Liberia - The economy

RESTRICTED FILE COPY Report No. AF-10a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMY OF LIBERIA September 4, 1963 Department of Operations Africa CONTENTS Psage Basic Data Map Summary and Conclusions I. THE BACKGROUND.......................................... 1 The Country and People.................................. 1 The Government........................................ 2 The Political Situation................................. 2 II. THE STRUCTURE OF THE ECONOMY............................ 3 The National Income..................................... 3 The Basis of the Economy................................ 4 The Financial Structure................................. 4 Public Finance........................................ Foreign Trade........................................... 6 III. MAIN ECONOTIC SECTORS................................... 7 Agriculture............................................. 7 Forestry................................................ 9 Fisheries............................................... 10 Kining.................................................. 10 Iron Ore.............................................. 10 Diamonds.............................................. 12 Industry................................................ 12 Transportation.......................................... 13 Railways.............................................. 13 Roads................................................. 13 Ports................................................. 14 Power................................................... 15 Water Supplies.......................................... 16 Telecommunications...................................... 16 Education............................................... 16 IV. ECONOMIC DEVELOP1ENT.................................... 17 Past Experience....................................... 17 V. PERFORMANCE, PROSPECTS AND CREDITWORTHINESS.................. 18 Performance............................................. 18 Foreign Aid............................................. 19 Prospects............................................... 20 Creditworthiness........................................ 20 STATISTICAL APPENDIX BASIC DATA Area: 43,000 square miles Population: 1,000,000 (estimated) Gross Domestic Product: U.S. $170 million (rough estimate) Public Finance: (in million U.S. $) Year Receipts Expenditures Difference 1940 0.750 0.635 + 0.115 1950 3.872 4.984 - 1.112 1960 32.368 33.309 - 0..981 1961 32.371 34.118 - 1.747 1962 35.486 42.219* - 6.733 1963 35.54w0-* 50.468* -14.928 * Budgetary forecasts. 44 Treasury estimates. Public Debt: Sept. 30, 1962 (in million U.S. $) Total (including undisbursed) 133.636 - Credit from private banks 14.438 - Suppliers' credits 63.010 - U.S. Government loans 42.992 - Other government loans 13.196 133.636 Eyternal Trade: (in million U.S. $) Year Exports Imports Balance 1940 3.313 2.236 + 1.077 1950 27.635 10.573 +17.062 1960 82.608 69.190 +13.418 1961 61.906 90.667 -28.761 1962 (a) 19.650 34.022 -14.572 (T) First quarter 1962. Commodities 1961 (in million U.S.) Exports Imports Rubber 25.5 Food 10.0 Other agricultural Beverage, tobacco 4.1 products 1.9 Mineral fuels 3.4 Iron ore 29.4 Chemicals 4.2 Diamonds 2.2 Materials manufactured 66.5 Miscellaneous 2.9 Others 2.h Total 61.9 Total 90.6 一 APRIL 1963開BRD一113己R SUT;11ARY AND CONCLUSIMNIS 1. Liberia has only recently begun the process of economic de- velopment. Production of rubber in the 1930's and the recent exploita- tion of the abundant mineral resources discovered in different parts of the country have eased Liberia's exit from the stagnation of the mid- nineteenth century. 2. The mineral and, to a lesser extent, agricultural resources justify the hope of' a continuing groi.,Tth in the Liberian economy. How- ever, the country is still baclcTard in most fields. Infrastructure - roads, poiier and water supplies - is inadequate, and there is a shortage of skilled labor and administrators. 3. The Government's "open door" policy has recently encouraged a massive inflOT-T of foreign capital for iron ore mining, and the Govern- ment itself has been trying to promote economic development, particularly roads and public buildings. Since much of this effort has been financed by suppliers' credits, it has landed the country in a very difficult fi- nancial situation. 4. Relatively important amounts of foreign aid are available., prin- cipally from the U.S.A. and Germany. Eximbank loans and suppliers' credit have financed construction of building and power plants and roads. Never- theless, the need for outside finance remains to continue basic economic development. 5. The eligibility of Liberia for Bank loans i,.-ill depend largely upon the Government's i.,Till to restrain expenditures and new borrol%ing while carrying through a program of debt rearrangement to ease the burden of its present debt. THE ECONOMY OF LIBERIA I. THE BACKGROUND The Country and People 1. Liberia is situated in the rain forest area of West Africa. It is bounded by Sierra Leone, the Republic of Guinea and the Republic of Ivory Coast, and covers 43,000 square miles. There are three main re- gions: the coast, where most of the rubber grows, the high forest areas, and the plateau of the hinterland. Numerous small rivers flow across the country, but rapids prevent navigation beyond a. few miles from the ocean. 2. The first population census took place in April 1962. The com- plete results of this census are not yet known, but the population is thought not to exceed 1 million. On this ba,sis, the average density would be aporoximately 20-25 persons per square mile. There are two main groups: a small group of about 15,000 people, formerly called Americo-Liberians, who are the descendants of the original settlers from the United States, and the indigenous population of about 20 tribes. 3. Liberia wa.s founded in 1822 by freed U.S. Negroes sent to Africa under the auspices of the American Colonization Society whose purpose was "to promote and execute a plan for colonizing in Africa with their own consent the free people of color residing in the U.S." The first gover- nors of the settlement were agents appointed by the Colonization Society, but in 1847 the Republic of Liberia was established under a constitution modeled after that of the U.S. 4. Until the 1920's most of the territory of Liberia remained out- side real government control and untouched by any modern economic influ- ence. The small Liberian exports of sugar, coffee, camwood and palm kernel produced in the coastal regions survived with difficulties in the face of competition from other countries. Due to this political and economic weakness, Liberia was during this period under a constant threat to its independence, and official U.S. support at the time was important. 5. This situation began to change in the years 1925-1926 when the Firestone Company injected new strength by establishing rubber plantations. In World War II the U.S. built the port of 'Monrovia, which came into opera- tion in 1948, and an important airfield. The presence of American forces had a notable impact on the economy. Important iron ore deposits were dis- covered after the war. Their exploitation has provided a great stimulus to Liberia's economic life. 6. Liberian history explains certain major factors in the present situation. First, the predominance of the descendants of the first Americo- Liberian settlers and the difficulties between them and the indigenous population which, until recently, hindered the establishment of an effi- cient administrative organization. Secondly, the absence of governmental assistance to promote economic growth such as has been provided for other - 2 - African countries by U.K., France and Belgium. For that reason, the eco- nomic development of Liberia has come to depend on an "open door" policy designed to attract private investments. The Government 7. Liberia has a republican form of government with a constitution patterned closely on that of the United States with three branches: exec- utive, legislative and judicial. The executive branch is headed by the President, elected by country-wide vote for a term of eight years. He may be re-elected for succeeding h-year terms. He appoints a cabinet to head each department with the advice and consent of the Senate. The present cabinet is composed of 11 members who head the following depart- ments: State, Treasury, Justice, Post, Defense, Interior, Public Instruc- tion, Public Works and Utilities, Agriculture and Commerce, National Public Health, Information. In addition, there are certain bureaus such as the Bureau of General Supplies and the Bureau of Civil Service. A Special Commission on Government Operations (SCOGO) has the responsibility of surveying the activities of every department and governmental agency to improve their efficiency. This Commission is assisted by a team of seven American experts financed by U.S. AID. The Bureau of Natural Re- sources and Surveys carries out mineralogical and geological surveys, supervises the cartographic service and controls mining operations. 