(In US$ million)

1974 1975 1976 1977 197811

I. Exports of Goods & NFS 407.2 403.7 467.1 459.0 500.0

1. Goods 400.3 394.4 457.1 447.4 486.4

2. Non-Factor Services 6.9 9.3 10.0 10.6 13.7

II. Imports of Goods & NFS -316.1 -354.9 -446.2 -521.9 -544.63. Goods -289.4 -331.2 -399.2 -463.5 -480.8

4. Non-Factor Servcies - 26.7 - 23.7 -47.0 -58.4 - 64.8

TRADE BALANCE 110.9 63.2 57.9 - 16.1 5.6

RESOURCE BALANCE 91.1 48.8 20.9 -62.9 -44.6

III. Factor Service5. Factor Payments -120.0 -122.9 -86.0 -80.0 -79.0

6. Workers' Remittances - 22.0 - 24.5 -25.0 -27.5 -32.5

7. Interest Payments - 4.3 - 4.9 - 4.6 - 7.8 -10.8

IV. Unrequited Transfers8. Grants to Public Sector 12.3 11.3 16.0 14.0 16.0

9. Grants to Private Sector 2.6 2.8 2.6 2.6 2.6

10. Maritime Revenues 9.9 16.5 16.3 12.8 13.6

CURRENT ACCOUNT BALANCE - 30.4 - 77.4 -59.8 -148.8 -134.7

11. Direct Foreign Investment 45.0 91.4 51.3 13.3

12. Government Borrowing 18.0 32.6 57.5 76.8

13. Debt Amortization - 15.8 -15.1 -19.9 -13.5

14. Errors and Omissions 29.0 -11.1 51.1 30.0

CAPITAL ACCOUNT 32.7 76.2 97.8 140.0 106.6

Surplus/Deficit 2.3 - 1.2 38.0 -8.8 -28.1

FINANCING - Govt.with Bank abroad 0.1 - 0.1 0.7 -2.0 2.3

- Deposit Money Banks 1.4 -32.5 19.2 19.4

- Monetary authorities 1.0 1.3 -6.2 -8.4 6.4

1/ Preliminary estimates

Sources: - Ministry of Planning and Economic Affairs

National Bank of LiberiaStaff Estimate

Table 2,2: VALUE OF EXPORTS, 1970-1978

(In US$ million)

Export Items 1970 1971 1972 1973 1974 1975 1976 1977 1978

Iron-ore 150.7 160.6 182.7 196.7 262.2 293.6 328.7 273.5 274.4Lump (53.8) (40.3) (46.7) (54.0) (68.8) (56.0) (58.5) (23.6) (14.4)Fines (4f.8) (5A. 8" (53.4) (52.2) (74.8) (86.8) (100.5) (115.8) (127.2)Pellets (19.7) (35.3) (54.8) (53.1) (75.6) (94.8) (112.7) (81.5) (76.5)Concentrates (36.4) (30.2) (27.8) (37.4) (43.0) (56.0) (56.2) (52.6) (56.3)

Rubber 36.2 32.5 29.0 42.9 64.5 46.2 53.3 59.1 69.2Latex (18.7 (16.1) (15.7) (15.8) (28.9) (20.1) (21.7) (24.3) (31.9)Crepe (17.5) (16.4) (13.3) (27.1) (35.6) (26.1) (31.6) (34.8) (37.3)

Diamonds 27.9 28.2 31.7 49.3 29.9 18.4 16.6 21.4 30.3Logs and Lumber 5.8 8.0 8.2 16.6 17.6 I 12.8 32.4 25.9 54.9Coffee 3.3 4.0 4.6 5.1 4.0 4.5 6.6 43.0 25.3Cocoa 1.0 1.3 1.5 1.9 4.3 4.4 4.1 6.1 14.4Palm Products 2.0 2.2 1.5 2.6 8.5 ! 3.2 2.7 3.8 3.6

Palm Kernels (2.0) (2.2) (0.4) (0.2) (0.1) ( -) ( - ) ( - ) ( - )Palm Kernel Oil ( - ) ( - ) (0.8) (1.7) (6.9) (2.3) (1.4) (1.8) (2.3)Expeller cake ( - ) ( - ) (0.3) (0.6) (1.2) (0.5) (0.7 (0.6) (0.7)Palm Oil ( - ) ( - ) ( - ) (0.1) (0.3) (0.4) (0.6) (1.4) (0.6)

Sawn Timber 0.1 0.1 _- - 1.8 2.2 1.4 -Other Domestic

Exports 3.1 2.7 4.5 3.4 3.6 3.6 4.5 4.2 5.4Re-exports 5.8 7.0 6.1 5.5 5.6 5.9 6.0 7.0 8.8

Total Exports,f.o.b. 235.9 246.6 269.8 324.0 400.0 394.4 457.1 447.4 486.3

Source: Ministry of Planning and Economic Affairs, External Trade of Liberia: Exports,various issues, and Economic Survey of Liberia 1975.

Table 2.3: STRUCTURE OF EXPORTS 1970-1978(In percent)

Export Items 1970 1971 1972 1973 1974 1975 1976 1977 1978

Iron Ore 63.9 65.1 67.7 60.7 65.5 74.4 71.9 61.1 56.4Lump (22.8) (16.4) (17.3) (16.7) (17.2) (14.2) (12.8) (5.3) (3.0)Fines (17.3) (22.2) (19.8 (16.1) (18.7) (22.0) (22.0) (25.8) (26.1Pellets (8.4) (14.3) (20.3) (16.4) (18.9) (24.0) (24.8) (18.2) (15.7)Concentrates (15.4) (12.2) (10.3) (11.5) (10.7) (14.2) (12.3) (11.8) (11.6)

Rubber 15.3 13.2 10.7 13.2 16.1 11.7 11.7 13.2 14.2Latex (7.9) (6.5) (5.8) (4.9) (7.2) (5.1) (4.7) (5.4) (6.6)Crepe (7.4) (6.7) (4.9) (8.4) (8.9) (6.6) (3.0) (7.8) (7.6)

Diamonds 11.8 11.4 11.7 15.2 7.5 4.7 4.7 4.8 6.2Logs and Lumber 2.5 3.2 3.0 5.1 4.4 3.2 3.2 5.8 11.3Coffee 1.4 1.6 1.7 1.6 1.0 1.1 1.1 .9.6 5.2Cocoa 0.4 0.5 0.6 0.6 1.1 1.1 1.1 1.4 3.0Palm Products 0.8 0.9 0.6 0.8 2.1 0.8 0.8 0.8 0.7Sawn Timber 1/ 1/ - - - 0.5 0.5 0.8 -Other Domestic

Exports 1.4 1.1 1.7 1.0 0.9 0.9 1.0 0.9 1.1Re-exports 2.5 2.8 2.3 1.7 1.4 1.5 1.3 1.6 1.8

Total Exports, f.o.b. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

1/ Negligible

Source: Ministry of Planning and Economic Affairs, External Trade of Liberia: Exports,various issues, and Economic Survey of Liberia 1975.

Table 2.4 VALUE OF IMPORTS, 1970-1978(In $ millior.)

1970 1971 1972 1973 1974 1975 1976 1977 1978

1. Food and Live Animals 21.4 24.4 25.5 30.2 38.4 38.6 41.9 56.8 66.9

2. Beverages and Tobacco 3.2 4.5 3.8 4.1 4.7 6.2 7.3 10.3 11.7

3. Crude Materials, inedible 1.8 1.7 1.7 1.6 2.1 3.0 4.8 4.8 4.4

4. Mineral Fuels, Lubricants, etc. 9.5 11.8 12.0 14.7 56.4 48.3 59.5 68.8 84.6

5. Animal and Vegetable Oils 0.7 0.9 1.1 1.2 2.4 1.0 1.8 2.1 2.9

6. Chemicals and Related Materials 9.7 11.6 9.9 12.8 18.5 22.0 24.5 29.6 31.1

7. Manufactured Goods, by Material 37.9 35.2 40.6 3°.0 54.4 70.2 79.5 97.0 91.9

8. Machinery and Transport Equipment 50.1 54.2 63.4 68.8 85.4 115.7 152.1 156.5 156.6

9. Miscellaneous Manufactured Articles 12.7 15.4 18.3 18.6 23.4 22.0 24.4 34.0 26.7

10. Miscellaneous Commodities andTransactions, n.e.s. 2.7 2.6 2.4 2.4 2.8 4.1 3.4 3.4 4.0

TOTAL IMPORTS, c.i.f. 149.7 162.4 178.7 193.5 288.4 331.2 399.2 463.5 480.4

Source: Ministry of Planning and Economic Affairs, External Trade of Liberia:Imports, various issues, and Economic Survey of Liberia 1977.

Table 2.5 STRUCTURE OF IMPORTS 1970-1978(In percent)

1970 1971 1972 1973 1974 1975 1976 1977 1978

1. Food and Live Animals 14.2 15.0 14.3 15.6 13.3 11.7 10.5 12.3 13.9

2. Beverages and Tobacco 2.1 2.8 2.0 2.2 1.6 1.9 1.8 2.2 2.4

3. Crude Materials, inedible 1.2 1.0 1.0 0.8 0.7 0.9 1.2 1.0 0.9

4. Mineral Fuels, Lubricants, etc. 6.3 7.3 6.7 7.6 19.6 14.6 14.9 14.8 17.6

5. Animal and Vegetable Oils 0.5 0.6 0.6 0.6 0.8 0.3 0.4 0.4 0.6

6. Chemicals and Related Materials 6.' 7.1 5.5 6.6 6.4 6.6 6.1 6.4 6.5

7. Manufactured Goods, by Material 25.3 21.7 22.8 20.2 18.7 21.2 19.9 20.9 19.1

8. Machinery and Transport Equipment 33.5 33.4 35.5 35.6 29.7 34.9 38.1 33.8 32.5

9. Miscellaneous Manufactured Articles 8.5 9.5. 10.2 9.6 8.1 6.6 6.1 7.4 5.6

10. Miscellaneous Cornodities andTransactions, n:e.s. 1.8 1.6 1.3 1.2 1.0 1.2 0.9 0.7 0.8

TOTAL IMPORTS, c.i.f. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Ministry of Planning and Economic Affairs, External Trade of LiberiatExports, various issues, and Economic Survey of Liberia 197/.

