- Economists urge major cuts to government to bolster public services and protect jobs as US – Liberia’s largest bilateral donor – looks set to withdraw most funding
- All sectors of economy brace for possible cuts to the World Bank, the largest overall donor – as economists warn of possible political instability
By Anthony Stephens and Prue Clarke with New Narratives
Economists have warned expected cuts to United States aid funding will hurt Liberia’s progress on development and threaten political instability. They have urged the administration of President Joseph Boakai to cut salaries and allowances of officials among changes they say will be needed to withstand the blow to jobs and the overall economy.
One of US President Donald Trump’s first acts when he resumed office in January was to pause more than $US40bn in US Agency for International Development’s annual global aid funding, as well as funding from the State Department, for 90 days. He appointed Elon
Musk, the South African-born billionaire, to head the Department of Government Efficiency which has taken a chainsaw through the US government, supposedly, in an effort to slash $US2 trillion from the $US7 trillion annual budget. (USAID’s supporters point out that USAID accounts for less than one percent of the US budget). That argument didn’t have much sway in the US administration as Mr. Musk tweeted he was “feeding USAID into the wood chipper”.
USAID alone donated $US80 million to Liberian projects in 2024 mostly in health, education and agriculture, according to the Liberia Project Dashboard. Other US agencies contributed more. Liberia is one of the 10 countries most reliant on USAID according to the Center for Global Development. Overall development assistance to Liberia equals 15 percent of the economy or $110 per person each year. USAID funding is about 25 percent of that or 4 percent of the overall economy.
Countries where USAID makes up more than 20 percent of aid according to Center for Global Development
Critics point out the most USAID never leaves the US, where it pays for overhead, operational costs and consultants with major aid players including for-profits such as DAI and Chemonics and nonprofits including RTI International and John Hopkins University. But with an annual government budget of just $US800m – nearly ten percent of which stays with the Legislature – and rampant, well documented corruption, Liberia’s government has been unable to provide most public services on its own.
Economists interviewed by New Narratives/Front Page Africa said the USAID cuts will likely mean reduction in services, take millions from the local economy and deal a blow to the government’s ambitious $US8 billion six-year development plan known as the ARREST Agenda for Inclusive Development. Government had expected 70 percent of ARREST’s budget to come from development partners.
A bustling Mechlin Street, one of the major business centers in downtown Monrovia. Credit: Anthony Stephens/New Narratives.
Liberian health and NGO workers across the country have already been laid off pending the outcome of the 90 day suspension. Workers said clinics will soon run out of medicines and vaccines, school feeding programs will be shut down, children on scholarships have been sent home from boarding schools. They said more impacts will be felt as cuts go on.
This clearly is going to affect Liberia in many sectors, including health, education and agriculture,” said Mr. Amara Konneh, Gbarpolu senator and Minister of Finance in the administration of President Ellen Johnson Sirleaf. “We won’t know yet the extent of the effect on us until we can review the data.
There are a range of legal challenges to Mr. Musk’s actions and there is a question mark over how much Liberian aid may eventually be declared essential and be allowed to continue. But repeated opinion polling has shown foreign aid does not have much support among US voters and experts think most of the cuts will stick. The Trump administration has committed to continue funding another major multilateral funder in Liberia, the Global Fund, for the time being.
Students queue for lunch at Sarah Sampson George School in Buchanan, Grand Bassa County: Photo by Eric Opa Doue.
US cuts come as the Swedish government, Liberia’s second biggest bilateral donor, reduced its 2025 commitment to Liberia by nearly 20 percent from approximately $US29 million in each year 2023 and 2024, according to Openaid.se and the December letter of appropriation sent by the Swedish government to the Swedish International Development Agency. That final 2025 funding may change according to Ms. Kerstin Jonsson Cissé, the embassy’s head of development, who said Sweden remains committed to “supporting sustainable development” in Liberia but cited Sweden’s ongoing commitment to Ukraine’s defense against Russia’s invasion as a major factor in the government’s thinking. But more than 25 percent of Sweden’s funding goes directly to Liberian partners so it’s changes will be felt.
President Trump’s apparent intention to withdraw US support from Ukraine, signaled this week, will likely force more European countries to divert funds to Ukraine’s defense. At the same time right-wing political parties are gaining more support in European countries. Like Mr. Trump they are winning votes with nationalist rhetoric that includes criticism of foreign aid.
“Most countries will review their relationship with third world countries,” warned Dr. Lester Tenny, a former dean of the Business College at the University of Liberia. “Their assistance will be based on strategic interest.”
Former presidential candidate Mr. Alexander Cummings, said the cuts were a wake up call to Liberia’s leadership that it was time to cut its dependence on aid and build a robust economy, based on the rule of law, that attracts foreign investors. Mr. Cummings lived in the US for several years as a top executive with US corporate giant, the Coca Cola company.
