Monrovia – Minister of Finance and Development Planning, Augustine Kpehe Ngafuan, has acknowledged the significant impact of the U.S. government’s decision to halt a key USAID-funded project in Liberia, but he reassured the public that the government is actively pursuing alternative strategies to mitigate the effects.
By Gerald C. Koinyeneh, [email protected]
The United States recently canceled a $17 million USAID-sponsored project meant to provide tax policy advice to Liberia. The decision, which came as part of broader U.S. spending cuts, was first revealed by the head of US Government Department of Government Efficiency (DOGE) billionaire Elon Musk on his social media platform, X (formerly Twitter).
“Among many other things, @DOGE today canceled a $17M project to provide tax policy advice to Liberia,” Musk wrote. “Why would anyone think that this is a good use of YOUR tax money?”
A Major Setback for Liberia’s Economic Reforms
The canceled initiative, known as the Local Empowerment for Accountability and Decentralization (LEAD) project, was designed to complement USAID’s Local Empowerment for Government Inclusion and Transparency (LEGIT) and Revenue Generation for Governance and Growth (RG3) programs, implemented by Development Alternatives, Inc. (DAI). These initiatives aimed to strengthen Liberia’s tax policy framework, promote decentralization, and improve local governance.
LEAD was particularly instrumental in assisting the Liberia Revenue Authority (LRA) as the country prepared to transition from a Goods and Services Tax to a Value Added Tax (VAT) system by 2026. The program was also helping modernize the LRA’s tax database, e-tax, a tool that had significantly improved revenue collection, especially in rural areas.
The decision to cancel LEAD has raised concerns, as the United States has been one of Liberia’s strongest allies, providing nearly $2 billion in aid since the end of the civil war. The move aligns with broader U.S. efforts to cut federal expenditures deemed unnecessary or misaligned with American taxpayers’ interests.
Government’s Response: ‘This Too Shall Pass’
Speaking to the Voice of America’s Daybreak Africa program, Minister Ngafuan acknowledged the setback but expressed confidence in Liberia’s ability to adapt.
“We have set ambitious goals to increase domestic revenue through the Liberia Revenue Authority,” he said. “USAID was a key partner in rolling out our new tax system and improving revenue collection. While their support was vital, we are resilient and will find ways to move forward.”
The minister highlighted that the aid cut also affects critical areas such as education, healthcare, governance, and election transparency, signaling a shift in Liberia’s relationship with international donors.
Despite the challenges, he remained optimistic.
“Liberia is a resilient country. We have survived the devastating 14-year civil war, the Ebola epidemic, and the COVID-19 pandemic. Under President Boakai’s leadership, we will bounce back. This too shall pass,” he assured.
Alternative Strategies and New Partnerships
To cushion the impact of the funding shortfall, Minister Ngafuan outlined several measures. They include Strengthening Fiscal Discipline. He said the government is implementing stricter financial management policies to curb losses, reduce waste, and enhance domestic resource mobilization.
Exploring New Partnerships:
According to the Minister, Liberia is engaging with new international partners and strengthening cooperation with regional bodies such as ECOWAS and the African Union to attract alternative funding sources.
Legislative Action: He said Ministry of Finance has submitted a report to President Boakai detailing the short- and long-term impacts of the aid cut, along with proposed strategies to keep Liberia’s development agenda on track. The report will soon be presented to the legislature.
Diversifying Funding Sources: The government is actively seeking alternative donors, both within Africa and beyond, to ensure that Liberia continues its progress despite financial constraints.
Call for Unity and Resilience
Minister Ngafuan acknowledged the vital role USAID has played in Liberia’s development, noting that between 2022 and 2029, the agency had been projected to contribute over $443 million—making it Liberia’s second-largest donor after the World Bank.
However, he urged Liberians to remain hopeful.
“We must not despair. With strategic adjustments and collective effort, we will navigate these challenges and continue on our path to growth and stability,” he stated.
As Liberia grapples with the impact of this sudden aid reduction, the government’s ability to execute its alternative plans will be critical in maintaining economic stability and sustaining key reforms.