Table 2.6: EXTERNAL TRADE BALANCE BY COUNTRY 1970-78(In $ million)

1970 1971 1972 1973 1974 1975 1976 1977 1978

ALL COUNTRIES 86.2 89.2 91.1 130.5 110.5 63.2 57.9 -16.5 5.5

USA 3.1 -1.8 -3.7 11.9 11.8 17.3 -31.1 -27.5 -13.8

F. R. Germany 16.1 25.8 21.8 31.8 48.9 41.9 76.8 64.6 56.3

United Kingdom 7.8 -4.4 -8.6 -8.3 -16.8 -23.3 -20.8 -17.3 -29.4

Netherlands 18.4 23.6 26.3 34.3 39.8 26.8 1.8 -7.2 6.7

France 10.6 8.0 8.9 11.9 22.0 21.6 27.6 21.1 24.7

Belgium 26.9 24.2 32.5 51.9 37.8 25.3 28.2 20.9 28.9

Japan 3.9 11.6 4.8 3.8 -5.8 -9.3 -16.2 -36.3 -34.4

Italy 18.4 25.3 39.7 34.3 43.4 47.5 58.8 38.4 34.4

Sweden -4.2 -5.0 -7.2 -9.5 -16.7 -13.3 -12.4 -27.1 -9.1

Other -15.4 -23.1 -23.4 -31.5 -53.6 -81.3 -54.8 -46.1 -58.8

Source: Ministry of Planning and Economic Affairs

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Table 2.7: TERMS OF TRADE 1974-78

Export Price Index Import Price Index(1975=100) (1975=100) Terms of Trade

1974 78.4 78.9 99.3

1975 100.0 100.0 100.0

1976 103.4 95.9 117.8

1977 119.7 117.8 101.6

1978 108.1 121.4 89.0

Source: Ministry of Planning and Economic Affairs

- 84 -

Table 2.8: PRODUCTION AND EXPORTS OF IRON ORE

--------- PRODUCTION1/ ------ ------------- EXPORTS ------------Pellets Others Total Quantityl/ Value2/ Unit Price3/

1970 1.8 21.6 23.4 23.3 150.7 6.47

1971 1.9 20.9 22.8 20.9 160.6 7.68

1972 4.0 18.4 22.4 22.6 182.7 8.08

1973 4.3 18.9 23.2 25.2 196.7 7.81

1974 4.1 20.7 24.8 25.2 262.2 10.40

1975 4.2 17.4 21.6 18.1 293.6 16.22

1976 4.2 15.8 20.1 20.2 328.7 16.26

1977 2.4 15.4 17.8 17.4 273.5 15.73

1978 2.5 15.3 17.8 20.8 274.4 13.19

1/ Long tons, million

2/ US$ million

3/ US$ per ton

Source: Ministry of Finance, Concession Secretariat andExternal Trade of Liberia - Exports (various issues)

- 85 -

Table 2, 9 ; PRODUCTION AND EXPORTS OF RUBBER

PRODUCTION 1/ J EXPORTS

Concessions Liberian Total Quantityl! Value- U3/

1970 118.7 53.4 172.1 183.9 36.2 19.7

1971 123.4 57.6 181.0 186.5 32.5 17.4

1972 132.2 48.1 180.3 182.9 29.0 15.9

1973 128.6 59.1 188.7 188.9 42.9 22.8

1974 124.9 69.8 194.7 190.1 64.5 33.9

1975 128.1 53.4 181.5 178.3 46.2 25.91976 132.3 55.7 188.0 161.5 53.3 33.01977 122.0 49.6 171.6 153.6 59.1 38.51978 111.3 54.9 166.3/ 58.4 69.2 43.8

Source: Liberian Authorities and External Trade of Liberia. Exports,

various issues.

1/ Million pounds

2/ $ Million

3/ J per pound

4/ Provisional

- 86 -

Thble 2,10: PRODUCTION AND EXPORTS OF LOGS AND LUMBER

PRODUCTION!i EXPORTS(Logs)

Quantityl/ QuantityV/ Value3/ Unit Price4 /

1970 220.5 188.4 65095 5.8 881971 319.2 251.2 86800 8.0 921972 402.4 269.2 93048 8.2 871973 524.3 304.1 105087 16.6 1581974 406.3 232.5 80348 17.6 2191975 456.8 122.3 42274 12.8 3031976 606.0 248.7 113262 32.4 286.11977 598.5 226.2 78748 25.9 I 328.91978 774.6 346.6 130930 54.9 5/ 357.0

Source: External Trade of Liberia: Exports (varicus issues) andEstimates of Domestic Product at Current and Constant1971 Prices.

1/ Thousand cubic meters2/ Thousand board feet3/ $ Million4/ $ per 100 board feet5/ Includes $8.1 million of sawn timber exports

- 87 -

Table 2.11: PRODUCTION AND IMPORTS OF RICE

PRODUCTION IMPORTS

Quantityl!/ Producer Price2/ Quantityl' Value3/ Unit Price2/For Paddy _

1970 n.a. 108.0 9.7 9.01971 n.a. _ 119.4 10.9 8.31972 n.a. 5.0 90.6 7.6 8.41973 n.a. 7.0 101.5 12.3 12.11974 549.0 7.0 76.1 15.8 20.81975 504.0 10.0 67.6 13.6 20.11976 540.0 12.0 82.6 12.9 15.61977 564.0 12.0 123.0 19.o 1o.u1978 4/ 581.0 12.0 134.3 22.9 17.1

I . I I . .1 _ _ _ _ _

1/ Million pounds2/ d per pound3/ $ million4/ Preliminar~y

Source: External Trade of Liberia: Imports various issues,Economic Survey of Liberia, 1977 and Ministry ofAgriculture

Table 3.1: EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DEC. 31, 1978

INCLUDES ONLY DEBT COMMITTED UAN. 1, 1900 - DEC. 31. 1978

DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS(IN THOUSANDS OF U.S. DOLLARS)

D E B T O U T T A N D I N G : I N A R R E A R S

TYPE OF CREDITOR-CREOITOR COUNTRY DISBURSED ;UNDISBURSED: TOTAL PRINCIPAL INTEREST

SUPPLIERS CREDITSNORWAY 10,277 - 10,277 - -

UNITED KINGDOM 1,700 2,400 4,100 - -

TOTAL SUPPLIERS CREDITS 11,977 2,400 14,377 - -

FINANCIAL INSTITUTIONSUNITED KINGDOM 5,611 8.094 13,705 -

UNITED STATES 43,088 3,275 46.363 - _

MULTIPLE LENDERS 30,000 60,000 90,000 - -

TOTAL FINANCIAL INSTITUTIONS 78,699 71,369 150.068 - -

MULTILATERAL LOANSAFRICAN DEV. BANK 6,929 19.339 26,268 - -OX

EUROPEAN OEV.FUND - 6,000 6,000 - -

EUROPEAN INVEST BANK - 10,189 10.189 - -

GULF ORG EGYPT(GODE) - 7.120 7.120 - -

IBRO 43,766 55.876 99.642 - -

IDA 13,138 22,862 36.000 -

IMF TRUST FUND 14,709 - 14.709 - _

OPEC SPECIAL FUND - 3.000 3000 -

SAFA (SP AR FUND AF) 3.600 - 3,600 - -

TOTAL MULTILATERAL LOANS 82.142 124,386 206,528 - _

BILATERAL LOANSCHINA, REP. OF 9,272 528 9,800 - -

CHINA. P.R. OF - 23,000 23,000 - -

GERMANY. FED.REP, OF 48,399 28,136 76,535 - -

ITALY 7.951 - 7g951 -

jAvAN 9,919 5,326 15,245 - -

KUWAIT - 7,500 7,500 - -

SAUDI ARABIA - 20,000 20,000 - _

UNITED KINGDOM 437 7,128 7,565 - -

UNITED STATES 92.699 25,349 118,048 - -

TOTAL BILATERAL LOANS 168,677 116,967 285.644 _ _

TOTAL EXTERNAL PUBLIC DEBT 341,495 315,122 656,617 _

NOTES: (1) ONLY DEBTS WITH AN ORIGINAL OR EXTENDED MATURITY OF OVER ONE YEAR ARE INCLUDED IN THIS TABLE.

(2) DEBT OUTSTANDING INCLUDES PRINCIPAL IN ARREARS BUT EXCLUDES INTEREST IN ARREARS.

Tahle 3.2;SERVICE PAYMENTS, COMMITMENTS, DISBURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL PUBLIC OEBT

PQOJECTIONS BASED ON DEeT n'TSTANDINC '''C' oSr DEOz . s:, ;;7;

INCLUDES ONLY DEBT COMMITTED JAN. 1, 1900 - DEC. 31, 1978DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS

(IN THOUSANDS OF U.S. DOLLARS)TOTAL

YEAR DEBT OUTSTANDING AT T R A N S A C T I 0 N S D U R I N G P E R I 0 0 OTHER CHANGES

BEGINNING OF PERIOD- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -_ - - - - - - - - - - - - - - - - - - - - - -

DISBURSED : INCLUDING COMMIT- DISBURSE- S E R V I C E P A Y M E N T S CANCEL- ADJUST-

ONLY :UNDISBURSED: MENTS :MENTS ---_------- ----------- ----------- LATIONS :MENT *

PRINCIPAL INTEREST TOTAL

(1) (2) (3) (4) (5) (6) (7) (8) (9)

1972 158.445 173,951 20.046 10.465 12.006 4,825 16,B31 62 434

1973 157.332 182.363 29.621 8.094 12.206 5.268 17.474 103 3.775

1974 156.922 203,450 27.722 14,919 14.792 4.986 19.778 47 3.281

1975 159,551 219,614 81.645 34.854 17,244 5.173 22.417 1 -3,034

1976 175.252 280,980 54.826 45,747 15,189 5.657 20,846 707 6,224

1977 210.808 326,134 101.804 96,397 19,893 7.880 27,773 287 5.805

lq7R 2QI.066 ^ ; 2 '7,!! 58 ' Z.__ ;4 26,o _ a.706

1979 341.495 656,615

* * * * * * THE FOLLOWING FIGURES ARE PROJECTED * * * * * -

1979 341.495 656.615 - 1l0,628 22,371 21,858 44,229 - 2 1

1980 429,752 634.246 - 94,266 28,170 30.277 58.447 - 4 0

1981 495.853 606,080 - 52.785 36.944 31,579 68,523 - 1 I

1982 511.695 569,137 - 28.194 43,128 28,961 72,089 - -3

1983 496,756 526,006 - 14,225 51,197 25,798 76,995 - -

,1984 459.787 474.809 - 7,415 50,815 21,471 72,286 - 2

1985 416.389 423.996 - 4,364 47,132 17.500 64,632 - -2

1986 373.620 376,862 - 2,146 41.997 14.068 56,065 - -1-

1987 333.767 334.864 - 825 29.316 11.438 40,754 - -2

1988 305.275 305,546 - 231 23.609 10,197 33,806 - -

1989 281.897 281,937 - 40 22,131 9.191 31.322 - -

1990 259.806 259,806 - - 19.850 8.292 28,142 - -10

1991 239.946 239.946 - - 19.103 7,478 26,581 - -

1992 220,843 220.843 - - 18.831 6.710 25.541 - -

1993 202.012 202.012 - - 18,382 5,944 24.326 - 2

1994 183.632 IRi sq2 - - IP )PA 'C4 -4

1995 165,244 165.244 - - 17,879 4,469 22.348 - 2

1996 147,367 147,367 - - 17,947 3,770 21.717 - -5

1997 129.415 129,415 - - 17,391 3,076 20.467 - 6

1998 112,030 112.030 - - 14,369 2,453 16,822 - -4

* THIS COLUMN SHOWS THE AMOUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONE

YEAR TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF DEBTS

FROM ONE CATEGORY TO ANOTHER IN THE TABLE.