8.. The legislative branch consists of two houses: the Senate with ten members and the House of Representatives with thirty-nine members, thirteen of whom represent the tribal people. All citizens male and female may vote in the national election if they are at least 21 years of age and own a hut, house or other property on which taxes are paid. Only Africans or people of African descent may acquire citizenship. Politically, the country is divided into five counties, four territories and three hinterland provinces. The President of Liberia appoints the county and territory superintendents and provincial and district commis- sioners. The Political Situation 9. The dominant political party in Liberia today is the "True W,hig Party" headed by President Tubman. The "True Uhig Party" has governed the country since 1870 when it displaced the formerly domi- nant Republican Party which is now extinct. President Tubman was first elected in 1943 and in May 1963 vas elected for a fifth h-year term. The Tubman policy is characterized by two main preoccupations: the unification of the country and the growth of its economy. The aim of the unification policy is to overcome the serious deficiencies of the existing tribal society and to provide its members with the minimum qualification necessary to participate effectively in the economic and political life. A serious effort has been made by the Tubman admin- istration to approach this aim. The extension of the electoral fran- chise, the nomination of tribal leaders to the House of Representatives, and the creation of roads are steps in this direction. To this end, the - 3 - Liberian Government has encouraged the foreign agricultural companies to install their plantations in isolated areas. The policy is shouing good results. From the economic point of view, the liberian Government has tried to attract foreign investment by a liberal policy. This "open door" policy allows a generous initial period of exemption from certain taxes in order that the investor night quickly recover a part of his investment. It maintains an unrestricted repatriation of profits and avoids confiscatory taxation. On the other hand, in some cases the Government receives shares in the companies. Certain companies are exempted from all taxes, the Government receiving 50 percent of the profits. II. THE STRUCTURE OF THE ECONOMY The National Income 10. There is little information on the national income. The Gov- ernment of Liberia does not prepare such estimates. Some estimates have been attempted, especially by a mission from Northwestern University. Although not much weight should be placed on such estimates, it is useful to mention them. In 1960 the GDP was roughly estimated at U.S. $170 million. Over the seven years from 1950 to 1957 the GDP increased ac- cording to these estimates by about 80% and over the three years 1957- 1960 by about 5C5. Investment as a proportion of national expenditure is high (around one-third in 1960), principally due to the foreign in- vestments in iron mining, but is expected to diminish after a few years when mining investments will largely be completed. Domestic savings are low and have not shown an increase as a proportion of GDP. The part of GDP accruing to the African is very low, since a large part goes to foreign investors. For that reason the amount of GDP per capita, about U.S. 4170, cannot be regarded as a valid indication of the standard of living of Liberians. In addition there are big differences in income -ithin the population. On the other hand, the subsistence sector has declined in importance since 1950. Wage income is growing accompanied by the development of distributive services or industries. All these estimates show that liberia's present material prosperity rests on nar- row foundations and that the future growth in income and government revenues depends mainly on prospective increases in the production of iron ore and rubber and financial support from foreign sources. 11. There are no indices of rages and prices. The average daily wage for unskilled labor varies between 37 cents in an independent rubber farm and 50 cents in mines. There is little data about price movements over the past years. But based on price movements in certain African countries, such as Ghana, it is thought that the general price level increased from 1950 to 1960 by about 30 to 4O%. 12. The country suffers from a labor shortage. Immigration is forbidden. The maximum male labor force may not exceed 180,000-200,000 persons. Due to certain sociological facts, the strong tribal organiza- tion, the small reaction to monetary incentive, it will probably 'ce rather difficult to enlarge the mass of workers over the next few years. This situation is likely to hinder the growth of certain major sectors of the Liberian economy, principally rubber production which suffers al- ready from a labor shortage. In the immediate future, however, the shortage of labor in rubber production will be eased somewhat as workers move out of iron ore mining, which calls for more labor in the period of establishing the mines and facilities than in the period of production. The Basis of the Economy 13. Until recently the economy of Liberia has been based on sub- sistence farming and on the production of rubber for export. While these continue to be the primary economic activities of the country, mineral production is rapidly becoming of first importance. Agri- culture, forestry and fishing produce about 40% of the GDP. Farming provides a living for about 50% of the population and produced 46% of total exports in 1961 with a value of U.S. $27.4 million. The main export commodities are rubber, piassava fiber, palm oil and ker- nels, cocoa and coffee. Agricultural imports amounting to U.S. $14.2 million in 1961 represent 15.7% of total imports and are mainly com- posed of rice (25,000 tons) other grains, sugar, meat, dairy products, beverages and tobacco. 1. Mining is becoming the major field of production. The three minerals currently produced are iron ore, diamonds and gold, the prin- cipal one being iron ore. In 1957 mineral exports amounted to U.S. $9.7 million. In 1961 they amounted to U.S. $31.6 million - of which U.S. $29.11 million was iron ore - representing 50' of total exports. 1lineral exports will increase in the next few years. The total Liberian produc- tion is expected to reach about 17 million tons in 1967. The part played by other industries in the Liberian economy is almost negligible. The Financial Structure 15. An act of legislature approved June 7, 1935 established the Liberian dollar, the monetary unit of the country equal to fifteeen and five twenty first grams of gold nine-tenths fine. They are the same specifications as those of U.S. dollars. The Liberian dollar, however, in practice never became the principal medium of exchange. An act accepted by the legislature of Liberia in March 1956 declared the U.S. dollar the legal currency in Liberia. 