BRIEF

Summary on the Ebola Recovery Plan: Liberia - Economic Stabilization and Recovery Plan (ESRP)

April 16, 2015



Impact of the Ebola Crisis

Since March of 2014, Liberia has been plagued by an unprecedented outbreak of the deadly Eloba Virus Disease (EVD). The epidemic has claimed the lives of several of our citizens particularly our health workers who are on the frontline to contain disease. As of April 8, 2015, the cumulative cases reported include suspected cases 5,088; probable cases, 1,879; confirmed cases, 3,150; and deaths, 4,466. This brings the total cumulative caseload to 10,172.

Owning to the contagious nature of the virus, major health facilities were closed during the peak of the outbreak. This has contributed to high mortality rates from other sicknesses, which together with the EVD related deaths have significantly increased the number of orphans. Our learning environment was interrupted due to the closure of schools as a means of curtailing the spread of the disease. Thus, the epidemic threatens our hard won socio-economic gains since the end of the civil war over a decade ago.

Economic activities have been seriously affected throughout the country with a sharp decline in agricultural production particularly domestic food production. Activities in the mining and service sectors also drastically declined. Overall, the precipitous decline in economic activities including cross-border trade, restriction on movement of people, goods and services, and rising insurance costs, threatened to give rise to severe food shortages across the country thereby contributing to increased poverty and vulnerability across the country. As the epidemic ravaged, concessions companies scaled down their operations and many expatriates fled the country for fear of contracting the deadly Ebola Virus Disease thereby resulting to a loss in income for our citizens. Consequently, real GDP growth, which was projected at 5.9 per cent for 2014, had to be revised to below 1 per cent and is expected to further weaken in 2015 with adverse consequences on medium term growth prospects.

This fall in economic activities has resulted into low revenue performance, while expenditure demand has increased significantly thus placing tremendous pressure on the Government’s fiscal position. Tax and non-tax revenues are expected to amount to US$401 million, well below the US$504.3 million projected before the crisis. On the expenditure side, significant expenditure demands in the amount of US$76.2 million have arisen as a result of the crisis, some of which are being met through the approved National Budget of US$635.2 million. Furthermore, the Government instituted fiscal measures which included a 40 per cent cut in foreign travel across Government and a 25 per cent drop in fuel and lubricant costs as well as a freeze on non-essential purchases such as vehicles, furniture, and office supplies to ensure that the Government avoids a fiscal collapse. The implementation of these measures reduced the impact of new spending pressures by US$33.4 million.

The Overall Objectives of the Plan

The primary aim of the ESRP (the Plan) is to get the economy back on track toward the primary goals of the country’s medium and long-term development plans. Thus, the plan focuses on three core objectives that are fully aligned to and consistent with the objectives of the Agenda for Transformation (AfT)[1] and Liberia Rising 2030. These objectives focus not only on the immediate direct and indirect socio-economic impact of the Ebola epidemic but also are intended to address enduring institutional and infrastructure weaknesses. These three core objectives are to:  revitalize growth to pre-crisis levels whilst ensuring that it is inclusive and that it creates more and better jobsprovide support for the poor and other at-risk group to strengthen resilience and reduce vulnerability; and rebuild and strengthen the capacity to deliver core social services including education and health with better coverage particularly in the rural areas.

Main Strategic Interventions of the Plan

Liberia’s ESRP is categorized under three broad strategic interventions:  Recovering Output and Growth; Strengthening Resilience and Reducing Vulnerability; and Undergirding Public Finances and Ensuring Service Delivery.

The ESRP is to be implemented through FY2015/2016 and FY2016/2017 and will be done through intensive coordination within Government and in alignment with Development Partners’ current and pipeline activities that reflect Government-driven priorities.  

The first strategic intervention, Recovering Output and Growth, seeks to revitalize growth to pre-crisis levels whilst ensuring that it is more inclusive by creating more and better jobs. Under this Strategic Intervention, the Government hopes to restore GDP growth to at least the pre-crisis rates of 5.9 per cent by 2017; increase employment in key sectors through efforts to increase competitiveness, enhance exploitation of the value chain and facilitate better access to domestic and external markets. Activities under this Strategic Intervention will be conducted in private sector development (including SMEs); agriculture, fisheries and forestry; services; manufacturing; mining and panning; and critical support infrastructure (energy, roads and transport; sanitation and water; and Information and Communication Technology (ICT).

The second strategic intervention, Strengthening Resilience and Reduce Vulnerability, the Government will implement activities in four key sectors, (i) Health and Social Welfare activities to increase access to, and utilization of, quality health and social welfare services and offer a comprehensive package of interventions of proven effectiveness; (ii) Education activities to ensure equitable access to free basic education for all children; (iii) Social Protection (SP) activities, which will adopt a clear and comprehensive policy and fiscally sustainable system for SP to support the poorest and most vulnerable, in the recovery from the Ebola crisis and to improve resilience through future shocks; and (iv) Security and Rule of Law activities to maintain the current security situation, ensure their sustainability and to increase the accountability and legitimacy of national security institutions and the public’s confidence in them.

Under the third strategic intervention, Undergirding Public Finances and Ensuring Service Delivery, the Government plans to secure public finances and ensure service delivery through improving revenue administration to increase tax compliance; enhancing economic governance; and prioritizing public expenditure to ensure efficiency in the use of the limited resources.

Financing

The 2015-2017 financing gap is estimated at US$812 million detailed as follows: 1) Recovering output and growth including finance for farmers and SMEs, labor programs, restarting infrastructure projects which were postponed because of the crisis (US$225 million); 2) Strengthening resilience and reducing vulnerability, including investments in the health plan, in education, in water and sanitation and in social protection (US$298 million); and 3) Strengthening public finances to help offset budget shortfalls (US$289 million).


 

[1] The AfT is currently undergoing a detailed review to assess weaknesses exposed by the Ebola crisis, and to evaluate implementation progress of projects currently funded under the AfT as well as to agree on the revised overarching prioritization of the development agenda for delivery in line with the priorities set out in the ESRP