- 90 -

Table 3,3 AVERAGE TER!S OF EXTERNAL PUBLIC DEBT COMMITMENTS

Interest Maturity Grace Grant Element(X) (Years) (Years) (%)

1974 4.5 19.2 5.1 36.1

1975 6.3 24.4 5.7 26.5

1976 6.7 17.7 4.4 21.8

1977 5.2 17.9 5.2 31.0

1978 7.4 16,5 4.9 21.1

Total ExternalPublic Debt 6.6 18.3 5.1 24.8

Ghana (1977) 4.2 34.8 7.6 49.4

- 91 -

Table 3.4: External Borrowings during Calendar Year 1978

I. Directly Productive Activities Amount in US$ million

Forestry (ADB) 5.0"1 (IDA) 6.0

Rubber Development 7.128LPRC Acquisition 15.0Oil Palm Projects 7.036Cocoa and Coffee 7.804Rubber Tree 7.407Forestry Products 4.7Rubber Development (IBRD) 7.0

it it (IDA) 6.0Upper Bong 6.6

Sub-Total 79.675

II. Physical Infrastructure

Monrovia Water Supply 2.6Fourth Power (BADEA) 3.9

it " (IBRD) 10.0i " (Saudi Fund) 11.0

LIFZA Expansion 3.2Infrastructure Dev. (China) 23.0LEC (EIB) 6.17Liberian Indus. Free Zone 3.3LEC (KfW) 3.43Roads Rehabilitation 7.5Fourth Highway (IBRD 3.8"1 "1 (OPEC) 3.0

Tartuke/Karloke 6.0Tubman Bridge 9.0

Sub-Total .95.9

III. Other 'Non-Development' expenditure

MATADI 10.0Agrimeco 7.8Boeing Aircraft 14.0OAU 5.8Hotel Africa 9.0

Sub-Total 46.6

Table 4.1 THE CENTRAL GOVERNMENT BUDGET

(In US$ million)

1970 1971 1972 1973 1974 1975 1975/76 1976/77 1977/78 1978/791

1. Budgetary Revenues 66.5 69.9 78.1 89.8 108.6 125.3 132.1 166.5 185.5 201.9

2. Current Budget 47.6 50.9 52.8 61.4 74.2 78.1 88.6 108.5 112.3 159.4

CURRENT BUDGET SURPLUS 18.9 19.0 25.3 28.4 3A.4 07.2 43.5 58.0 72.6 42.5

3. Development Budget 6.9 6.9 7.4 11.1 15.0 24.0 30.8 30.2 77.0 84.7

BUDGETARY SURPLUS 2/ 12.0 12.1 17.9 17.3 19.4 23.2 12.7 29.9 - 4.4 -42.2

4. Extra Budgetary Expenditures 16.5 18.3 19.5 19.2 15.3 27.5 32. 7 70.7 67.8 95.1

5. CVBERALL DEFLCIT -L.5 -6.2 -1.6 -1.9 4.1 -4.3 -20.0 -40.8 -72.2 -137.3

6. FINANCING OF DEFICIT

- Foreign Grants 10.8 13.3 11.3 11.0 12.3 11.3 11.3 16.0 16.0 23.0- Foreign Loans

(Borrowings) 5.7 5.0 8.2 8.2 5.1 18.0 46.0 57,4 35.6 169.8(Anortization) -9.1 -11.2 -14.2 -12.8 -17.4 -16.3 -24.1 -19.7 -20.7 -44.6

- IMF (net) -0.9 1.6 0.1 -0.9 -1.1 -0.5 - - 12.2 -- Other -2.0 -2.5 -3.8 -3.6 -3.0 -8.2 +13.4 -12.9 29.1 17.1

Memo Items:

1. Public Debt Servicing 20.6 20.6 20.7 21.8 22.9 21.7 29.6 24.5 30.7 49.12. Debt Servicing/Budgetary

Revenues (%) 31.0 29.6 26.5 24.3 21.1 17.3 22.4 14.7 16.5 24.3

I/ PreliTninarv estimates Source: Ministry of Finance

2/ Before debt amortization

Table 4.2: CENTRAL GOVERNMENT REVENUES

(In US$ million)

1970 1971 1972 1973 1974 1975 1975/76 1976/77 1977/78 1978/79

1. Taxes on Income & Profit 25.7 26.9 27.6 31.5 41.5 46.9 ] 47.7 69.1 59.6 65.8

-Iron Ore Profit Sharing 13.0 12.2 13.6 14.0 13.9 16.3 17.2 28.7 14.2 10.4

-Corporation Tax 6.9 7.1 5.3 7.7 13.5 12.7 11.7 17.3 18.8 24.3

-Individual Income Tax - - - - - - 7.2 9.9 21.2 25.0

-Austerity Tax 3.5 3.5 4.3 4.7 5.7 7.0 7.5 8.1 - _

-Tax on non-residents - - - - - - 3.7 4.0 3.7 1.8

-Other 2.3 4.1 4.4 5.1 8.4 10.9 0.4 1.1 1.7 4,3

2. Taxes on Property 1.2 1.1 1.3 1.4 1 1.5 2.0 2.3 2.3 2.8 2.8

3. Taxes on Domestic Transc. 3.3 3.8 5.1 7.6 7.8 8.0 5.2 6.5 7.2 8.8

4. Taxes on Foreign Trade 20,7 22.1 23.5 24.9 33.0 33.8 36.4 50.2 67.0 79.5

- Import Duty 18.1 19.6 20.7 20.7 27.4 28.2 30.7 44.1 60.0 70.4

5. Other Taxes receipts 4.5 3.9 4.9 6.0 5.6 6.0 8.4 9.1 10.2 15.0

TOTAL TAXES 55.5 57.8 62.4 71.4 89.4 96.7 100.0 137.2 146.8 171.9

6. Maritime Revenues 5.0 6.1 7.2 8.6 9.9 16.5 15.6 15.5 12.2 13.5

7. Non-Tax Revenues 6.0 5.6 8.5 9.8 9.3 12.1 16.5 13.8 26.5 16.4

TOTAL REVENUES 66.5 69.5 78.1 89.8 108.6 125.3 132.1 166.5 185.5 201.8

Memo Items:

1) Tax Rev./Monetary GDP* 17.2 16.9 16.8 16.7 16.6 14.6 17.9 24.1 23.6 26.8

2) % increase in Tax Revenues 7.4 4.1 8.0 14.4 25.2 8.2 11.8 37.2 7.0 17.1

3) % Increase in Monetary GDP* 4.3 6.0 8.7 14.8 26.3 22.7 21.6 1.7 9.3 3.0

4) Iron Ore Pr.Sh/Iron-Ore netOutput 12.4 10.7 10.5 10.5 7.6 5.8 7.7 16.3 10.4 10.0

5) Import Duties/Import ofGoods 12.1 12.1 11.6 10.7 9.5 8.5 9.3 11.0 12.9 14.6

* At factor cost.

Table 4.3 : TAX REVENUES

(Percentages)

1970 1971 1972 1973 1974 1975 1975/ 1976/ 1977/ 1978/1976 1977 1978 1979

I) DIRECT TAXES 48.5 48.4 46.3 46.1 48.1 50.6 50.0 52.1 42.5 39.9

1. Taxes on Income & Profit 46.3 46.5 44.2 44.1 46.4 48.5 47.7 50.4 40.6 38.3

- Iron Ore Pr. Sharing 23.4 21.1 21.8 19.6 15.5 16.9 17.2 (20.9) 9.7 6.0- Corporation Tax 12.4 12.3 8.5 10.8 15.1 13.1 11.7 12.6 12.8 14.1- Individual Income Tax - - - - - - 7.2 7.2 14.4 14.5- Tax on non-residents - - - - - - 3.7 2.9 2.5 1.0- Austerity Tax 6.3 6.1 6.9 6.6 6.4 7.2 7.5 5.9 - -

- Other 4.2 7.0 7.0 7.1 9.4 11.3 0.4 1.9 1.2 2.5

2. Taxes on Property 2.2 1.9 2.1 2.0 1.7 2.1 2.3 1.7 1.9 1.6

II) INDIRECT TAXES 51.5 51.6 53.7 53.9 51.9 49.4 50.0 47.9 57.5 60.1

3. Taxes on Domestic Transact, 5.9 6.6 8.2 10.6 8.7 8.3 5.2 4.7 4.9 5.1

4. Taxes on Foreign Trade 37.3 38.2 37.7 34.9 36.9 34.9 36.4 36.5 45.6 46.2

- Import Duty 32.6 33.9 33.2 29.0 30.7 29.2 (30.7) (32.1) (40.9) (41.0)

5. Other Taxes 8.1 6.8 7.8 8.4 6.3 6.2 8.4 6.6 6.9 8.8

TOTAL TAXES 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memo Items:

Taxes/Budgetary Revenues 83.6 83.2 79.9 79.5 82.3 77.1 75.7 82.4 79.1 85.1

Table 4.4: FUNCTIONAL CLASSIFICATION OF BUDGETARY EXPENDITURE 1970-1978(In US.$ million)

Expenditure Items 1970 1971 1972 1973 1974 1975 1976 1976/77 1977/78

TOTAL 68.7 72.4 75.9 89.5 107.7 118.8 133.7 178.5 236.3

General Services 21.9 24.3 26.5 33.0 35.6 39.2 52.7 54.7 65.5Administration 10.2 11.3 15.1 20.8 22.9 25.0 36.7 35.3 39.1Foreign Affairs 3.9 4.2 3.6 3.8 3.9 4.4 4.7 5.6 8.2Public order and safety 3.4 4.1 3.7 4.0 4.6 4.9 6.0 7.1 9.3Defense 3.7 4.3 3.8 3.7 3.7 4.5 5.3 6.7 8.9Other 0.7 0.4 0.3 0.7 0.5 0.4 - - _