16. Liberia has no central bank and the Government imposes no foreign exchange restrictions. The banking system in 1962 was com- posed of six banks which are either affiliates or branches of foreign banks. The major bank is the Bank of Monrovia, an affiliate of First National City Bank of New York. The Bank of Honrovia has been the official depository of the Government since 1935. Other banks at present operating in Liberia are: Bank of Liberia (partly Liberian- oi-ned with Chemical Bank of New York, a minority shareholder), Tradevco (Bankers Trust and M,edio Banca - ilan), Chase Manhattan, International Trust Co. (International Bank of Washington with a small liberian share- holding), and Commercial Bank of Liberia (mainly Swiss - Intrabanque - and Lebanese). Most of these began operations only recently. Because there is no central bank i!hich would normally centralize banking data, it is difficult to get information on the monetary situation. Table 13 gives figures collected in Monrovia of bank deposits and advances. Public Finance 17. The major fact concerning public finance is the tremendous in- crease of receipts and expenditures of the liberian Government during the last ten years. Receipts of 1962 are more than nine times those of 1950,and expenditures have increased in the same proportion. Governmental Current Revenues and Expenditures (million of U.S. $) Year Receipts Expenditures Difference l9O 0.7 0.6 + 0.1 1950 3.8 L.9 - 1.1 1960 32.3 33.3 - 1.0 1961 32.4 34.1 - 1.7 1962 35.5 42.2* - 6.7 1963 35.5-* 50.4* -11.9 Budgetary forecasts. -3 Treasury estimates. l8. The remarkable increase in receipts results principally from the creation in 1991 of an income tax and from the payments of royalties on iron ore exports by the Liberia Mining Corporation. The rate of growth of expenditures, which has been very high, especially in 1959 and 1960, has sharply declined in 1961 and 1962 because of a decline in revenues due to reduced economic activity and depression in commodity prices particularly rubber. This fact illustrates a weakness of the Liberian financial situation due to the fact that, as in many other African countries, the major part of government revenues depends on foreign trade: income tax, import duties, iron ore profit sharing are almost 7_5 of the total revenues. The major part of income tax rev- enues is paid by Firestone, and this revenue varies with world rubber prices. Revenues depend largely on world demand for iron and rubber over the coming years. The estimates given in Table 3 were prepared by the Liberian Government. Estimated revenues from iron are based on production indications given by the companies. The size of ore produc- tion forecast seems realistic. All mines are closely connected with the steel industry. For example, the Republic Steel Corporation is a shareholder in Liberia Hining Company and the National Iron Ore Company, - 6 - Thyssen in the German Liberian Mining Company (DELIMCO), and Bethlehem Steel and Swedish steel companies in the Liberian American Swedish Minerals Company (LAIICO). Furthermore, certain of these mining com- panies have already sold all or part of their production under long- term contracts. On this basis, the Liberian Government has estimated that its revenues will rise from U.S. $35 million in 1962 to U.S. $78 million in 1972. The principal factor of this increase is the growth of iron ore profits, which will increase1 s a proportion of total revenues from 14% in 1962 to 25% in 1972.- On present ex- pectations of rubber and iron ore prices these revenue figures seem optimistic, especially in the long term. More prudent estimates would assume revenues to rise from $35 million in 1963 to $63 million in 1972. 19. The growth of expenditures has followed that of revenues. Between 1951 and 1961 the average annual rate of growth was 19,. It is difficult to determine the amount of capital expenditure within total government expenditure. The greater part of capital expendi- ture has been outside the budget and financed by loans. However, rough estimates indicate that about one-third of expenditures covered by the budgets in the years 1960-61, 1961-62 and 1962-63 were capital expenditures for such things as buildings, power, roads and other public works. The Government's estimates of expenditures are given in Table 3. The slight decrease in the amounts of forecast expendi- tures after 1965 results from the decrease in the amount of fixed commitments, i.e. debt service. The expenditure figures in Table 3 cannot, however, be taken seriously, since they result in annual budgetary deficits of from $12.5 million to $3.6 million from 1963 to 1966 and deficits of this size cannot be financed. 20. The major problem which the Liberian Government has to face over the coming years is that of debt service payments on their present debt. This question is discussed later in the report in the context of past performance and creditworthiness. Foreign Trade 21. Liberia's foreign trade has been increasing, total value ris- ing from 5.5 million dollars in 1940 to 38.2 million dollars in 1950 and to 152.5 million dollars in 1961. Value of Foreign Trade (million of U.S. $) Year Total Exports Imports Balance 1960 5.5 3.3 2.2 + 1.1 1950 38.2 27.6 10.6 +17.0 1960 151.8 82.6 69.2 +13.4 1961 152.5 61.9 90.6 -28.7 19162 (a) $3$19.) J..-6. (a) First ouarter 1962. 1/ Iron ore mining companies are not subject to income taxes, the Gov- ernment of Liberia receiving a part - generally 50% - of the net profits (see paragraph 43). - 7 - About half of this trade is with the U.S.; but in recent years Western European countries have taken an increasing part in this trade. Liberia's balance of trade has been constantly favorable until 1961, when there was an excess of imports due to a drop in iron ore and rubber prices and the heavy import of capital equipment. 22. The principal factors in the increase of exports from 1953 to 1556 were a rise in the prices of rubber and an increase in exports of iron ore. A drop in 1957-1958 resulted largely from a drop in prices of rubber and iron ore. Until 1962 the major export was rubber but over the coming years the major export will be iron ore. These two products rep- resent 90% of exports. 23. The rapid increase in imports reflects mainly the growth of the Liberian economy stimulated by increased foreign investments. But this increase in recent years has been due to imports of equipment for the iron mines of LMCO and DEIMCO. Food represents about 15.7% of total imports, mainly rice (25,000 tons) due to the small local production. 24. The Government does not prepare balance of payments figures. There are no monetary or exchange controls applicable to the private sector so that data other than export and import statistics are not ob- tainable. Generally speaking, while the trade balance has been favorable the balance of current payments has been in deficit, largely because of repatriated profits of foreign companies which probably represent more than fifty percent of the amount of merchandise import. The deficit on current payments is covered by the inflow of capital. III. 1AIN ECONOMIC SECTORS Agriculture 25. Agriculture is one of the two most important sectors of the Liberian economy. Three groups of agricultural enterprises are distin- guishable. The biggest group is the native tribesmen who follow the traditional pattern of African agriculture chiefly in Liberia's hinter- land where the traffic connections are few and poor. A much smaller group of some 3,000 farmers, descendants from American immigrants, farm on land to which they hold titles; over 2,500 of them cultivate rubber. Estate agriculture is represented by six foreign companies, all of them engaged in rubber production. The Firestone Company alone cultivates 86,000 acres of rubber trees, constituting the largest rubber planta- tion unit in the world. 26. Tribal agriculture is almost entirely restricted to subsistence farming. The lack of roads and technical assistance, and tsetse infesta- tion, as well as problems of land tenure and land fragmentation are the reasons for little or no changes over the past decades. The Government of Liberia intends to promote production of staple food for domestic consumption with emphasis on swamp rice production. Farmers presently - a produce only upland rice yielding 800 lb. or less per acre. To demon- strate the advantages of swamp rice production, the Government invited a.group of Chinese experts, who succeeded in harvesting up to 5,000 lb. of paddy per acre by introducing improved varieties and application of fertilizers and plant control. However, rapid production increase of rice is unlikely to occur because of lack of extension officers and roads. Increases of staple food production over the coming years may not do more than keep pace with the population growth, thus forcing Liberia to main- tain present import levels over the next decade. 27. High prices for rubber during World War II and the Korean boom, plus the example of high rates of profit accruing to Firestone, provided sufficient incentive for new producers to enter the rubber market. Since then the number of independent Liberian rubber producers has steadily increased. M1ore than 2,500 farmers cultivate rubber trees on some 120,000 acres. Firestone's provision of trees, budiwood, credit and technical as- sistance has greatly assisted in the expansion of rubber in Liberian farms. However, Liberian farms are generally much less efficient than Firestone and realize much lower rates of profit per acre of mature rubber. 