Increased Debt vs Mediocre Development -Boima Kamara Dissects Weah, Sirleaf Economies

Economists generally postulate how economic growth is inversely correlated to poverty. In simple terms, if the economy is growing in proportion to how resources are evenly spread out to efficiently manage the welfare of the citizens, then economic growth, which is largely measured by a country’s gross domestic product (GDP), will represent a fair analysis of a country’s economic progress. However, in the case of Liberia, economist Boima Kamara, who served as former president Ellen Johnson-Sirleaf’s last Finance Minister, sincerely believes that the current George Manneh Weah-led administration which continues to harp on the country’s burgeoning economy based on projections from global financial statistics, is way off the marker; and must reset its economic priorities especially relating to how limited revenues are spent. Kamara also used the occasion to compare the current administration’s external and domestic debt burden with that of its predecessor, by raising cardinal issues with the incremental debt portfolio of the Weah regime and the physical benefits of the additional US$1.1 billion debt that Liberia under Finance Minister Tweah has incurred since Sirleaf democratically left power in 2018.

Basing his premise on a presentation done by Finance and Development Planning Minister Samuel D. Tweah when he appeared Monday, June 19, 2023 on ELBC to herald the gains of the Weah government, at which he (Tweah) analyzed the relationship between real per capita GDP and poverty, former Minister Kamara said there is an inverse relationship between real per capita GDP and poverty.

“When you do well as a country and your real GDP grows, your population size which is the base is not changing, but the real component is increasing, how does that even translate into wellbeing is another question.

“If real GDP is falling in the graph that Minister Tweah was attempting to show, you will see that the rate of poverty will decline. But when GDP reduces, the rate of poverty increases. That’s just economics, nothing but theory. But in the applied, as real per capita is increasing, the question is does that translate into the economic wellbeing of the Liberian people? When our people go to JFK, do they have sufficient medicine, or do they have to go across the road to Lucky Pharmacy? Out-of-pocket expense on healthcare has to change.

“Universal healthcare is a paramount issue. People who have worked their whole lives, the seniors in our country. You see people in the streets begging; our mothers and our fathers begging. We have to make provision for our seniors; we have to make provision for people who gave their lives to the country, and respect them, former presidents as well.

“Weah, you will step out of office. My advocacy is that the budget must respect people who served the country. There has to be that allowance. How are we taking care of former president Sirleaf; how are we taking care of former Vice President Boakai? Tomorrow, President Weah, you will have to become former; there has to be a structure in place that must cater for you people. See America. Barack Obama and other presidents are around and they are still being respected by the country and by the revenue.

“Liberia, the time has come that we must rise up and be normal. There is something just wrong with our psyche. It has to change. This is why I am calling on the Legislature to put the Liberian people at the center and work with the Judiciary and the Executive. These are tough times,” Mr. Kamara stated.

Comparative debt analysis – Sirleaf vs Weah eras

Providing a pedantic analysis of how the country fared under the Sirleaf regime and what is the current debt situation, vis-à-vis the allocation of development loans that benefit the people of Liberia, Mr. Kamara tried to lay the premise of a completely wrecked economy inherited by former President Sirleaf who also had to battle getting Liberia out of the HIPC (Heavily Indebted Poor Countries) categories to qualify for debt relief.

“On the issue of debt, this is the story of our debt. Prior to Madam Sirleaf’s administration, she inherited a system that was more than damaged infrastructurally. We had no electricity; the Mount Coffee Dam had been damaged and she had to fix it. She inherited salaries that predated her regime to Taylor and Gyude Bryant that she had to pay out and bring everybody current. Madam Sirleaf had to ensure paying the AFL soldiers, something that threatened the stability of Liberia.

“Madam Sirleaf was confronted with issues of roads. You can imagine in 2006, when one would walk on Tubman Boulevard, you could see that the road condition was bad. Driving along Old Road, driving from Monrovia to Ganta, driving from Monrovia to Buchanan, we all saw what it was. So, she took on the herculean task of assembling the brightest of Liberians, and even had to bring some of our brethren from the diaspora. There is a lesson that I have learned during these five years from Liberia: the time has come that we must learn to respect the people we have in the diaspora; they have a lot to contribute, and we should recognize them for that.

“From 2006 to 2010, Liberia reached HIPC completion point in June of 2010, that came through painful commitment to transparency and accountability. Liberia’s almost US$4 billion debt was waived, thanks to Minister Ngafuahn. He led the charge that completed us reaching HIPC completion point. He was ending what Finance Minister Sayeh did. So, thanks to all of them. That’s what we need to start doing, to recognize people when they serve well.