Social & Community Services 14.1 15.3 16.2 20.8 24.0 28.5 31.6 44.5 64.7Education 7.5 8.9 9.3 11.3 11.9 14.8 17.7 23.1 35.1Public Health 3.6 3.8 4.7 5.6 6.9 8.6 8.9 13.9 18.8Other 3.0 2.6 2.2 3.9 5.2 5.1 5.0 7.5 10.8

Economic Services 9.7 9.7 8.5 9.4 16.1 23.0 21.4 28.4 58.8Agriculture 1.3 1.9 2.3 3.6 5.5 5.6 7.6 10.6 19.6Transport & Communications 4.7 4.0 3.6 1.1 0.9 11.8 6.2 25.6Industry 1/ 0.2 0.9 1.2 1.2 3.7 17.4 1.1 0.5 1.3Other 3.5 2.9 1.4 3.5 6.0 0.9 11.1 12.3

Debt Services 20.6 20.6 20.7 21.8 22.9 21.7 22.1 33.1 33.4

Unallocated 2/ 2.4 2.5 4.0 4.5 9.1 6.4 5.9 17.8 13.8

Source: Ministry of Planning and Economic Affairs and Economic Survey of Liberia, 1978

1/ Mining, manufacturing, energy and construction2/ Includes domestic expropriation claims and contingent reserves

Table 4.55; FUNCTIONAL CLASSIFICATION OF BUDGETARY AND EXTRA BUDGETARY EXPENDITURE(In US$ million)

1970 1971 1972 1973 1974 1975 1976 1976/77 1977/78 1978/79

TOTAL 85.2 90.7 95.4 108.7 125.1 148.1 192.8 226.2 275.0 340.3

General Services 24.3 24.5 26.5 33.0 35.6 39.2 58.3 73.4 71.5 101.5Administration 11.4 11.5 15.1 20.8 22.9 25.0 40.3 52.2 46.3 32.4Foreign Affairs 3.9 4.2 3.6 3.8 3.9 4.4 4.7 5.4 6.3 7.1Public Order and Safety 3.6 4.1 3.7 4.C 4.6 4.9 6.0 7.5 9.4 11.2Defense 3.7 4.3 3.8 3.7 3.7 4.5 7.2 8.3 9.5 9.1Other 1.7 0.4 0.3 0.7 0.5 0.4 - - - 41.52/

Social & Community Services 22.6 26.1 22.1 26.5 29.3 33.2 43.5 53.5 72.6 118.8Education 10.6 11.8 12.4 14.9 15.8 17.6 23.4 27.1 39.7 47.5Public Health 4.8 8.0 7.5 7.7 8.3 10.0 12.9 14.4 19.1 24.5Other 7.2 6.3 2.2 3.9 5.2 5.6 7.2 11.8 13.8 45.8

Economic Services 15.3 17.0 22.1 22.9 28.2 47.6 63.0 60.7 99.5 78.4Agriculture 2.5 3.4 5.5 6.5 8.6 12.8 , 10.4 22.1 26.7 29.4Transport and Communications 7.7 8.3 7.4 2.8 4.9 40.0 29.6 50.8 40.9Industry 1/ 0.3 2.0 1.2 8.6 3.7 34.8 5.4 2.0 5.5 2.4Other 4.8 3.2 8.0 5.0 11.0 7.2 7.0 16.5 5.6

Debt Services 20.6 20.6 20.7 21.8 22.9 21.7 22.1 24.5 30.7 41.0Public Corporations - - _- - - - - - - 40.5Unallocated 2.4 2.5 4.0 4.5 9.1 6.4 6.0 14.3 0.7 1.0

Source: Economic Survey of Liberia, 1977

1/ Mining, manufacturing, construction and electric power.

2/ General Government expenditure mainly on OAU Conference related activities.

- 97 -

Table 4.6 CAPITAL EXPENDITURES OF PUBLIC CORPORATIONS

($000)

1977-781/ 1978-792-/

1. Agriculture 3/- LPMC 8963- 1542-/- LPPC 2000 6659- LCCC 1011 2931- FDA 1969 55005/- AGRIMECO 975- 7800=-- ADCB - 1041-r

2. Manufacturing 3/- LRPC 1064- N.A.- LIBSUCO 1182-/ N.A.- LFZA 270 3800

3. Energy- LEC 1500 9440

4. Transportation- NPA 7678 N.A.- Air Liberia 15479 2000- RIA 258 N.A.

5. Communication 3/- LTC 87733-= 1031

3/ 15- LBC 639- 1450

6. Housing- NHA 763 13000- NHSB _ _

7. Water Sewerage- LWSC 1052 7830

8. Other Services- LDC 1113 512- NSSA 564 500

TOTAL 46.228 65.037

Source: All figures in this statement are taken from the AnnualBudget 1978-79, except for those indicated otherwise.

1/ Revised estimates.2/ Budget estimates3/ Information furnished by the Controller General, Public Enterprises.4/ LPMC Annual Financial Statement5/ Bureau of General Accounting Monthly Expenditure Report.

Note: This statement is compiled from several different sources andrepresents, at best, a broad estimate of the budgetary alloc-ations made to the corporations. The actual release of funds andactual expenditures may be quite different from these figures.

- 98 -

Table 4.7: OAU - Related Expenditure(US$ million)

Development Budget Amount

OAU Conference Center 33.2Ministry of Foreign Affairs Building 8.252 VIP Residences 12.0RIA Terminal 6.5Village including Hotel Africa 24.0Other activities 9.5

Subtotal 91.4

Current Budget

OAU Operating Budget 10.0

Subtotal 10.0

Total 101.4

Note: The above statement is based on the best estimates available anddoes not represent the actual expenditures incurred (which wouldbe available only after the Conference is over). This statementdoes not include projects like Paynesville-Robertsfield Roads,Tubman Bridge etc. which have been constructed to facilitate theholding of the conference but confer much broader benefits.

Source: 1) Ministry of Public Works

2) Budget documents

3) Bureau of General Accounting, Monthly Expenditure Report

- 99 -

Table 4.8: DEVELOPMENT EXPENDITURE JULY 1978 - MARCH 1979

($ Mill.)

PUBLIC CORPORATIONS 18.543 (23.32%)

Agrimeco 7.8Air Liberia 4.037NHA 3.508ADB 1.041Other Corporations 2.107

GENERAL GOVERNMENT 19.105 (24.03%)

Public Buildings 15.0Special Projects 1.10Contributions to International

Organizations 2.233Others 0.772

MINISTRY OF PUBLIC WORKS 21.622 (27.2%)

Totota-Ganta Rd. 2.065St. Paul Bridge 5.737Tubman Bridge 1.471UN Drive 1.29Monrovia Streets 1.282Tubman Blvd. 0.810Johnson St. Bridge 0.934Feeder Roads 0.539Maintenance o_ Roads 5.091Other Roads 2.403

MINISTRY OF ACRICULTURF. 8.775 (11.0%)

Upper Lofa 1.475Bong 1.567FDA 1.865Livestock Bureau 0.611Others 3.257

MINISTRY OF EDUCATION 3.774 (4.8%)

World Bank Implementation 2.494Others 1.28

UNIVERSITY OF LIB3ERIA 1.380 (1.8%)

MINISTRY OF LOCAL GOVERNMENT 2.586 (3.2%)

Farm to Market Roads 0.941Others 1.645

MINISTRY OF HEALTH 1.421 (1.8%)

SUB-TOTAL 77.206 (97% )

OTHER EXPDR. 2.3 ( 3%)

TOTAL 79.5

Source: - Bureau of General Accounting, Monthly Expenditure Report

Table 5.1 : LIBERIA - NATIONAL BANK OF LIBERIA ASSETS AND LIABILITIES, 1974-1978

…------------------------ (US$ Million) ------------------

1974 1975 1976 1977 1978

ASSETS 35.39 39.86 46.09 57.71 45.09

External Assets (net) 11.84 13.90 13.56 26.40 13.00External Assets (11.87) (13.93) 17.17 27.34 18.03US currency (2.49) (0.95) (5.43) (4.97) (4.10)Balances with banks abroad (5.49) (7.50) (7.65) (18.33) (9.56)Holdings of SDR's (3.89) (3.39) (4.09) (4.04) (4.37)IMF Gold Tranche (-) (2.09) _ _ _

External Liabilities 0.03 0.03 3.61 0.94 5.03Balances with Banks 2.69 3.90 4.65 3.72 3.01GOL Securities 20.26 19.99 25.48 24.51 26.63Advances _ 0.88 0.48 0.46 0.27GOL () (-) Banks (--) (-) _ 0

Others (-) (0.88) (0.48) (0.46) (0.27)Other Assets 0.60 1.19 1.92 2.62 2.18

LIABILITIES 35.39 39.86 46.09 57.71 45.09

Paid-up Capital 5.00 5.00 5.08 5.34 5.34General Reserve 0.01 0.32 _ _ _Liberian coins in circulation 8.80 8.41 8.90 9.87 10.68Deposits 9.44 11.53 19.50 28.51 14.47

GOL (5.84) (6.81) (12.93) (19.85) (-7.64)Banks (3.17) (4.40) (6.09) (7.92) (18.84)Other (0.43) (0.32) (0.48) (0.74) (3.27)

Allocation of SDRs 11.68 11.17 11.08 11.58 12.42Other Liabilities 0.46 3.43 1.54 2.41 2.18

Source: National Bank of Liberia

- 101 -

Table 5.2 : DOMESTIC ACCOUNTS OF THE COIMERCIAL BANKS, 1974-78

(US$ MilLion)

1974 1975 1976 1977 1978

GOVERNMENT (net) 1.10 -1.95 0.03 4.72 9.41

- Long-Term Debt 2.42 1.41 0.88 4.67 9.41

- Other Claims 1.37 0.71 -

- Securities 0.17 0.13 0.15 0.13 -

- Deposits -2.86 -4.20 -1.00 -0.80 -

PUBLIC CORPORATIONS (itet) -5.70 -6.87 -12.30 -14.01 -4.84

- Loans and Overdrafts 0.84 1.79 0.68 1.14 11.33

- Deposits -6.54 -8.66 -12.98 -15.15 -16.17

FINANCIAL INSTITUTIONS (net) - -2.93 n.a. I - -7.97

- Loans - - n.a. -

- Deposits - -2.13 n.a. - -7.97

PRIVATE SECTOR (net) 10.27 19.'27 -0.70 21.22 14.93

- Loans and Overdraf:s 70.93 74.'6 81.12 106.98 129.93

- Investments in Sha:es and

Debentures 1.74 1.80 2.05 2.25 2.23

- Deposits -62.40 -57.13 -83.82 -88.01 117.23

NATIONAL BANK (net)-/ 0.63 1.8l 2.54 6.31 17.15

- Deposits with the National Bank 3.17 4.21 5.64 8 3 18.58

- Borrowings from the National Bark' -2.54 -2.4( -3.10 -2.12 -1.43

1/ National Bank of Liberia commenced its operations in July 1974.

