In fiscal year 2025, President Joseph Boakai has proposed an $851.8 million budget, with a substantial $745.69 million earmarked for recurrent expenditures, representing 87.5% of the total. This proposal marks the first comprehensive budget under his administration, underscoring a prioritization of operational costs such as salaries and critical services. This heavy allocation for recurrent spending raises alarms regarding a potential over-reliance on debt financing and new borrowings within an already precarious economic landscape, highlighting Liberia’s insufficient capital expenditures critical for long-term development. Despite the pressing need for significant infrastructure investment—given the nation’s infrastructure deficit—the allocation toward capital projects remains disappointingly low, necessitating a reevaluation by President Boakai to ensure investments in roads, bridges, and public facilities that will fundamentally support economic growth and recovery.
Responding to the challenge of low civil servant wages, the administration has proposed salary increases by 2025. However, the fiscal situation remains dire, with robust inflation at 10.1%, compounded by the rapid devaluation of the Liberian dollar, threatening to render these salary adjustments ineffective. With rising living costs, the government’s struggle to stabilize the economy becomes more critical. Alarmingly, only $106.07 million (12.5% of the budget) is earmarked for capital expenditures, of which a mere $52.82 million is designated for essential road construction and repairs. This focus on operational expenses over critical infrastructure raises questions about the government’s commitment to addressing the country’s significant developmental needs while risking further entrenchment of poverty and economic stagnation.
Compounding the challenges, significant allocations to the National Legislature, approximately $39.8 million, seem to distract from pressing infrastructure issues. This includes sizeable budget provisions for the offices of key legislative leaders, such as salaries for the Speaker and Senate Pro Tempore, further diverting resources from essential public infrastructure development. In 2024, a controversial budget allocation allowed lawmakers to procure SUVs, aiming to aid mobility amid inadequate road conditions, but this approach has drawn criticism for neglecting the underlying infrastructural challenges that need addressing. Such expenditures merely prioritize short-term political conveniences over long-term infrastructural investments essential for both governmental efficacy and community connectivity.
The dire state of Liberia’s infrastructure was emphasized in the Global Competitiveness Index, where the country ranked 132nd out of 140 assessed economies. With only 27% of the population having access to electricity, the World Bank estimates that annual infrastructure investments need to fall between $350 million and $600 million over the next three decades. This level of investment is necessary to bridge the current infrastructure gap hindering national progress and development. As the proportion of recurrent expenditures increases without sufficient capital investment, Liberia’s developmental objectives become increasingly unattainable, stressing the need for a strategic reallocation of financial resources that prioritize infrastructure as a fundamental component of national development.
The broader economic environment in Liberia has observed a worrying trend, with the fiscal deficit now standing at 7.1% of GDP, a noticeable increase attributed to declining revenues and rising consumption expenditures. The public debt has escalated to $2.5 billion, comprising 58.8% of GDP, compounding concerns about fiscal sustainability. The draft budget for 2025 earmarks a staggering $137 million for debt servicing, highlighting a critical challenge for managing the nation’s debt obligations while attempting to revitalize economic growth. Although Liberia’s Debt-Service Ratio remains manageable at 6.4%, it is essential to recognize the rising public debt levels and refrain from crossing the threshold that could signal significant economic strain.
To rejuvenate its economy effectively, the government must prioritize infrastructure development and implement cost-saving measures, such as reducing the governmental structure’s size and eliminating wasteful spending. Currently, the breadth of Liberia’s cabinet stands in stark contrast to that of wealthier nations—an illogical resource allocation for a country struggling to stabilize its economic foundations. A proposed increase in the President’s office budget for 2025 runs counter to the necessary measures for fiscal prudence and economic recovery. Moreover, curtailing international travels and reassessing the number of Ministries, Departments, and Agencies could foster a leaner, more efficient governance model. By prioritizing the enhancement of existing institutions over establishing new ones and guiding the transparent privatization of critical economic sectors, Liberia could stimulate competitive growth and improve service delivery, ultimately leading to a more resilient economy.