28. Reasons for the low output of independent farms are poor manage- ment, which is technically backward and does not exercise adequate super- vision of tapping and other preparations, as well as an acute labor short- age. If world market orices continue to fall during the coming years, which is likely, many farms will have to suspend operations and no further expansion of rubber plantings can be expected. 29. From the mid-1930's, when Firestone's plantation came into pro- duction, until 1961, when iron ore became predominant, rubber was Liberia's principal export. Despite the diminished relative value of rubber exports, the production of rubber remains Liberia's principal economic activity in a number of other respects. In 1960, for example, an estimated 35,000 workers were employed on plantations and independent farms. These com- prised over 40% of the estimated total of some 85,000 employed in the money sector of the economy. Until 1961, Firestone was still the only rubber concession in production. Since the mid-1950Ts, however, five more foreign concessions have established rubber plantations. Three of these (Liberia Company, Goodrich, African Fruit Company) started tapping in 1962. The remaining two concessions (Salala Rubber Corporation, Liberian Agricultural Company) will not produce until 1966 and 1967. 30. The total acreage of the reserve areas of the six concessions is just over 3 million acres, or approximately 11% of Liberia's total land areas. Development areas, however, including Firestone, will total only 118,500 acres by 1970. Production figures and acreage planted are given in Table 7. Production of rubber of the Firestone plantation will be below the 1961 level until 1969 when the young trees of the present replanting program will be mature. However, rubber from the new conces- sions will compensate Firestone's lower production from 1965 on, and total output of rubber from Liberia may be in the region of 130 million - 9 - lb. by 1970. World market prices may decline to 22 cents per lb. by 1965 from the present 28 cents level and continue to be low, so that the value of total production by 1970 would be in the region of U.S. $22 million. 31. The plantations expect that despite the price decline, their high yields and efficient management will enable them to operate at a profit even at a lower world market price. Average yields per acre tapped of improved varieties on plantations in Liberia are about 1,200 lb. and improved clones now being used for replanting may raise yields up to 1,600 lb. per acre. There is, however, a severe problem of labor shortage on the plantations which curtails production. There is an es- tiniated shortfall of 12,000 workers at present for the six concessions and it is calculated that this resulted in a. production loss of approxi- mately Li or about U.S. $.9 million worth of rubber in 1962. No change in the Government's wage policy can be foreseen and all plantations are likely to suffer from labor shortage over the coming years. 32. The Government intends to encourage oil palm production as an alternative for former rubber planters. Oil palm grows over wide parts of the territory; however, little research has been carried out and im- ports of selected high yielding palm trees will become a necessity be- fore any large scale prcmotion of this crop could be recommended. In- creased oil production would contribute to a gradual decrease of import requirements of oils and fats amounting to U.S. $.17 million in 1961. 33. Exports of cocoa and coffee are likely to remain at present levels. However, a decline in the value might occur due to falling world market prices. With regard to piassava fiber no change in volume or value over the next years can be anticipated as the plant grous wild in the swamps and no cultivation improvements can be carried out. 34. D.pansion of agriculture will suffer from the lack of qualified extension officers in government service. The present number of officers is inadenuate because agricultural graduates are readily absorbed by plan- tations which offer higher salaries than the Government can offer. Higher salaries for extension officers as well as transport facilities are the basic needs for promoting production expansion. Furthermore, marketing facilities are presently nonexistent and will require special attention. Agricultural credit will be provided by the Agricultural Credit Corpora- tion which has been established in 1962. The Corporation will draw its funds from PL 480 counterpart funds and is expected to bring its capital to U.S. $5.8 million by 1965. Forestr 35. One of the most promising prospects for economic development is the commercial exploitation of Liberia's vast forest resources. Until recently, Liberia's estimated nine million acres of high forest have been virtually untapped, because of inaccessibility of the major timber stands. At present, there are only five timber concessions and four domestic timber concerns in the country. Total output of timber in 1961 is estimated at - 10 - just under 10 million board feet, an amount insufficient even to meet local demands. IWJith the construction of roads opening up forest areas, produc- tion is likely to increase to about 130 million board feet annually, with n value of over U.S. $15 million by 1968. Stumpage tax and land rental from conciOsns right be expecte. to yield U.S. '.83 million to the Government from 1968 onward. However, reckless exploitation of existing timber re- serves could lead to serious land deterioration. The Government is aware of this problem and has introduced a law to assure proper reafforestation, but limited possibilities of supervision may limit enforcement of the law. Fisheries 36. Maritime fishing is presently undertaken by one Liberian company with five trawlers. Fish landings fluctuate very much, because boat re- pair facilities are lacking. Demand for fish is reflected in the relatively high prices paid. The Government is aware that before any investment in the fishing industry can be made, a survey of fish reserves in the coastal water has to be carried out. A scheme to establish fish pools in Liberia's hinterland is in its infancy and an evaluation of these projects appears to be premature. Mining 37. The three minerals currently produced in Liberia are ircn ore, diamonds and gold. The most important is iron ore. Iron Ore 38. Four firms are at present concerned with mining in Liberia. The Liberian Mining Company. This company has a concession on a deposit sit- uated near the Sierra Leone border at Bomi Hills. The equity capital was provided by Col. Christie who headed a group of private American investors and. by the Republic Steel Corporation which is the majority stockholder of the company. The Liberian Government has no equity investment in IMC but has the right to be represented on the Board of Directors. The ore re- serves are estimated to be about 200 million tons - 50 million of which is formed by a magnetite running 65-70p iron. A recent geological survey and drilling program is reported to be encouraging. Large additional tonnages of good quality ore are said to have been added to LHC's extensive known reserves of high grade ore. The mine began to operate in 1951. The yearly production is about 3 million tons, of which 1.2 million tons is concen- trates. The ore is carried to the port of Monrovia by a. company-owmed rail- way forty miles long. LIAC employs about 2,700 workers, principally unskilled. 39. The Liberian American Swedish Minerals Company (LA1CO). An im- portant ore deposit has been discovered in the Nimba 7ountains in the Central Province close to the borders of Guinea and Ivory Coast. The re- serves are estimated to be several hundred million tons of commercially exploitable iron ore. According to LAMCO's estimates proven deposits at Nimba exceed 250 million tons with iron content of about 66%. The LAMCO - 11 - project ill operate as a joint venture under which Bethlehem Steel Cor- poration owns 25% and LAMCO 75/. LAMCO is a Liberian corporation. Its capital stock is owned equally by the Liberian Government and a group of American and Swedish interests and some Liberian citizens. It is esti- mated that LAMCO's total labor force will be about 2,250 of which 1,730 will be Liberians and 520 foreigners. The mineral -ill be transported to the ne7w port of Buchanan by a company-omed railroad 200 miles long. The cost of the project is estimated to be around '215 million, prin- cipally financed by loans from the Export Import Bank and the German Kreditanstalt. The first shipments are scheduled for summer 1963. Production is expected to be about 7.5 million tons per year initially and perhaps 10 million tons or more. Almost all of the joint venture's first 7.5 million tons has been contracted for by Bethlehem Steel and German, French and Italian buyers. Important ore deposits have been discovered in Guinea just across the border from LAMICO's deposits. An international syndicate with American, English, Japanese and Belgian interests is now being formed. If this group decides to mine these deposits, it may use LAMCO's railway and the port of Buchanan. Negotia- tions with LANCO on the use of their railroad are now in progress. 