Source: Compiled from the National Bank of Liberia S-atistical Bulletins (Various Issues)

Table 5.3 : C0MERCIAL BANKS CONSOLIDATED BALANCE SHEZTS 1974-1978

(In US$ million)

1974 1975 1976 1977 1978

FOREIGN ASSETS (NET) -3.76 -7.87 20.78 4.93 -4.41

Foreign Assets 23.48 17.16 36.43 25.24 25.17

Cash on Hand (3.55) (3.82) (3.90) (5.96) (5.74)

Claims on Banks Abroad (19.70) (12.89 (32.36) (18.89) (19.12)

Credits to lor.-Residents - - - - -

Other (0.23) (0.45) (0.17) (0.39) (0.31)

Foreign Liabi'lities -27.24 -25.03 -15.65 -20.31 -29.58Liabilities to Banks Abroad (-25.99) (-21.05) (-12.63) (-17.34) (-26.18)Non-Resident Deposits (-1.25 (-3.98) (-3.02) (-2.97) (-3.40)

DOMESTIC ASSETS 101.90 113.78 124.48 162.57 204.25

Reserves 3.49 4.65 6.18 9.06 19.08Cash in Hand. Coins (0.32) (0.44) (0.54) (0.63) (0.49Balances with Bank of Monrovia - - - - -

Balances with National Bank (3.1i) (4.21) (i.o4) (8.43) (18.59)

Claims on Government (Net) 1.10 -1.95 0.03 4.72 9.41Scheduled Debt (2.42) (1.41) (0.88) (4.67) (9.41)

Other Claims (1.37) (0.71) - _ _Securities (0.17) (0.13) (-10.15) (0.13) -

Deposits (-2.86) (-4.20) (-1.0) (-0.8) -

Claims on Private Sector 72.67 76.76 83.12 109.23 132.17

Loans and Overdrafts (70.93) (74.96) (81.12) (106.98) (129.93)Investment in Shares & Debentures (1.74) (1.80) (2.0) (2.25) (2.23)

Claims on Public Corporations 0.84 1.79 0.68 1.14 11.33

Loans and Overdrafts (0.84) (1.79 (0.68) (1.14) (11.33)

Interbank Assets 1/ 1.83 2.70 5.91 11.62 6.85

Other Assets 21.97 29.83 28.56 26.80 25.41

DOMESTIC LIABILlIIES 98.14 105.91 145.78 167.64 199.85Deposits of the Private Sector 62.40 57.9, 83.82 88.01 117.23

Demand Deposits (37.22) (29.54) (47.32) (42.40) (54.91)

Time and Savings Deposits (25.18) (27.65) (36.50) (45.61) (62.32)

Deposits of Public Corporation 6.54 8.66 12.98 15.15 16.17Inrterbank Deposits 1/ 4.52 7. NO 15.30 26.38 15.86Capital Accounts 8.89 5. 8.80 14.48 17.16

Other Liabilities 15.79 26.40 24.88 23.62 33.43

1/ Includes financial instituctons.

Source: Compiled from National Bank of Liberia Statistical Bulletins (Various Issues)

- 103 -

Table 5.4: DEPOSITS IN THE COMYERCIAL BANKS 1974-78

(US$ Million)

1974 1975 1976 1977 1978

Personal Deposits 25.10 30.11 36.25 47.74 55.87

- Demand 7.43 7.83 7.90 6.41 8.32

- Time 3.48 4.37<28.35 41.33 47.55

- Savings 14.19 17.91

Corporate Deposits 37.29 27.08 47.57 40.27 61.36

- Demand 37.29 27.08 39.42 35.99 46.59

- Time 5.60 4.25<8.15 4.28 14.77

- Savings 1.90 1.04

Public Corp. Deposits 6.54 8.66 12.98 15.15 16.17

- Demand 1.57 3.77 6.05 7.95 8.29

- Time 4.26 4.04 /

- Savings 0.71 0.85 7

Total Resident Deposits 68.93 65.85 96.80 103.16 133.40

- Demand 38.78 33.31 53.37 50.35 63.20

- Time 13.34 12.66(42.43 52.81 70.20

- Savings 16.81 19.88

Government Deposits 2.86 4.20 1.00 0.80 -

Non-Resident Deposits 1.25 3.98 3.02 2.97 3.40

TOTAL DEPOSITS 73.04 74,03 100.82 106.93 136.80

SOURCE: Compiled from the National Bank of LiberiaStatistical Bulletins (Various Issues)

Table 5 5: COMMERICAL BANK'S CREDITS AND OVERDRAFTS TO PRIVATE SECTOR, 1978

---- March 1978----- ----- June 1978 ---- --- September 1978--- ---- December 1978----Sector No. $ Million % No. $ Million % No. $ Million % No. $ Million %

Commerce 649 48.8 42.7 673 53.7 44.0 652 59.89 47.5 771 62.03 43.9

Agriculture 61 24.69 21.6 60 23.3 19.1 57 22.05 17.5 159 23.36 16.6

- Forestry (34) (10.20) (8.9) (37) (11.0) (9.1) (31) (9.00) (7.1) 134 (8.85) (6.3)

- Rubber (13) (11.77) (10.3) (2) (9.56) (7.9) (13) (8.64) (6.9) (10) (9.10) (16.4)

- Others (14) (2.70) (2.4) (11) (2.63) (2.1) (13) (4.39) (3.5) (15) (5.40) (2.6)

Personal 4,310 12.11 10.6 4,534 12.37 10.1 4,346 11.24 8.9 4,679 13.31 9.4

Construction 449 9.97 8.7 409 10.78 8.8 513 11.00 8.7 527 12.63 8.9

Transportation 93 2.05 1.8 79 2.00 1.7 60 2.30 1.8 52 2.66 1.9 .-

Manufacturing 55 12.58 11.0 56 11.89 9.8 57 11.20 8.9 54 10.18 7.2

Mining 9 0.87 0.3 8 0.80 0.7 8 0.91 0.7 8 1.38 1.0

- Iron Ore (6) (0.67) (0.6) (6) (0.72) (0.6) (5) (0.77) (0.6) (5) (0.62) (0.5)

- Others (- (-H- - - - _ _ _ _ _ _

Others 36 0.87 0.8 39 4.52 3.7 30 6.35 5.0 53 14.85 8.4

TOTAL 5,698 114.23 100.0 5,898 121.98 100.0 5,760 126.21 100.0 8,332 141,273 100.0

Source: National Bank of Liberia

Table 5.6 : LIBERIA - COMERCIAL BANKS' LOANS AND OVERDRAFTS TO PRIVATE SECTOR, 1975-78

…--------- 1975 --- … _____ -1976… -… - - --------1977…- --------- 1978---------Sector $ 1/ $ X $ % $ %

million % Change millior % Change milliol % Change million % Change

Commerce 43.25 56.3 20.6 37.66 45.4 -13.0 49.83 46.1 32.3 62.03 43.9 24.5

Agriculture 15.26 19.9 -6.7 21.2 25.8 38.9 23.24 21.5 9.6 23.36 16.6 0.5

Personal 8.61 11.2 7.4 5.07 6.1 -58.8 10.23 9.5 101.7 13.31 9.4 30.1

Construction 3.42 4.5 -16.6 6.42 7.8 87.7 8.2 7.6 27.7 12.63 8.9 54.0

Transportation 0.89 1.2 -61.8 1.98 2.4 122.4 2.66 2.5 34.3 2.66 1.9 -

Manufacturing 0.91 1.2 -58.4 7.98 9.6 776.9 11.06 10.2 38.6 10.18 7.2 8.0 l0

Mining 2.95 3.8 235.2 1.77 2.1 40.0 0.60 0.5 -66.0 1.38 1.0 130.0 o

Others 1.47 1.9 -25.4 0.06 - - 0.49 0.4 716.6 14.85 10.5 -

(Home Improvement) (11.84) (8.4) -

TOTAL 76.76 100.0 7.0 82.38 100.0 7.3 108.12 100.0 31.2 141.27 100.0 30.6

Source: National Bank of Liberia

1/ % Change from the previous year

Table 5.7:SUMMARY OF OPERATIONS, LIBERIAN BANK FOR DEVELOPMENT AND INVESTMENT, 1967-1978

(As of December 31, 1978)

--- Loans ------ --- Equity ------ ----Total--------

No Amount No Amount No Amount($'000) ($'000) ($'000)

1967-1975 Approvals 198 9,989 14 688 212 10,677

Commitments 175 9,122 12 586 187 9,707

Disbursements 193 8,994 12 530 205 9,524

1976 Approvals 52 3,643 1 150 53 3,793

Commitments 49 3,970 1 150 50 4,120

Disbursements 48 3,801 1 150 49 3,951

1977 Approvals 26 4,958 1 28 27 4,986

Commitments 24 4,029 1 28 25 4,057

Disbursements 27 2,211 1 28 28 2,239

1978 Approvals 34 7,700 - - 34 7,700

Commitments 33 2,628 - - 33 2,628

Disbursements 26 4,446 - - 26 4,446

1967-1978 Approvals 310 26,290 16 866 326 27,156

Commitments 281 19,749 16 764 297 20,046

Disbursements 294 19,452 16 708 310 20,160

Source: LBDI and IBRD/DFCD

M1ONROVIA

Table 6.1 : CONSUMER PRICE INDEX (MCPI), 1975-1978(September-November 1964=100)

tWeightl/ 1975 1976 1977 --- …----1977 ------------- ------------ 1978----------------Item I II III IV I II - III IV

All items 100.0 212.5 225.3 238.4 233.9 236.9 240,9 241.9 247.0 251.8 261.9 262.7

Food 34.4 207.0 205.8 226.1 219.4 224.1 231.3 229.6 235,5 244.5 263.2 263.6

Tobacco andBeverages 5.7 163.9 182.5 191.6 190.4 191.2 191.2 193.4 198.5 208.3 210.7 210.7

Fuel and Light 5.0 160,7 183.5 203.2 183.5 191.1 208,0 229.5 229.5 229.5 231.6 236.8

Clothing 13.8 241.7 280.1 294.5 290.4 294.4 296.1 297.1 298.0 299.0 300.2 301.1

Furniture 6.1 195.2 290.7 216.9 215.6 218.3 216,3 217.3 218.0 218.4 219.1 219.5

Personal Care 11.4 300.7 317.2 325.4 324.1 325.2 325.3 326.9 333.0 341.1 349.0 349.9

Rent 14.9 176.5 188.2 200.7 197.9 197.9 203.5 203.5 216.1 216.1 231.5 231.5

Misc. 8.7 206.1 212.6 215.1 216.2 216.3 213.7 214.2 213.6 214.5 215.2 216.7

1/ The weights and selected items were derived from a family expenditure survey conducted in Monrovia during

the period October - December 1963 among a sample of wage earners and clerical employees household of two

or more persons with monthly income not exceeding $250 at the time of the survey. The weights were revised

according to a limited expenditure survey conducted in June. 1964.