In the minds of Americans-the biggest economy in the world-Liberia is positioned as a beggar. We need to change that perception.
Alexander Cummings, opposition political leader in a recent statement
Economists Fear Potential US Cuts to World Bank Funding
A bigger concern now, said experts, may be the future of the World Bank. The Bank’s International Development Association, which provides grants to the world’s poorest countries, is by far the largest donor to Liberia. It gave $US190m in funding in 2024. IDA funds a range of projects including a $US90 million solar project launched in October to provide access to electricity to 1.25 million people by 2030.
The World Bank has been a major funder of solar power projects in Liberia.
Estimates are that the US provides more than half IDA’s funding. Finance ministers around the world are growing increasingly worried that the Trump administration will end funding to the World Bank. Mr. Trump has not mentioned the Bank but Project 2025, a blueprint written by people now on staff with the Trump administration and which forecast many of the changes the administration is already making, recommended US withdrawal.
That could deliver a devastating blow warned experts. Senator Konneh, who previously served on the staff of the World Bank, said a cut to electricity projects would hit hard.
“This means that we are not going to have the opportunity to expand our ability to increase our energy production, so that could be severe for the economy,” he said. “You’re talking about possible transformative economic actions there. So this is really concerning. Of course, the jobs that will be created as a result of that project may not happen.”
Dr. Tenny, a former consultant with the World Bank, added concern about President Trump’s plans for mass deportations of people in the US illegally. Some Liberians have already been detained for deportation. Remittances -payments from Liberians overseas to family at home – equaled the size of the Liberian government budget in 2023 and nearly 20 percent of the Liberian economy.
He warned World Bank cuts, on top of US cuts and a cut in remittances, could have a “ripple effect” on the economy with “mass dismissals of NGO staff” and, potentially, “social instability.”
“Purchasing power will reduce as a result of reduction in disposable income,” said Dr. Tenney. “Imports will reduce. Taxes will reduce because taxes are contingent on imports. Also, taxes are contingent on disposable income. And then we’ll be caught up in what we call in economics, ‘a liquidity trap.’”
2024 Donor Data from the Liberia Project Dashboard
Dr. Tenny advised the government to urgently overhaul tax laws. “Look at those impediments that reduce your revenue inflow – your tariff law, your tax law,” and “adjust it.”
Liberian Government Scrambles to Assess the Impact
For now the Liberian government is racing to understand how the current cuts will impact the economy so they can devise a response. Mr. Augustine Ngafuan, Minister of Finance and Development Planning, told Voice of America’s Day Break Africa program on Wednesday, that an assessment had been presented to President Boakai and will be submitted to the Legislature. President Boakai had already ordered a range of austerity measures for his cabinet, covering salaries, benefits, operational costs, and travels among others.
Senator Amara Konneh warns cuts to World Bank funding could have “severe” impacts on the economy.
The cuts have ignited calls for government to reign in spending.
“I think what we need to do here in the Senate and hopefully in collaboration with the House of Representatives, is to review the size of our government,” said Senator Konneh, who chairs the senate’s Public Accounts and Audits Committee, in a Front Page Africa/New Narratives interview. “See how perhaps we can streamline some of the institutions where we see some duplication to cut costs and then direct some of the savings to education and health. Invest directly in the people.”
An obvious cut according to another former finance minister, is salaries and allowances of public officials, which are among the highest in the world and fuel a patronage system that experts said undermines economic growth.
Salaries must “align with our income. We can’t spend more than we have. We must cut our coat according to our size,” said Mr. David Fahart, finance minister under the administration of President Samuel Doe.
Senator Konneh refused to endorse salary cuts for now, but agreed, “It’s an important subject, but also a politically sensitive subject which will require a thorough review.”
Food Security a Priority
One of the most immediate concerns said experts, is food security. Liberia imports at least half of its staple food, rice, which provide half of Liberians’ calories. It’s costly and leaves the country at the mercy of international exporters’ prices. But increasing domestic supply will be difficult, said Senator Konneh, without major improvements in electricity and roads, two funding priorities of the US.
“Unless we can create light manufacturing operations in our country to produce what we consume to meet the demand of our economy, it’s going to be difficult for us to make progress,” said Senator Konneh. “But to create light manufacturing, you need stable electricity, and this is where the frustration comes in with the lousy performance of LEC, because we’ve invested over a billion dollars now rebuilding our energy sector since the end of the war. And dry season after dry season, we see instability in our electricity production and distribution, which affects more businesses, which limits the capacity to expand the economy.”
He shares Dr. Tenny’s concerns about political instability.
“As a result, we’re not going to create the jobs to absorb the young people into the economy, which can be very risky.”
For now Liberians across the economy are forced to wait, like people in countries across the world, to see what the new Trump administration will do next.
This story is a collaboration with New Narratives as part of the “Investigating Liberia” project. Funding was provided by the Swedish embassy in Liberia. The donor had no say in the story’s content.