4O. The National Iron Ore Company (NIOC). NIOC's main ore deposits are located along the Mano River near the Sierra Leone border. NIOC is a Liberian company. Its capital stock is owned 501 by the Liberian Gov- ernment, and 15' by the Liberia Mining Company and a group of investors headed by Col. Christie. The remaining 35% of the stock is held by pri- vate Liberian interests. Reserves are estimated to be about 65 million tons with iron content of 56-60% and probably about 100 million tons more with iron content of about 5-5. By scrubbing and washing, the iron ore content will be raised to about 57-58%. The ore is carried by rail to the L1C mine at Bomi Hills and through UIC's railroad to Nonrovia. Cost of the project is estimated to be about $30 million, financed by loans, principally from First National City Bank of New York and Eximbank. Production began in 1961. It is scheduled to be about 3.5 million tons per year. It is reported that all the company's annual production has already been sold for each of the next ten years. 41. The Germlan Liberian Nining Company (DEINITCO). This company has rights on an ore deposit situated at Bong Range in the Central Province about fifty miles from Honrovia. The proven reserves are estimated to be about 300 million tons of ore with an average iron ore content of 375. This ore will be concentrated to get an ore with an iron content of 65%. The capital stock of DELIMICO is divided eoually between the Liberian Gov- ernment and Geerkschaft Exploration, a firm of the Thyssen Consortium. The Liberian Government will receive 50 of the net profits. It has the right to elect five of the eleven members of DELIMCO's Board of Directors. Cost of the project will be about $100 million. The mine installations, railway between Bong Range and Monrovia and port are now under construc- tion. The company plans to begin production in 1965. DEIMCO plans its mining and processing capacity at about 8 million tons per year, which means a !-5 million tons annual output of concentrated ore for export. The value of the ore will be lover than that of other Liberian mines and the costs of production will be higher. - 12 - 42. These four companies are called on to play an important role in the Liberian economy. The potential production and estimated reserves of the four companies are summarized below: Extraction capacity in millions of long Estimated ore reserves tons per year proven and probable in 1in. Max. millions of long tons LMC 3 4 200 NIOc 3.5 5 165 LANCO 7.5 12 400 DELIMCO 8 8 300 Total 22 29 l,065 The proven and indicated reserves represent an amount sufficient to sustain the production at full capacity by all companies for at least 35 years. 43. Concerning the financial relations between the mining firms and the Government of Liberia it is to be noted that while the Government owns 50% of the capital stock of the three new iron ore concessions LAMCO, NIOC, DELIMCO, only in the case of NIOC has the Government itself had to subscribe for its shares. In the other cases the shareholding is granted to the Gov- ernment in return for the grants of exploitation rights. The Government will receive 5ON of the "net profits" of these companies. The concession agreements allow for amortization of borrowed capital at an agreed rate and "net profits" mean profits after allowing for such amortization. In addition, the Government will receive 50% of Bethlehem's share of net profits from the LAMCO joint venture. The Government is not a shareholder of the LIC but it receives 35% of net profits. This percentage will in- crease in 1970 up to 501. In return for this appropriation of net profits, companies are exempted from all taxes (except for certain small taxes) and import or export duties. Diamonds h4. Diamonds are found in the Western Province. The principal diamond fields are around the Lofa River. Foreigners are excluded from prospecting and mining diamonds, except with concession agreements, none of which has been negotiated, though the Liberian Government desires to attract a conces- sionaire to work the deposits by large-scale modern methods. The amount of Liberia's production is difficult to estimate. Indeed, many diamonds are illicitly imported into Liberia from neighboring countries. Industry 45. Liberia has little manufacturing industry. The most important are brick and tile manufactures, soap, drinks and wood products. Many of them have been created by Firestone to provide the firm's needs. In 1961 - 13 - a brewery -,as set up by a Swiss group. Three major concessions recently granted are for construction of a shoe factory (Swedish interests), cement factory (Italian interests), and an industrial explosive and chemicals factory (Baird Chemical Corporation, and Canadian Industries Limited of Montreal) but none of these projects is yet under way. It seems that in spite of the open door policy foreign interests are not yet very interested in establishing industry in Liberia. There are the handicaps of a small local market, shortage of skilled labor, and the difficulty in meeting competition from imports. Due to this last fact the brewery has been threatened with serious financial difficulties, and the Government is con- sidering the possibility of increasing the tariff on imported beer. There are also the restrictive regulations on ownership. Under the present law no foreigner may hold real property, he may lease land from a Liberian citizen but such lease may not be for longer than 21 years; two additional optional periods of 21 years each are authorized. On the other hand, there is the undoubted prospect of further growth in the economy, which should allow some expansion of industry. In order to help the develop- ment of industries, the Government of Liberia has approved the creation of a development bank which IFC is helping to establish. Transportation Railways h6. As mentioned above, there is at present only one railroad in operation between Mano River and Monrovia. Two other railways are under construction, one between Buchanan and Mount Nimba and the other between Monrovia and Bong Range. All these railways are exclusively used for ore transportation. Roads 47. Road development in Liberia started around 1952. At that time the country had less than 300 miles of roads, mainly gravel roads in poor condition. Today Liberia has nearly 1,700 miles of roads and tracks of which about 1,000 miles are all-weather roads and 170 miles paved high- ways. From 1952 up to today, about $30 million have been invested in road construction, financed mainly by Eximbank loans ($16 million) and two short-term credit loans from the Italian Construction Company, Vianini. 48. The number of registered vehicles has increased from only 650 in 1949 to over 9,000 in 1962. With the planned increase in mileages of new roads in the coming years, the steep increase in registered vehicles is expected to continue. 