Source: Ministry of Planning and Economic Affairs.

Table 6.2 : RATES OF CHANGE - MONROVIA CONSUMER PRICE INDEX( % Changes)

% ----------------- 1978-Weight 1975 1976 1977 I II III IV

All Items 100.0 +13.6 + 6.0 + 5.8 5.6 6.3 8.7 8.6

Food 34.4 +15.4 - 0.6 + 9.9 7.3 9.1 13.8 14.8

Tobacco and Beverages 5.7 +12.0 +11.3 + 5.0 4.2 8.9 10.2 8.9

Fuel and Light 5.0 + 6.2 +14.2 +10.7 25.0 20.1 11.3 3.2

Clothing 13.8 +20.5 +15.9 + 5.1 2.6 1.6 1.4 1.3

Furniture 6.1 +16.5 + 7.4 + 3.4 1.1 0.4 1.3 1.0

Personal Care 11.4 + 7.8 + 5.5 + 2.6 2.7 4.9 7.3 7.0 XRent ~~~~~~~~~~~~~~~~~~~~~~~0

Rent 14.9 + 8.2 + 6.6 + 6.6 9.2 9.2 13.8 13.8 X

Miscellaneous 8.7 +15.4 + 3.2 + 1.2 -1.2 -0.8 0.4 1.2

1/ Rates of increase over the same quarter of the previous year

- 109 -

Table 6.3: MONTHLY PRODUCERS' AND EXPORT PRICES FOR RUBBER 1976 - 1978(In cents per pound)

Purchase Prices Export PriceLatex Specification Nonspecification RSS No. 1 Price

Coagulum Coagulum Singapore f.o.b.

1976January 22.7 17.4 16.0 29.3February 23.1 19.2 17.7 32.4March 22.2 20.1 18.5 33.0April 22.3 22.2 19.8 34.4May 22.5 22.2 19.9 38.2June 23.2 23.7 21.3 34.4July 24.4 25.1 21.8 38.2August 24.3 22.6 19.4 38.2September 24.4 21.6 18.2 36.3October 24.7 19.6 17.6 37.6November 26.7 20.8 19.6 37.7December 26.7 21.6 18.6 35.6

1977January 27.5 20.8 17.8 37.7February 28.0 21.6 18.6 37.5March 28.6 21.6 18.4 36.7April 29.0 21.9 19.1 36.3May 29.4 22.0 19.0 35.5June 29.4 22.6 29.1 35.5July 29.4 22.1 18.8 36.4August 29.4 21.8 18.7 39.7September 29.1 21.9 19.1 39.4October 29.6 23.4 20.3 40.3November 30.3 24.5 20.4 44.6December 31.3 24.0 20.0 40.0

1978January 31.5 22.9 19.9 38.9February 31.5 22.9 19.9 39.1March 31.6 23.7 19.6 40.0April 31.9 23.9 19.6 40.9May 31.7 24.5 19.5 40.9June 31.4 25.9 19.5 42.5July 32.3 28.5 22.1 45.4August 33.3 28.5 21.9 54.4September 32.9 30.3 23.4 47.9October 33.0 32.4 25.2 50.0November 35.6 35.8 28.2 53.6December 37.9 36.6 29.1 54.6

Source: Rubber Planters Association

- 110 -

Table 6.4: LI2ERIA PRODUCE MAkRKET:NG CORPOPATION PRODUCERAND EXFORT PRICES

(US$/long ton)

Year Coffee CocoaExport Producer % Export Producer %

1971/72 854 470 55 471 336 71

1972/73 985 560 57 615 403 65

1'973/74 1020 560 55 1028 582 57

1974/75 1257 688 55 1678 722 43

1975/76 1814 880 48 1289 605 47

1976/77. 2530 1540 -61 2726 .1166 i3

1977/78. .3124- 1716 55 3542. -1276. th

1978/79 3146 1716 55 3432 1716 iO

Source: LPMC

- ill -

Table 6.5 LIBERIAN PRODUCE MARKETING CORPORATION'S

PURCHASE AND EXPORT PRICES OF COCOA AND COFFEE

1974-1976

(Cul IUtv';*

ru;rLtI ia;. L).jl;'.I (i.u.b.) Puzc.inat Export (I.o. b.)

1974Janun iv 25 SO 26 36

Febra;., 25 52 26 48

Ma;rch 30 26 50April 30 JO 26May 30 50 2G U5June 30 61 26 77

July 30 56 26 -

Aup,us t 30 58 36Sept *Wwlr 30 47 36 -Octc.L: r 30 49 36 74

Novenber 30 - 36 73

DecenLer 30 46 36 71

19/5Janiuiry 30 I45 - 69F.bru::2 y - 45 36 89

March 30 43 36 33

A, ,. 11 30 43 36 62May 30 43 36 35

June 30 44 36 40

July 30 46 30Auguslt 30 66 - -

Sepl.o:tobcr 30 72 57

Octob r 38 68 - 191

Noven.bei 38 - 25 247

December 38 166 / 27½ Grade 1 199<26%, Crad7 II< 25 rAQ-

1976January 38 142 " 161

February 38 87 " 156

March 38 132 " -Aprll 38 117 Os -May 40 - " _

June 40 84 " 174

July 40 107 -Auguct 40 98 " Septer:hier 40 n.a /50 Crade I n.a

October 40 n.a ( 47' Grade 11n.a

Novenihcer 40 n.a. 45 FAQ n,a

Source: Lconomic Survey uf Liberia 1975, I'EA an d Ll"lC;

1/ FAQ: f.nir ;Ivc r;qc qtiuliLy cocoa wl.ic. occounIts fur riore th !u 6,, af the purclix.

- 112 -

Table 6.6 : LPMC PURCRASES OF COFFEE, COCOA, AND PALM KERNELS(tons)

Yearl/ Coffee Cocoa Palm Kernels Palm Oil 2/ Expeller Cake 2/(clean) (dry beans) (dry kernels)

1971/72 4.100 2,632 11,568 2,992 3,641

1972/73 4,635 2,290 11,786 4,987 5,923

1973/74 3,635 3,165 15,486 6,743 7,458

1974/75 3,950 2,730 13,797 5,811 6,739

1975/76 4,320 2,772 12,399 5,168 6,118

1976/77 10,566 2,757 9,181 4,508 5,253

1977/78 10,108 3,351 8,779 3,418 3,296

1978/793/ 8,048 3,020 6,000 N.A. N.A.

1/ Sept, - Oct. Source: LPMC

2/ Production

3/ Oct 1978 - June 1979 only

- 113 -

Table 7.1: POPULATION ESTIMATES OF LIBERIA BY COUNTY1979

No. of Persons Share of Population

Bong 228,418 12.8

Grand Bassa 159,411 9.0

Grand Cape 71,557 4.0

Grand Gedeh 78,141 4.4

Lofa 211,565 11.9

Maryland 107,246 6.0

Montserrado 548,316 30.8

Nimba 300,890 16.9

Sinoe 73,182 4.1

LIBERIA 1,778,725 100.0

Source: 1974 Population Census and Staff Estimates

Note: The above estimates are derived by extrapolating the 1974 populationcensus for each county using the county specific intercensal annualgrowth rates 1962-74. A projection based on aggregate growth rateof 3.3% for Liberia would yield-a figure of 1,773,000 for 1979 thusthere is a difference of 5,000 between the two sets of estimates.

- 114 -

Table 7.2: POPULATION BY AGE AND SEX(1978)

(Numbers in thousands)

Age Group Male Female Total

0-4 170 172 3425-9 133 133 266

10-14 109 109 21815-19 91 90 18120-24 74 73 14725-29 61 59 12030-34 51 50 10135-39 43 42 8540-44 36 34 7045-49 29 28 5750-54 24 23 4755-59 20 18 3860-64 15 13 2865-69 11 9 2070-74 7 5 1275-Over 6 4 10

Total 880 862 1,742

Source: UN 1979 Revision

Table 7.3 : POPULATION OF LIBERIA BY SEX AND COUNTIES-1974

--- Both Sexes --- ---- Male -- -- Female ------ -Geographic Area NO. Percentage No. Percentage NQ. - Percentage

LIBERIA 1,503,368 100.0 759,109 100.0 744,259 100.0

Bong County 194,186 12.9 95,262 12.5 98,924 13.3I-n'

Grand Bassa CountY 151,146 10.0 76,010 10.0 75,136 10.1

Grand Cape Mount County 56,601 3.8 29,599 3.9 27,002 3.6

Grand Gedeh County 71,823 4.8 33,859 4.5 37,964 5.1

Lofa County 180,737 12.0 86,506 11.4 94,231 12.7

Maryland County 91,598 6.1 45,366 6.0 46,232 6.3

Montserrado County 439,991 29.3 236,146 31.1 203,845 27.3

Nimba County 249,692 16.6 122,215 16.1 127,477 17.1

Sinoe County 68,594 4.5 34,146 4.5 33,448 4.5

Table 7.4 :URBAN POPULATION OF LIBERIA BY SEX AND COUNTY - 1974

---- Both Sexes ------- -- Male - ----- ------ FemaleGeographic Area No. Percentage No. Percentage No. Percentage

URBAN

LIBERIA 438,171 100.0 232,943 100.0 205,228 100.0

Bong County 18,603 4.2 9,891 4.2 8,712 4.2

Grand Bassa County 36,639 8.4 19,344 8.3 17,295 8.4

Grand Cape Mount County 12,787 2.9 6,839 2.9 5,948 2.9

Grand Gedeh County 6,094 1.4 3,157 1.4 2,937 1.4

Lofa County 18,724 4.3 9,428 4.0 9,296 4.5

Maryland County 24,788 5.7 12,522 5.4 12,266 6.0

Montserrado County 257,971 58.4 139,447 59.8 118,524 59.7

Nimba County 50,715 11.6 25,892 11.1 24,823 12.1

Sinoe County 11,850 2.7 6,423 2.8 5,427 2.6

Table 7.5 :RURAL POPULATION OF LIBERIA BY SEX AND COUNTY - 1974

--- Both Sexes ----- ------ Male ---- Female ----Geographic Area No. Percentage No. Percentage No. Percentage