“So, Liberia’s debt came from over US$4 billion down to around US$500 million in 2010, of which external debt was US$222 million, and domestic constituted US$280 million. But out of this US$280 million, there is a legacy component which predates Madam Sirleaf, going far back as President Doe’s regime when we had a legacy debt hanging on the Central Bank of Liberia that was kept on the balance sheet. So, in this US$280 million in 2010, almost US$200 million was accounted for by the Central Bank as the government’s own obligation to the Central Bank.

“So, what did I do? It had to be this way because the IMF argued that our government either chooses to pay that debt or it is left on the books and you pay some interest to sustain the life of the Central Bank. When you give birth to a child, you have to support that child. So, you either capitalize the Central Bank, or you keep the debt. And that’s why that debt remained as a legacy issue hanging on. So, between 2010 and 2017, Liberia’s total public stock, the debt, increased to US$1.13 billion. That means an increase of somewhere around US$600 million. That’s the story of the Sirleaf administration. And those debts, the external component of the US$1.13 billion, US$736 million was external debt. And in that external debt, we are talking about all of the issues regarding the rehabilitation of the Monrovia to Ganta; Monrovia to Buchanan roads. So, you can see what this debt contributed to. Part of the rehabilitation of the Mount Coffee Dam, they are all part of it. The debt also facilitated reforms that took place that gave independence especially to anti-graft institutions and public sector reforms were all part of this debt. Now let’s what happened after 2017. Domestic debt of that US$1.13 billion is US$398 million. So, debt increased by up to US$600 million. That’s the increase that took us from US$503 million to US$1.1 billion in 2017.

“Now, between 2017 and 2018, moving from Sirleaf to President Weah, the debt stock increased from US$1.1 to US$1.2 billion. External components increased from US$736 billion to US$847, and domestic from US$398 million slightly reduced US$393 million. The bigger picture is that the debt increased between 2017 ending to 2018 ending. And between 2018 ending till now, the debt stock has increased from US$1.2 billion to US$2.3 billion, an increase of almost US$1.1 billion.

“So, you were right to ask, what can we see for the US$1.1 billion increase in the debt? So, we will then hold the National Legislature. You were the ones ratifying these debts. We will have to hold the Executive; you were the ones passing the debt onto the Legislature for ratification. So, the question is, on what have we spent an increase of US$1.1 billion? Was it on growth enhancing projects? So, if it is on roads, let’s see the roads. Who got the financing? It’s not only financing, but who got the job done?

“As for Madam Sirleaf, you can see from Monrovia to Buchanan. You can see from Monrovia to Nimba. But can we see what the US$1.1 billion increased debt has done? Somebody has to explain; so, we will hold the government, we will hold the Legislature. Please explain to the Liberian people. That’s the story on debt,” former Finance Minister Boima Kamara stated emphatically.

The story on budgetary allocation

According to the renowned Liberian economist and fiscal policy specialist, Liberia’s economic woes are especially tied to how present and past regimes miss out on prioritizing programs and projects that increase the wellbeing of the citizens, but would rather focusing of enriching the purse of public figures through budgetary allocations while important state institutions remain derelict in terms of budgetary support.

“The call for the need for this social contract is ever-compelling than ever before. Why is it that in five and half years, the Legislature through what we call the policy area, the Office of the Pro Tempore under President Weah’s administration receives US$10.6 million?

“The House of Senate takes US$103 million; the Office of the Speakers takes almost US$10 million. The office of the Deputy Speaker takes almost US$8 million. The House of Representatives, the people’s representatives, takes almost US$179.5 million. The total of the US$3.5 billion that the Legislature has accounted for, they have taken US$307.4 million, when in fact, the University of Liberia in six years has only received around US$96 million, a critical institution of human capacity development we treat as a step child.

“Agriculture is the same picture. Agriculture cannot boast of anything close to US$20 million in five and half years. It was the same picture under President Sirleaf, and it is the same picture for health. Now, I serve currently as the health financing advisor for the African Union Center for Disease Control, the Health Economic Program. One of the protocols to which Liberia is a signatory, is that the healthcare expenditure as a share of her national budget should increase to fifteen percent. But I must tell, my fellow Liberians, from Madam Sirleaf to President Weah, the healthcare expenditure as a share of the national budget has never crossed 0.5 percent, much less 1 percent. When will we get closer to even 5 percent, not to say 15 percent?

“That’s why I believe the issue goes beyond an individual. It’s a national problem in terms of how we prioritize spending as a nation, and it has to change. The Office of the Vice President received US$16.14 million, it is the same picture. So, where are we going with this? It has to change!” Mr. Kamara lamentedly concluded.