49. Unfortunately, there is no reliable information on traffic den- sity based on actual traffic counts. Only in and around Monrovia, the capital, has traffic been counted showing a traffic density of 800 to 1,IOO vehicles per day passing the entrance streets to the east and the north of the city. However, rough estimates of traffic on the main high- ways in the country indicate that between 200 and 400 vehicles pass over those roads daily. - 1)4 - 50. All roads in Liberia, including streets in the cities and towns, are administered by the Department of Public !orks and Utilities (DPWU) created in 1945. Not until 1951 did the DPWU obtain a special department for roads and streets which from 1952 to 1962 was under the guidance of the U.S. Bureau of Public Roads (BPR). The department's operation col- lapsed nearly completely last year when BPR left. At the beginning of this year, the firm J. C. White Engineering Corporation,of New York, was retained to advise on and assist in a complete reorganization of DPIU's operation, not only with roads and streets, but also with buildings, electricity, water supply and sewerage, ports, etc. The service is fi- nanced by a grant from US-AID. 51. The great activity in new construction and improvement of roads over the past few years, has been possible only by extensive foreign loans and credits of about $30 million, mainly from the Eximbank and the Italian contractor, Vianini. The construction of the roads under the Eximbank loans was undertaken by a few foreign contractors on a basis of limited competitive bidding and at high cost. Vianini undertook the construction of the roads financed by himself on a negotiated unit-price basis. All work under the two credits from Vianini will be completed by March 1964. Just recently there were three new roads given on contract to a German construction company, Strabag A.G. Part of a German Government loan is financing 805 of the cost. 52. In late 1962 the Bank was asked by the Government to consider financing road construction, and as the outcome of a Bank mission's visit in January 1963, the Bank is considering proposals prepared by the mis- sion for construction and improvement of two roads (90 miles), and main- tenance equipment. Total cost is estimated at $11.25 million of which foreign currency cost would be $3 million. The construction and improve- ment proposed would, in the case of one road (Kle-Pujehun), open up new areas with agricultural and timber potentialities, and in the other case (Honrovia-Shiefelin-Robertsfield) would complete a short cut for heavy traffic over the road from the capital to the main Firestone plantation and the international airport of Robertsfield. Ports 53. The principal port is at Monrovia. It was built originally under a lend-lease agreement between the United States and Liberia dur- ing World War II and was opened to commercial vessels in 1948. It is a free port. Since its completion it has been run by the Monrovia Port Management Company, Ltd., an affiliate of a U.S. firm, as agent for the Liberian Government. Traffic has increased as follows (in tons): 1957 1958 1959 1960 Cargo landed 236,000 204,000 221,000 333,300 Cargo loaded 2,060,000 1,993,000 2,596,000 3,020,000 (of which iron ore) 25000,000 1,914,000 2,500,000 2,924,000 - 15 - The port is at present well equipped but would need expansion in a few years to handle an increase of activity, unless part of the traffic is handled at Buchanan. 54. It has already been mentioned that a port is now under construc- tion by LANCO at Buchanan. The port has provision for handling general cargo to take the overflow from Monrovia. Another port was built at Sinoce. Originally, it was planned as an outlet for bananas grown by a German com- pany. The bananas failed due to Panama disease and the port will now be used mainly to export rubber being grown by the American Fruit Company and timber from adjacent countries. Power 55. Electric power in Liberia is provided by private plants and in the Monrovia areas by the Monrovia Power Authority. The principal conces- sions, such as LMC, LAMCO, Firestone and Goodrich, have their own power plants and transmission systems to meet their own needs. The Monrovia Power Authority is a government agency created in 1959. It has authority to operate in the whole country; but at present operates only in the fol- lowing towns: Monrovia (capacity) 13,100 KW (an additional 7,500 K is now under construction) Robertsport " " " 271 KW Buchanan " " " " " 373 K! Greenville " " " 271 IT Harper " " " " " 475 1J Transmission facilities of the agency include about 130 miles of 69 KV lines and 140 miles of 12.5 KV: interconnections have been constructed between the lonrovia Power Authority System and the IEC's plants in Monrovia and Bomi Hills on one side and Firestone's system in Harbel on the other side. These commercial systems can supply power to the Au- thority at its hours of peac demand. There has been considerable modern- ization and expansion since 1959, financed mainly by loans of $7,265,000 and $4,750,000 from the Eximbank. 56. Power demand has been growing rapidly. Peak demand in the area of Monrovia more than doubled in each of the two four-year periods, 1950- 1953, and 1954-1958, and again in the last four years. Consumption was running at an annual rate of 66 million KWH in 1962. Peak demand was 11,600 K last December. In 1966, estimated peal: demand is expected to reach 25,340 K!T which will exceed the total installed capacity. A study, financed by ICA, made by an American engineering firm, the Stanley En- gineering Company, recommends the installation at Mount Coffee near Monrovia on the River St. Paul of a hydroelectric plant. The initial installation TTould be 30,000 KU with later additions which could bring the capacity up to 90,000 K. The estimated initial cost is $27 million including transmission lines. US AID have agreed to lend $24.3 million - 16 - for this project, for a term of 40 years, including a grace period of 10 years, ith a credit fee of 3/4 of 15 per year. Water Supplies 57. In this field Liberia, compared with other Hest African coun- tries, is backward. In Nonrovia, the existing system is insufficient to meet the increasing needs of the toum. Inland the installations have generally been constructed by firms having rubber or mining concessions. Projects are now under study concerning the extension of Monrovia's system, at an estimated cost of about $7.5 million; the modernization of a sewer- age system of I-onrovia, at an estimated cost of about $8.6 million and installation of water supply systems in Harper, Greenville and Buchanan, at an estimated cost of $2 million. AID is considering proposals for fi- nancing the Honrovia water and sewerage improvements and Germany is in- terested in helping water supplies in the smaller centers. Telecommunications 58. ith the exception of very weak telephone services in Monrovia and within concession sites, the only telephone line in Liberia is one between Honrovia and Bomi Hills constructed by LM1C. Elsewhere the com- munications are operated by radio. The Government has signed a con- tract with a Swedish firm for the expansion of the onrovia telephone system and the establishment of small exchanges in 20 other places throughout the country. Education 59. Although there has been an improvement in the standard of school- ing in Liberia over the past few years, it is still low. It is thought that some 20 to 30% of school-age children go to school. Literacy is thought to be about 55 of total population. Investment in education is a high pri- ority need, particularly for primary and rural education. At present the elementary school buildings in Monrovia are used on a two-shift system, with separate morning and afternoon pupils. Education is provided by Gov- ernment, by private groups, particularly concessions operating in Liberia, and by Christian missions. In 1961 Government was maintaining 504 schools, private companies and others 56, and Christian missions 178. In 1961 about 6,000 studerts were enrolled in elementary schools, 11,200 in junior and senior high schools. The Liberian Government allocated about 10'7 of its budget - ';.6 million in 1963 for education. There are three institutions of higher education: the University of Liberia, a public university in onrovia with 300 students, an Episcopalian University with 120 students and a Roman Catholic College with 4O students. The Liberian Government is now studying a ten-year education program which will call for loans of $20 million. The goal is to attain 90-955 literacy in ten years and to promote a wide elementary education by 1970. Teachers' training facilities are being expanded and the Government expects to train enough teachers within 10 years. The U.S. has been providing aid in this field- AID expects to lend on soft terms '2 million this year for a high - 17 - school and, probably next year, $300,000 for an elementary school. The Government expects UNESCO to make a study this year of the country's educational needs. IV. ECON01MC DEVELOPIEIT Past Experience 60. The first foreign investment took place in the 1920's and 1930's when Firestone began rubber production. During and immediately after the war the main investments were for the use of the U.S. Army - an airfield, some roads and the port of Monrovia. With the discovery of iron began the great inflow of foreign capital, private capital for iron mining and later for agricultural and forestry concessions, and government borrow- ing for roads and buildings. 