By Seltue Karweaye
In fiscal year 2025, President Joseph Boakai has proposed a budget totaling $851.8 million. A significant portion of this budget, specifically $745.69 million, is allocated for recurrent expenditures, making up 87.5% of the overall budget. This proposal represents the first full annual financial plan under his administration.
The majority allocation reflects the government’s focus on ongoing operational costs, including salaries and essential services. However, this trend raises concerns about excessive recurrent spending, reliance on new borrowings, and debt servicing obligations. One major drawback of this budget is the insufficient emphasis on capital expenditures, which are critical for the country’s long-term development.
Given Liberia’s extensive infrastructure deficit, the lack of investment in capital projects is particularly disheartening. The nation urgently needs improvements in infrastructure—such as roads, bridges, and public facilities—to facilitate economic growth and enhance the quality of life for its citizens. Therefore, President Boakai needs to reevaluate the budget estimates and prioritize funding for infrastructure development. By doing so, he can help initiate the vital infrastructure renewal program that the country needs to thrive.
The administration has announced plans to increase civil servants’ salaries by 2025, responding to the pressing issue of low wages in Liberia. However, the financial situation is precarious; the government is currently grappling with a severe budget deficit and has funded some of its activities through loans. With inflation rates soaring to 10.1%, exacerbated by the rapid decline of the Liberian dollar, even modest wage increases may be rendered ineffective. The combination of high inflation and currency devaluation threatens the purchasing power of ordinary Liberians, posing an ongoing risk of economic hardship soon if the government fails to stabilize both the currency and inflation.
On the other hand, capital expenditure remains alarmingly insufficient in the 2025 draft budget. Only US$106.07 million, or 12.5% of the total budget, is allocated for infrastructure development and basic services. Among this, a mere US$52.82 million is earmarked specifically for road construction and repair. This allocation falls drastically short in light of the country’s significant infrastructure deficit, which has hindered economic growth and development.
Rather than prioritizing funding to address the pressing infrastructure needs, President Boakai has proposed an allocation of US$39,886,910 for the National Legislature. This allocation raises concerns as it appears to divert attention and resources away from critical public infrastructure projects.
Specifically, the Office of the Speaker is receiving a budget of US$1,755,553, with the Speaker’s annual salary set at US$245,540, equating to approximately US$21,211.67 per month. Similarly, the Office of the Senate Pro Tempore has been allotted US$1,024,136, while its annual salary amounts to US$254,250 (around US$21,187.50 per month). Additionally, the Office of the Deputy Speaker receives US$645,817, with the Deputy Speaker’s annual salary being US$208,940 (roughly US$17,411.67 per month).
In 2024, as part of a controversial budget allocation, each of the 103 lawmakers in Liberia was granted $45,000 to acquire SUVs. This decision stems from the lawmakers’ recognition of the poor state of the country’s road infrastructure, which significantly hampers their ability to fulfill their responsibilities effectively. The allocation for these vehicles serves as a temporary measure to address the challenges legislators face while navigating treacherous road conditions throughout the nation.
Despite this financial effort to enhance mobility for the lawmakers, it raises concerns about the lack of attention given to the underlying infrastructural issues in Liberia. The substantial funds dedicated to vehicle purchases highlight a pressing need for comprehensive road repairs and upgrades, which have been largely overlooked in the overall budget proposal. This situation points to a systemic problem in the country’s governance, where urgent infrastructural improvements are necessary to support both public officials and the citizens they serve. Addressing these road conditions is essential not only for the efficiency of government operations but also for the broader development and connectivity of Liberian communities.
In 2019, the Global Competitiveness Index Report highlighted the critical state of infrastructure in Liberia, ranking the country 132nd out of 140 economies assessed for the quality of their infrastructure facilities. This low ranking underscores the ongoing challenges Liberia faces in terms of developing and maintaining essential infrastructure. According to the World Bank, Liberia’s infrastructure stock is significantly below the global standard, which recommends that infrastructure investments should constitute approximately 70 percent of a country’s gross domestic product (GDP). The current state of Liberia’s roads is concerning, as the percentage of paved roads remains relatively low, severely limiting transportation and accessibility. Additionally, only 27% of Liberia’s population has access to electricity, which poses major obstacles to economic growth and quality of life.
To address these infrastructure deficits, the World Bank estimates that Liberia will need to allocate between $350 million and $600 million annually over the next three decades. These funds will be necessary depending on the technologies adopted and the standards set for infrastructure development. This investment is crucial for bridging the existing gap in infrastructure that has hindered the country’s progress.