RURAL

LIBERIA 1,065,197 100.0 526,166 100.0 539,031 100.0

Bong County 175,583 16.5 85,371 16.2 90,212 16.7

Grand Bassa County 114,507 10.7 56,666 10.7 57,841 10.7

Grand Cape Mount County 43,814 4.1 22,760 4.3 21,054 3.9

Grand Gedeh County 65,729 6.2 30,702 5.8 35,027 6.5

Lofa County 162,013 15.2 77,078 14.6 84,935 15.8

Maryland County 66,810 6.2 32,841 6.2 33,966 6.3

Montserrado County 182,020 17.1 96,735 18.4 85,321 15.9

Nimba County 198,977 18.7 96,373 18.3 102,654 19.0

Sinoe County 55,744 5.2 27,723 5.2 28,021 5.2

- 118 --

Table 7.6 : LITERACY RATES BY COUNTY(% of population of age 10 years & above)

Male Female Total

Bomi Territory 24.0 8.9 16.9

Bong County 19.5 6.8 12.9

Grand Bassa County 20.0 7.8 13.9

Grand Cape County 20.4 7.0 14.1

Grand Gedeh County 29.2 7.6 17.5

Kru Coast Territory 33.9 9.7 21.3

Lofa County 16.3 3.5 9.5

Marshall Territory 31.0 13.9 22.9

Maryland County 34.9 15.6 25.1

Montserrado County 47.5 28.8 39.1

Nimba County 24.0 8.3 15.8

Rivercess Territory 16.0 3.7 9.6

Sasstown Territory 32.5 6.8 19.0

Sinoe County 34.1 10.2 22.2

LIBERIA 29.6 12.2 21.0

Source: 1974 Census of Population

- 119 -

Table 7.7 VITAL BIRTH/DEATH STATISTICS AND RATE - 1977(Reported)

Rate Number

Live Birth Rate 15.3 25,592

Still Birth Rate 17.3 447

Crude Death Rate 2.4 3,957

Infant Mortality Rate 55.4 1,429

Maternal Mortality Rate 1.9 49

Source: Ministry of Health and Social Welfare

Note: The above registered rates are very incomplete and onlypartial. They have been included here to show how muchimprovement is needed in the vital registration systemof Liberia.

- 120 -

Table 7.8: HEALTH FACILITIES - POPULATION RATIOS 1978(Average number of persons per one health facility)

Health Posts/ AllHospital Health Centers Clinic Facilities

Grand Gedeh 81,000 40,500 8,100 6,230

Sinoe 38,500 38,500 2,265 2,026

Maryland 34,700 104,000 5,200 4,330

Bong 106,500 42,600 7,890 6,265

Nimba 94,670 56,800 7,890 6,450

Lofa 102,500 41,000 5,256 4,460

Grand Bassa 57,330 - 9,050 7,820

Cape Mount 32,000 - 5,820 4,920

Montserrado 36,290 127,000 6,350 5,180

Total 53,400 71,200 6,190 5,140

Source: Ministry of Health and Social Welfare

- 121 -

Table 7.9 MEDICAL AND PARAMEDICAL STAFF IN LIBERIA-1978

Medical & Para- Mission &Medical Staff Government Concession Private Total

Physician 106 38 38 182

Dentist 13 2 3 18

Anesthetist - - 1 1

Professional Nurse, R.N. 324 109 76 509

Practical Nurse 109 20 55 184

Sanitary Inspectors 156 3 - 159

Drug Dispensers - - - -

Pharmacist 9 3 3 15

Lab Technician 68 16 8 92

X-Ray Technician 18 2 6 24

Physician Asst. 97 5 1 103

Lab Asst. 15 2 5 22

Cert. Midwives 152 27 42 221

Nurses Aides 351 119 72 542

Dressers 178 14 4 196

Total 1,715 361 312 2,388

Source: Ministry of Health and Social Welfare

- 122 -

Table 7.10 : PUBLIC EXPENDITURE ON HEALTH

1976/77 1977/78 1978/79

Recurrent 15.4 16.5 19.6

Administration - 0.9 1.0

Preventive 1.6 1.0 1.0

Curative 12.8 14.6 17.6

(JFK Medical Center) (6.8) (7.3) (9.6)

Development 2.3 5.2 6.2

(JFK Medical Center) (0.4) (1.0) (3.8)

Total Expenditure on Health 17.7 21.7 25.8

As % of Total Expenditure 7.7 7.6 7.6

As % of GDP 2.3 2.5 2.9

Source: Budget Documents

- 123 -

Table 7.11 : HOSPITAL BEDS/POPULATION RATIO - 1978

Bed per 1000Hospital Beds Population Population/Bed

Montserrado 1,317 2.6 386

Grand Bassa 179 1.0 961

Sinoe 80 1.0 963

Cape Mount 97 1.5 663

Bong 193 0.9 1,108

Lofa 176 0.9 1,169

Maryland 215 2.1 485

Nimba 196 0.7 1,450

Grand Gedeh 50 0.6 1,636

LIBERIA 2,503 1.5 684

Source: Ministry of Health and Social Welfare

Table 7.12: DISTRIBUTION OF HEALTH FACILITIES IN LIBERIA 1978

COUNTY NUMBER OF HOSPITALS NUMBER OF HEALTH CENTERS NUMBER OF POSTS OR CLINICS TOTAL HEALTH FACILITIESA B C D T A B C D T A B C D T

Bong - 1 1 - 2 5 - - - 5 21 1 3 2 27 34

Bassa 1 2 - - 3 - - - - - 10 1 8 - 19 22

Cape Mount 1 1 - - 2 - - - - - 10 - - - 11 13

Gedeh 1 - - - 1 2 - - - 2 10 - - - 10 13

Lofa 1 - 1 - 2 4 - 1 - 5 37 - 2 - 39 46

Maryland 2 1 - - 3. 1- - - 1 17 - 3 - 20 24

Montserrado 7 2 3 2 14 3 1 - - 4 48 - 2 30 80 98

Nimba 1 1 1 - 3 5 - - - 5 24 4 8 - 36 44

Sinoe 1 1 - - 2 1 1 - - 2 28 - 6 - 34. 38

TOTAL 15 9 6 2 32 21 2 1 - 24 205 6 33 32 276 332

A: GovernmentB: ConcessionC: MissionD: PrivateT: Total

Source:- Ministry of Health & Social Welfare

Table 8.1: LABOR FORCE ESTIMATES 1974 AND 1979

…---------…1974---------------- 1979 Labor Force Participation RateTotal Male Female TOTAL Total Male Female

Bong 58,589 41,080 17,509 68,981 30.2 43.1 17.7

Grand Bassa 42,171 31,339 10,832 44,539 27.9 41.2 14.4

Grand Cape 20,999 14,360 6,639 26,548 37.1 48.5 24.6

Grand Gedeh 20,920 12,766 8,154 22,739 29.1 37.7 21.5

Maryland 22,641 15,350 7,291 26,502 24.7 33.8 15.7

Lofa 62,211 39,279 22,932 72,778 34.4 45.4 24.3

Montserrado 113,945 97,974 15,971 142,013 25.9 41.5 7.8nl

Nimba 71,602 49,954 21,648 86,355 28.7 40.9 17.0

Sinoe 16,758 13,514 3,244 18,149 24.8 39.5 9.7

LIBERIA 429,836 315,616 114,220 508,604 28.5 41.5 15.3

Source: 1974 Census of Population and Staff Estimates

Table 8.2: EMPLOYMENT IN LIBERIA BY MAJOR SECTORS 1977 AND 1978

1977 Percentagel 1978 Percentage

TOTAL EMPLOYMENT 408,250 100.0 417,046 -

Agriculture 310,150 76.0 315,379 75.6

Montary Agriculture-/ 46,000 11.3 46,966 11.3

Non-Monetary Agriculture (SubsistenceFarming)3/ 256,800 62.9 260,909 62.6

Forestry 5,000 1.2 5,105 1.2Fishing 2,350 0.6 2,399 0.6

Industry 35,650 8.7 36,457 8.7

Mining 14,200 3.5 13,916 3.3Construction 5,500 1.4 5,830 1.4Manufacturing 6,200 1.5 6,510 1.6Arts and Crafts 8,500 2.1 8,925 2.1Electricity, Gas and Water 1,250 0.3 1,276 0.3

Services 62,450 15.3 65,210 15.6

Government, Public Services 25,500 6.3 27,285 6.5Commerce 15,600 3.8 15,928 3.8Transports 6,850 1.7 6,994 1.7Business 1,400 0.3 1,429 0.3Hotels and Restaurants 700 0.2 715 0.2Community and Personal Services 8,400 2.1 8,576 2.1Household Services 4,000 1.0 4,084 1.0

Note: The average annual growth rates of employment in the monetary, economy were 2.1%; in subsistence economy 1.6%.

1/ Percentages may not add to 100 because of rounding.2/ Concessions and Liberian Commercial farming including small-scale commercial farming and public corporations.3/ Subsistence Agriculture employment, with productivity at 45% of potential productivity.

Source: Ministry of Planning and Economic Affairs.

- 127 -

Table 8.3: EMPLOYMENT IN LIBERIA BY OCCUPATION GROUPS1977-1978

1977 1978

1. Managing Owners, Manager ofLarge Enterprises 220 256

2. Owners of Small BusinessStablishment 3,950 4,227

3. Professional Workers, Decision-Making, Senior Level 1,945 2,126

4. Professional and Technical Workers,Other Levels Non-Teaching 6,400 6,728

5. Professional Workers Other Levels,Teaching 6,430 6,800

6. Clerical Workers 10,005 10,468

7. Sales Workers 38,830 39,540

8. Service Workers 7,060 7,255

9. Agricultural Workers 276,025 280,476

10. Production Workers 57,385 59,170

Of 9 and 10:Skilled Workers 15,000 16,982Semi-Skilled Workers 44,000 44,154Unskilled Workers 274,415 278,510