61. It is difficult to assess the amount of all these investments. The amount nou, or soon to be, invested in iron mining or agricultural concessions is estimated at about U.S. $40 million, of which agricultural plantations represent about $60 million, all ovwned by foreign companies. The Liberian Government is a shareholder in all iron ore concessions except EC, but of some $380 million invested or to be invested in these projects all but $10 million has been provided from foreign sources. The total in- vestment in building construction was estimated in 1961 to be about '24 million of which $l8 million was for the Liberian Government. Foreign capital has been flow!ing into Liberia during the past year or two at an annual rate of approximately $75 million, of which some $60 million was for iron ore mines, perhaps $10 million for government bui)ding and road projects, and the remaining $5 million for other purposes. A steep de- cline is anticipated in the near future following completion of iron ore investment. 62. On its side the Government has tried to increase public invest- ment. Under a technical agreement between the Government of Liberia and the U.S.A. in 1950 a five-year program was inaugurated in 1951 under the direction and advice of the "Joint U.S.-Liberian Commission for Economic Development." This program was subsequently expanded into a nine-year program which expired in 1960. In 1951-1962 Liberia allocated about 20% of its annual budget for development purposes through the Joint Commission. The funds spent through the Joint Commission were spread (rather thinly) over various ministries such as Public Works, Health, Agriculture and Education and for servicing loans for power, water and roads. Most of the Joint Commission's efforts seem to have been for technical assistance, mainly by way of personnel to help the administration. 61:. Having succeeded in attracting foreign capital, the Liberian Government has endeavored to begin laying doim the framework of a modern country - roads, buildings and poer. No plan or systematic statement of priorities has been prepared, nor, indeed, hasany elaborate plan so far - 18 - been necessary, since the needs were obvious enough. Now the Government has established a National Planning Agency. The Agency is to propose national planning policy and to coordinate plans which involve govern- ment programs and projects, external assistance programs, and policy involving government concessions. The new organization began its work in July 1962 with the help of experts from the United States and United Nations. A program has not yet been completed. Nevertheless, it is al- ready possible to determine certain investment sectors of high priority, particularly agriculture, roads, water, electric power and education. V. PERFORM-AINCE, PROSPECTS AND CREDITWORTHINESS Performance 64. For some years the Government has been trying to build as quickly as possible the framework for a modern country. Much of this construction of roads, buildings and power was financed by Eximbank loans, other bank loans and suppliers' credits covered by short-term government notes. The expected increase in government revenues no doubt seemed to the Government to justify, in principle, this policy. But, since there has been no international competition, the Liberian Government has had to pay heavily. The high financing costs have been disguised by their partial inclusion in contract prices. Until recently no systematic check was kept on the total of public debt and it has been only during the last year that complete information has been gathered and studied by the Government. Total external public debt outstanding at September 30, 1962, including undisbursed, was $133.6 million, of which almost half ($63 million) was suppliers' credits, $30 million was Eximbank loans, and $14 million was credits from private banks. The remainder represents loans from the U.S., German and Israeli Governments. Full debt service payable on this debt in 1963 would be $26 million - over 70% of the Gov- ernment's estimated current revenues. However, the Government knows that it can negotiate a postponement of some of the debt service pay- ments and has budgeted for payments of $18 million in 1963, which rep- resents half the estimated government current revenues for 1963, 30% of estimated export earnings in 1962 or 19% of estimated exports in 1963. It should be noted that external public debt is total public debt! there is no separate internal public debt. Even after reducing debt service payments this year to $18 million, the Government would be faced, on its own estimates, with heavy budget deficits for at least three years (see Table 3). There is little prospect of financing these deficits. The Government has therefore no other choice than to approach its creditors for a re-arrangement of debt obligations. 65. The Government is now well aware of its plight. It has said that it will not contract any more suppliers' credits, and that it wishes to have international competition for its development projects. It is taking steps to increase revenues and reduce expenditures. It has opened discussions with its main creditors. It has also arranged a stand-by - 19 - credit from the IMF of $5.7 million. The Government reports that its creditors seem disposed to enter into arrangements for postponing matu- rities. It appears that the debt could be made manageable if maturities were pushed back several years, but even this relief would mean a high debt service burden and restraint on other expenditures for the next decade or more. 66. An analysis by purpose of the debt incurred by the Government up to September 1962 shows that about 40% has been for roads, 10% for power, 10% for the Executive lansion, 7% for Sinoe harbor, 4% for tele- communications, and the remaining 29% for a miscellany of public build- ings, street paving and other government and municipal works. Some of this expenditure has been largely for "prestige" purposes; for example, the Executive Mansion. Part of the road expenditure, too, has been iasted because of inappropriate standards of construction, in some cases too high and in some cases too low. Yet, to make a very broad judgment, probably at least two-thirds of all this expenditure has been for justifiable basic economic development. The fact that so much of the finance took the form of loans or suppliers' credits, however, has caused Liberia to pay heavily, and the Government is now eager to in- troduce international competition into the country's development in the public sector. Foreign Aid 67. Total U.S. aid to liberia from 19. to 1962 amounted to U.S. $8.3 million. In addition there have been loans principally by Exim- bank amounting to U.S. $104.3 million of which $62.9 million was to the Government and $41.4 million to private firms, including U.S. $30 million to LA11CO. The total of U.S. grants and loans was thus U.S. $152.6 million. For 1963 U.S. AID is considering loans on soft terms for a high school ($2 million) and a hospital and medical training center ($4.7 million). Besides the loan made for power (see paragraph 56) they are considering other projects which will probably be financed in 1964: a water and sewerage scheme for Monrovia ($15 million) and an elementary school ($300,000). Grants approved for fiscal 1963 amounted in January 1963 to $6 million and may reach $8 million for the year. These cover a wide field with emphasis on education. 68. The United Nations agencies have provided grant assistance totaling approximately ,2.5 million for the period 1954 through 1961. In addition a U.N. ExpanCied Technical Assistance program has boen authorized for 1961-62 and a U,N. Special Fund Agriculture Education project of U.S. $1.2 million for a six-year period was agreed in Sep- tember 1961. 