Moreover, the imbalance between recurrent spending (which covers operational costs) and capital spending (which is focused on infrastructure and development projects) further complicates Liberia’s development efforts. Participants at the Third United Nations Conference on Least Developed Countries stressed the critical role of infrastructure development. They stated that building vital infrastructure—such as roads, bridges, and communication systems—is not merely about construction; it is a strategic means to achieve broader developmental outcomes, including the reduction of poverty and the improvement of living conditions for the populace.
There is more concerning news regarding Liberia’s economic landscape that requires careful attention. According to the World Bank, Liberia’s fiscal deficit has increased significantly from 1.5 percentage points, now standing at 7.1% of its Gross Domestic Product (GDP) in 2023. This increase can be attributed to a notable decline in revenues and grants, coupled with rising consumption spending by the government. As a result of this fiscal pressure, the government has found it necessary to resort to borrowing to finance some of its operations.
The public debt situation in Liberia raises serious concerns about the nation’s fiscal health. As of 2023, the total public debt has surged to US$2.5 billion, amounting to 58.8 percent of the country’s Gross Domestic Product (GDP). This represents a significant increase from US$1.8 billion, or 53.3 percent of GDP, recorded in 2021.
Looking ahead to the upcoming 2025 fiscal year, the Liberian government has earmarked US$137 million specifically for debt servicing. This figure illustrates a substantial rise in expenditures dedicated to managing public debt obligations and is projected to constitute 16.1 percent of the total budgeted expenditures. Notably, this allocation for debt servicing is the highest single expenditure item within the government’s budget estimates in recent years, especially considering it follows the cancellation of a considerable $4.6 billion in debts that Liberia previously owed.
Evaluating a country’s debt sustainability requires a comprehensive analysis of several economic indicators that provide insights into the country’s financial stability. One of the most critical metrics is the gross debt as a percentage of gross domestic product (GDP), known as the debt-GDP ratio. For Liberia, this ratio stood at 41.6% in 2022, which is noteworthy when compared to the sub-Saharan African average of 56%. The World Bank has identified that economic growth begins to suffer significantly when the debt-GDP ratio surpasses a threshold of 77%. This finding underscores the importance of keeping Liberia’s ratio below this critical level to ensure ongoing economic health.
Another key measure of debt sustainability is the Debt-Service Ratio, which indicates the proportion of a nation’s export earnings that are allocated to servicing its debt obligations. An ideal Debt-Service Ratio is considered to be below 18%, as a lower figure suggests a healthier economic environment. For Liberia in 2022, the Debt-Service Ratio was reported at 6.4%, indicating that the country is currently managing its debt obligations within a sustainable framework. However, it is important to note that while Liberia’s Debt-Service Ratio is less alarming compared to many other African nations—where the average was 19% in 2022—the trends presented in the data indicate that Liberia could be approaching a precarious juncture. If these patterns continue unchecked, the country may face significant challenges in effectively managing its debt in the years ahead, necessitating prudent fiscal policies to avert potential economic distress.
To effectively reboot the economy, it is essential to redirect emphasis toward infrastructure development, which serves as a critical foundation for sustained economic growth. One of the immediate steps the President can take is to significantly reduce the cost of governance. This can begin with a thorough evaluation of the current cabinet structure, which is perceived as oversized and inefficient. For instance, Belgium, boasting a GDP of $594.1 billion, manages to operate efficiently with only 15 ministers, including the prime minister. In stark contrast, Liberia, with a substantially lower GDP of $4.76 billion, maintains a cabinet of 19 ministers, in addition to numerous other appointed officials. This disparity highlights the need for a leaner and more cost-effective government structure in Liberia.
Furthermore, President Boakai should consider a drastic reduction in his office budget as outlined in the 2025 draft budget. Currently, the proposal indicates a budget increase from $1,963,504 in 2024 to $3,442,406 in 2025. This increase is counterproductive, especially in the context of economic recovery. Instead, he should aim to implement significant cuts, prioritizing essential expenditures and eliminating wasteful spending.
In addition to budget reductions, President Boakai should limit international trips to cut down on expenditures. By carefully evaluating the necessity of these trips and prioritizing only those that are crucial for Liberia’s interests, the government can ensure that funds are used more effectively.
Additionally, it would be prudent for the government to look into reorganizing the numerous Ministries, Departments, and Agencies (MDAs). This can be achieved through strategic mergers, scrapping redundant offices, and potentially outsourcing certain functions to enhance efficiency. A streamlined government structure would not only reduce costs but also improve service delivery to the public.
Moreover, the government should take a decisive stance against the establishment of new public tertiary institutions at this time. Instead, the focus should be on enhancing the existing institutions’ quality and efficiency. The transparent privatization of key sectors—often referred to as the commanding heights of the economy—should also be pursued. This strategy can drive competition, improve service delivery, and stimulate economic growth, ultimately leading to a more robust Liberian economy. I rest my pen.