TOTAL 408,250 417,046

Source: Ministry of Planning and Economic Affairs

- 128 -

Table 8.4 STRUCTURE OF EMPLOYMENT IN RURAL AND URBANAREAS BY INDUSTRY - 1974

Urban Rural Total

All Industries 100.0 100.0 100.0

Agriculture 23.6 87.1 71.6

Mining 11.0 3.1 5.1

Manufacturing 3.2 0.6 1.2

Electricity, Gas & Water 0.1 - -

Construction 2.5 0.4 0.9

Trade 12.2 1.0 3.7

Transport & Communications 4.3 0.5 1.4

Financial Services 1.1 - 0.3

Community & Personal Services 29.8 3.5 9.9

Activities not adequatelydefined 11.7 3.3 5.4

Source: 1974 Census of Population and Housing

- 129 -

Table 8.5: STRUCTURE OF EMPLOYMENT IN RURAL & URBANAREAS BY OCCUPATION - 1974

Urban Rural Total

Professional, Technical &related 9.6 1.5 3.5

Administrators & Managers 0.9 * 0.3

Clerical Workers 7.8 0.7 2.5

Sales Workers 10.2 1.0 3.2

Service Workers 10.8 1.3 3.6

Farmers, Fishermen, etc. 20.8 86.2 70.1

Production, Operators 31.8 6.2 12.5

All Others 8.1 3.0 4.3

Total 100.0 100.0 100.0

* Less than 0.1%

Source: 1974 Census of Population

- 130 -

Table 8.6 : STRUCTURE OF EMPLOYMENT IN MONROVIA BY OCCUPATION

1974Percentage

Professional, Technical and related 11

Administrator and Managers 03

Clerical Workers 12

Sales Workers 25

Service Workers 13

Farmers, Fishermen, etc. 01

Production, Operators 35

All Others 03

TOTAL 100

Source: Shankland and Cox, Economics and Employment (September 1977)

- 131 -

Table 8.7: STRUCTURE OF EMPLOYMENT IN [DNROVIA BY INDUSTRY

1974Percentage

Wholesale and Retail Trade 28.9

Government 25.0

Community & Personal Services 14.3

Transport, Storage and Communications 8.3

Manufacturing 7.2

Farming, Fishing, etc. 3.4

Mining 2.0

Construction 4.4

Electricity and Water 2.2

Business Services 2.7

Hotels and Restaurants 2.1

Industry not reported 0.1

TOTAL 100.0

Source: Shankland and Cox, Economics and Employment (September 1977)

- 132 -

Table 8.8: EXPATRIATES EMPLOYMENT, 1977-1978

- 1977 1978 ---All Sectors All SectorsNationals & All Sectors Nationals & All SectorsExpatriates Expatriates Expatriates Expatriates

1. Managing Owners, Managersof Large Enterprises 220 150 256 174

2. Owners of Small BusinessEnterprises, Managers 3,950 1,500 4,227 1,606

3. Professional Workers,Decision-Making Levels,Senior Levels 1,945 580 2,126 634

4. Other Professional Workers,Technical Workers, non-Teaching 6,400 1,390 6,728 1,461

5. Other Professional Workers,Teaching 6,430 395 6,800 418

6. Clerical Workers 10,005 190 10,468 198

7. Sales Workers 38,830 170 39,540 173

8. Service Workers 7,060 110 7,255 113

9. Agricultural Workers 276,025 115 280,476 116

10. Production Workers 57,385 720 59,170 742

TOTAL 408,250 5,320 417,046 5,635

Note: Foreigners in Technical Assistance or holding work permits,without Diplomat and foreign staff in diplomatic missions.

Source:

- 133 -

Table 8.9: GOVERNMENT EMPLOYMENT BY AGENCY, 1977-1978

Ministries 1977 Percentage 1978* Percentage

All Agencies 28,198 100.0 29,321 100.0

Education 7,278 25.8 7,656 26.1

Health and Welfare 2,159 7.7 2,211 7.5

Justice 2,702 9.6 2,721 9.3

Agricuiture 1,465 5.2 1,583 5.4

Public Works 4,517 16.0 4,931 16.8

Local Government 2,305 8.2 2,443 8.3

G.S.A. 459 1.6 479 1.6

Finance 1,265 4.5 1,272 4.3

Commerce 274 1.0 284 0.9

Executive Mansion 758 2.7 753 2.6

Legislature 563 2.0 583 2.0

Informaticr. 444 1.6 464 1.6

Foreign Affairs 673 2.4 683 2.3

Labor 479 1.7 494 1.7

Lands and Mines 669 2.4 676 2.3

Planning 457 1.6 464 1.5

Judiciary 727 2.6 762 2.6

Potal Affairs 314 1.1 321 1.0

ADP 245 0.8 266 0.9

Election Commission 27 - 31 -

General Auditing 86 0.3 93 0.3

I.P.A. 95 0.3 97 0.3

Civil Service 93 0.3 98 0.3

S.E.C. 14 - 17 -

NFEC 49 0.2 53 0.1

Budget - Bureau 75 0.3 79 0.3* Preliminary estimatesSource: Ministry of Planning and Economic Affairs

- 134 -

Table 8.10:PUBLIC CORPORATION EMPLOYMENT 1977 AND 1978

1977 Percentage 1978* Percentage

All Agencies 8,754 100.0 9,397 100.0

Liberia Electricity Company 937 10.7 957 10.1

Housing and Saving Bank 56 0.6 81 0.9

Water and Sewer Corporation 353 4.0 359 3.8

Free Zone Authority 36 0.4 54 0.6

Liberia National Bank 160 1.8 192 2.0

Social Security 41 0.5 63 0.7

Telecommunications 442 5.0 482 5.1

Liberia Development Corporation 53 0.6 64 0.7

National Housing Authority 101 1.1 127 1.3

ELBC/TV 84 1.0 95 1.0

LPMC 895 10.2 921 9.0

LBDI 43 0.5 56 0.5

Agrimeco 650 7.4 728 7.1

Libsuco 856 9.7 921 9.8

Forestry Development Authority 436 4.9 516 5.5

National Port Authority 1,933 22.1 1,981 21.1

LPPC 826 9.4 871 9.3

Ducor Hotel 272 3.1 289 3.1

LCCC 413 4.7 451 5.0

Air Liberia 167 1.9 189 2.0

* Preliminary estimates

Source: Ministry of Planning and Economic Affairs

- 135 -

Table 8.11:Average Monthly Wages in Liberia by Sector (1977)

A. Private Sector US$

Agriculture 50.8Forestry 156.4Mining 182.7Manufacturing 139.7Construction 177.9Transport 247.1Commerce 182.2Services 175.2

Sub-Total 124.2

B. Public Sector 232.4

Source: NSSWC, Employers Directory (June 1977)Budget Document 1977-78

- 136 -

Table 9.1: MONTHLY HOUSEHOLD DISTRIBUTION OF INCOME IN LIBERIA-1974

Income Group No. of Households Percentage(U.S. $)

Under 50 229,018 73.6

50 - 99 52,404 16.8

100 - 149 13,828 4.4

150 - 199 4,611 1.5

200 - 249 2,536 0.8

250 - 299 1,913 0.6

300 - 349 1,473 0.5

350 - 399 1,218 0.4

Above 400 3,989 1.3

TOTAL 310,990 100.0

Source: - 1974 Census of Population

- 137 -

Table 9.2 REGIONAL DISTRIBUTION OF INCOME 1974

Per Capita Income Gini Coefficients(U.S. $) Household Income Personal Income

LOFA 105 0.330 0.335

MARYLAND 100 0.331 0.308

GRAND GEDEH 103 0.334 0.332

SINOE 108 0.354 0.369

CAPE MOUNT 145 0.356 0.337

NIMBA 125 0.386 0.382

BONG 127 0.387 0.372

BASSA 129 0.388 0.378

MONTSERRADO 232 0.467 0.417

LIBERIA 153 0.452

Source:- Prof. E. Akep's Unpublished estimates based on 1974 Censusof Population

- 138 -

Table 9.3: INCOME DISTRIBUTION IN MONROVIA 1974

Income Group No. of Households Percentage(Monthly HouseholdIncome)

Under $50 17,442 37.4

$50 - $99 14,987 32.0

$100 - $149 5,696 12.2

$150 - $199 2,334 4.5

$200 - $249 1,260 2.7

$250 - $299 1,354 2.9

$300 - $349 887 1.9

$350 - $399 793 1.7

Above $400 2,147 4.6

TOTAL 46,690 100.0

Source:- 1974 Census of Population

- 139 -

Table 9.4: INCOME DISTRIBUTION OF GOVERNMENT EMPLOYEES IN LIBERIA 1978

Income Group No. of(U.S. $) persons % Males % Females %

1 - 99 11,092 39.3 9,677 34.3 1,415 5.0

100 - 149 8,270 29.3 6,689 23.7 1,581 5.6

150 - 199 2,659 9.4 2,069 7.3 590 2.1

200 - 249 1,695 6.0 1,302 4.6 393 1.4

250 - 299 1,257 4.4 1,101 3.6 226 0.8

300 - 349 804 2.9 649 2.3 155 0.5

350 - 399 598 2.1 490 1.7 108 0.4

400 - 474 355 1.3 314 1.1 41 0.1

475 - 549 315 1.1 273- 1.0 42 0.1

550 - 524 288 1.0 231 0.8 57 0.2

625 - 699 322 1.1 228 0.8 94 0.3

700 - 774 104 0.4 96 0.3 8 *

775 - 849 84 0.3 72 0.2 8 *

850+ 379 1.3 345 1.2 34 0.1

TOTAL 28,198 100.0 23,446 84.1 4,752 16.9

*Less than 1.0%

Source:- Ministry of Planning & Economic Affairs

-140 -

Table 10.1: ORGANIZATION CHART OF A 'TYPICAL' MINISTRY IN LIBERIA

MINISTER

DEPUTY MINISTER DEPUTY MINISTERPOLITCALIIAPPOINTEES ASST. MNISTER ASST. MINISTER ASS. MINISTER ASST. MINISTER BUREAU

PRINCIPAL DIRECTOR/PRINCIPAL SPECIALIST/pRINCIPAL ADMINISTRATIVE OFFICER DIVISION

CIVIL SERVIICE SENIOR DIRECTOR/SENIOR A.O./SENIOR STAFF ANALYST SECTIONPPROFESSIONALSTAFF

DIRECTOR/A.O. /STAFF ANALYST

ASSI1STANT A.O./ASST. STAFF ANALYST

CIVIL SERVICE EXECUTIVE SECRETARYSUPPORTINGSTAFF SUPERVISING CLERK

SECRETARY

SENIOR CLERK/TYPIST

- 141 -

Table 10.2: RURAL ADMINISTRATION IN LIBERIA

Ministry/Agency Representative at County Level

FINANCE Collector of Internal RevenuesJUSTICE County Attorney

Deputy Inspector of PoliceDeputy Inspector of Immigration

PUBLIC WORKS Resident EngineerEDUCATION Supervisor of SchoolsAGRICULTURE Regional Agriculture CoordinatorCOMMERCE, INDUSTRY Inspector of CommerceLABOR, YOUTH & SPORTS Commissioner, LYSHEALTH Medical DirectorADP ADP RepresentativesLANDS & MINES Land CommissionerDEFENCE Local COMMANDERINFORMATION Information OfficeGSA CoordinatorFDA Regional ForresterLOCAL GOVERNMENT County Superintendent

Assistant SuperintendentAdministrative AssistantProject Officer

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