Seminar: Managing Natural Resource Revenue in Liberia
This seminar, hosted by the Ministry of Finance, IMF and in collaboration with the International Growth Centre aimed to provide a forum for discussion on the opportunities and challenges in managing natural resource revenue for sustainable economic development in Liberia.
Liberia is set to receive large natural resource revenue inflows over the medium- to long-term, through exploitation of iron ore deposits and, potentially, petroleum. By 2015, iron ore is projected to account for around 15 percent of GDP. Natural resource revenue inflows offer significant opportunities, including accelerated reconstruction, development, and poverty reduction and could help finance Liberia’s transition to middle income status by 2030 (the objective of the authorities second poverty reduction strategy—the Agenda for Transformation). However, there are also risks unless resources are properly managed. Liberia is a fragile state and capacity constraints pose additional challenges. The key challenge will be to maximize Liberia’s natural resource revenue and channel it for sustainable economic development.
The main outcomes from the event were that:
- The conversation on resource revenue management in Liberia is still in early stages, and is inextricably linked to other broad issues in Liberian development.
- There is a need for further conversations: to triangulate any new policy on revenue management with existing related policies; to engage with the public to gain input, set expectations, build a narrative around why resource revenue management makes sense for Liberia, and to create a constituency in favour of sound resource management principles.
- The eventual policy must be embedded in Liberia’s unique political economy, including its long history with concessions, government patronage channels, and up to the recent challenges with the County Development Funds, which are themselves a form of resource revenue management.
- Liberia’s choices should be informed by looking at other countries’ systems, understanding their relative successes and failures, so that Liberia can gain from the experience of others.
- Part of revenue management means getting revenue in the first place by optimizing the taxation of resource extraction.
- The policy should consider the management of all significant resource revenues, not just oil but certainly including mining.
- There remain concerns about the capacity to manage both revenue and its eventual expenditure; the stakes for the rest of the economy are sufficiently high that Liberia should consider “importing” capacity if necessary, while setting up local bodies to shadow and eventually replace the contractors.
- Any resource revenue management strategy must carefully define roles and institutions and must cultivate transparency: for effective, honest management; for meaningful citizen monitoring of government actions; and for attracting and retaining profitable, responsible companies to work in Liberia, which will ultimately be the source of prosperity long after the resources will have been exhausted.
A full agenda for the event is available for download below.