69. West Germany has been the most important source of aid after U.S. Development assistance provided from this country totaled about "2 millicn in early 1963, and in addition, & log-term credit of $12.5 million for road construction, airport improvement and a develcpment bank was agreed in June 1961. Smaller amounts of assistance have been - 20 - provided or planned by Switzerland, Sweden and China. The total grant assistance from all sources, l9b4 through 1961, amounted to roughly $50 million. The prospects for foreign aid seem rather favorable for Liberia. In particular, the U.S. program will probably continue for the next several years. Prospects 70. The main impetus to economic development has come from foreign private investors in rubber and iron ore mining, and the effects of this investment have permeated throughout the economy, enlarging the money sector and allowing the Government to invest in public development. The effects, especially of the mining investment, will be felt for some years to come. Government revenues can confidently be expected to rise steadily, but a large part of these revenues will have to be devoted to servicing debt recently incurred, and there will be only limited scope for new borrowing. It is therefore important for the Government to avoid wasteful expenditures and to devote what resources are available to productive use. Improvement of the road system and of agriculture will help enlarge the money economy and the domestic market for manufacturing and service industries. Investment will be needed also in power and water supplies to keep abreast of demand. 71. It is impossible to say precisely how much new public bor- rowing would be needed over the next few years to sustain the economy and permit some growth. A reasonable assumption would be that about $80 million new borrowing would be required over the next eight years or so roughly for the following purposes: road $10 million; agriculture, education and health $25 million; water $15 million; power (Mount Coffee hydro) $30 million. It is possible that most of this (for power, water, agriculture, education and health) could be on "soft" terms, if the U.S. AID continued to follow present policies. Creditworthiness 72. Liberia has reasonably good economic prospects, but a very bad immediate financial situation which, however, could be made manageable. The degree of success that can be expected from the Liberian Government's efforts to manage its financial situation depends upon the soundness of certain assumptions. The main asssumptions are: a willingness on the part of the main creditors to accept an extension of amortization pay- ments over a period several years longer than their present terms; a steady increase in government revenues; a restriction of government ex- penditures, other than debt service, to a small annual increase; and a limit to new borrowing along the lines suggested in paragraph 71. On such assumptions, it is possible to envisage repayment of all the present debt by about the year 1976, an extension of three or four years. If indications are received that Liberia will pursue reasonably sound financial policies, it should be considered eligible for Bank loans. STATISTICAL APPENDIX Table Government Revenues and Expenditures...................... 1 Government Revenues, Fiscal Year Ending September 30...... 2 Estimated Revenues and Expenditures, 1963-1970............ 3 Government Expenditures, Fiscal Year Ending September 30.. 4 External Public Debt as of September 30, 1962...... .. ... ......... . 904..*0. 5 Estimates of Iron Ore Production and Government Revenues.. 6 Potential Acreage Planted and Output of Rubber, 1962-1970. 7 Total Rubber Production and Estimated Value, 1962-1970.... 8 Value of Foreign Trade.....9............ .... 9 Value of Imports by Products.. ..................... 10 Value of Exports by Products............ ........... 11 Exnort Forecast .......and ..v........ .................. 12 Bank Deposits and Advances at End of Year.....0.......... 13 Table 1 Government Revenues and Expenditures (millions of U.S. .$ Year Receipts Expenditures Difference 1940 0.750 0.635 + 0.115 1950 3.872 4.984 - 1.112 1951 12.830 10.261 + 2.569 1956 17.923 17.427 + .496 1957 19.415 19.663 - .248 1958 18.110 23.114 - 5.004 1959 24.552 24.626 - .074 1960 32.368 33.349 - .981 1961 32.371 34.118 - 1,747 1962 35.486 42.219 * - 6.733 1963 35.540 ** 50.468 * -14.928 * Budgetary forecasts. Treasury estimates. Source: LiberianTeonsury-. Table 2 Government Revenues Fiscal Year Ending September 30 (millions of U.S. $) 1960/1961 1961/1962 A. Internal Revenues Firestone income 7.00 5.40 Other income 1.51 2.33 Highway levy 1.60 2.08 Luxury tax 1.69 2.03 Iron ore profits 5.74 5.35 Hut tax 0.36 0.34 License tax 0.85 0.87 Miscellaneous 3-03 4,88 Total 21.78 23.28 B. Customs Revenues Import duties 6.88 8.29 Surtax 1.00 1.19 Export duties 0.37 o.64 Miscellaneous 0.15 o.16 Total 8.40 10.28 C. Other Revenues Public utilities o.49 0.7 Consular fees 0.95 1.09 Vessel registration 1.07 0,85 Total 2.51 2.51 GRAND TOTAL 32.69 36.07 Table 3 Estimated Revenues and Expenditures, 1963-1970 Budgetary expenditures Fixed apart from Year Commitments(a) debt service Total Revenues Difference 1962 16.0 26.2 42.2 35.5 - 6.7 (actual) 1963 18.1 32.4 50.5 38 -12.5 1964 20.5 30.6 51.1 10 -11.1 1965 19.6 32.3 51.9 '3 1966 17.6 3h.o 51.6 )- 3 1967 1h1 36.7 50.8 53 . 1968 10.7 4o.3 51.0 58 + 7.n 1969 7.6 43.4 50.4 _6 +11.6 1970 7.1 46.8 53.9 68 +1.1 1971 6.8 50.5 57.3 73 +15.7 1972 6.1 44.5 50.6 78 +27.4 (a) Annual debt service estimated by the Liberian Treasury as payable after allowing for the rolling over of certain debts to private banks. Source: Liberian Trepsurv. Table 4 Government Expenditures Fiscal year ending September 30 (in million of US $) 1960/61 1961/62 1963 1/ The Legislature 0.6 0.6 0.5 The Chief Executive 1.9 2.8 2.1 Foreign Services and Information 3.7 3.7 3.9 Financial Administration 1.3 1.9 1.6 Justice 1.3 1.3 1.4 Defense 1.6 2.1 2.6 Posts and Telegraphs 0.6 0.9 0.9 Interior 0.2 0.2 0.3 Education 2.9 3.6 5.3 Public Works 1.0 1.1 3.7 Agriculture and Commerce 0.3 0.3 0.9 Health 1.9 2.0 2.8 Local Government o.4 0.4 0.6 General Government 5.5 5.2 5.1 Debt service 0.1 0.2 18.2 Development Program 4.1 8.7 - Joint Commission 5.2 6.0 0.3 Others 0.1 0.1 0.2 32.6 41.0 50.4 1/ Budgetary Forecasts for calendar year 1963. Table 5 External Public Debt As of Septumbar 30, 1962 (Million of U77- Net of undisbursed Including undisbursed Total external debt 1/ 83.5 133.6 Privately-placed debt 77.4 - Credits from private banks 13.3 1.4 - Suppliers' credits 42.1 63.0 U.S. Government loans 27.4 43.0 Eximbank 3.*5 Development Loan Fund .1 2.8 Military sales 1.0 1.0 Agricultural sales credit - 8.7 Loans from other governments .7 13.2 Germany - 12. Israel .7 .7 1/ Does not include lend lease creditsof the United States with 818,923,000 outstanding. Estnimated contractual service Payments on external public debt outstanding includinF undisbursed as of September 30, 1962. (A) Full debt service payable. (B) Estimates made by Liberian Treasury as payable after allowing for the rolling over of certain debts to private banks - in million U.S. 4: (A) (B) 1962 n.a. 16.0 1963 26.0 18.1 1964 19.7 20.5 1965 20.5 19.6 1966 18.5 17.6 1967 14.6 14.1 1968 ) 10.9 1969 ) 7.0 1970 ) 50.2 7.0 1971 ) 7.0 1972 ) 7.0 Table 6 Estimates of Tron Ore Production And Govcrnmant Revcnuos from Iron Ore Production (P) Million Tons Revenues (R) Million $ LMC NIOC LAMCO DELIMCO TOTAL P R P R P R P R P R 1963 3.0 5.0 2.5 0.0 2.4 1,2 0.0 0.0 7.9 6.2 1964 3.0 5.0 3.5 0.05 6.0 2.8 0.0 0.0 12,5 7.85 1965 3.0 5.0 3.5 0.3 7.5 3.3 1.0 0.3 15,0 8.9 1966 3.0 5.0 3.5 08 7.5 3.4 2.5 0.6 16.5 9,8 1967 3.0 5.0 3.5 0.9 7.5 3.5 3.0 0.8 17.0 10.2 1968 3.0 5.0 3.5 lo,4 7.5 3.6 3.0 1.0 17.0 11.0 1969 3.0 5,,0 3.5 2.2 7.5 7.0 3.0 1.0 17.0 15.2 1970 3.0 7.01/ 3.5 2.6 7.5 7.6 3.0 1.0 17.0 18.2 1971 3.0 7.0 3.5 3.0 7.5 8.3 3.0 1.0 17.0 19.3 1972 3.0 7.0 3.5 3.0 7.5 8.4 3.0 1.0 17.0 19.4 1/ Government participation increases from 35% to 50%. Source: Liberian Treasury. Table 7 Potentiol Acreage PlAnted and Outnut of Rubber, 1962-1970 1962 1963 1964 1965 1966 1967 1968 1969 1970 Firestone: .000 acres: 70.0 70.0 70.0 70.0 70.0 70,0 70.0 70.0 70,0 million lbs: 78.5 77.7 77.1 76.9 76.9 77.1 77.5 79.1 82.9 Goodrich: .000 acres: .3 1.3 3.0 5.5 8.6 10.2 11.2 11.2 11.2 million lbs: .1 .6 1.2 2.5 4.4 6.2 7.9 9.4 10.6 African Fruit Company .000 acres: .7 1.6 2.4 3.2 3.9 4.4 4.7 5.0 5.3 million lbs: .2 .6 1.1 1.7 2.5 3.2 3.8 5.5 5.1 Liberia .000 acres: .1 .3 1.0 1.7 2.4 3.0 3.5 h.o 4.5 million lbs: - .1 .4 .8 1.2 1.8 2.4 3.0 3.6 Liberian Agriculture .000 acres: - - - - 3.0 7.0 11.0 16.0 23.0 million lbs: - - - - .9 2.7 5.2 8.5 13.1 Salala .000 acres: - - 1.0 2.5 3.5 4.5 million lbs: - - - - - .3 .9 1.7 2.6 Independent .000 acres: 120.0 120.0 117.0 114.0 111.0 108.0 105.0 102.0 99.0 million lbs: 17.0 17.0 16.5 16.0 15.5 15.0 14.0 13.0 12.0 Total .000 acres: 191.1 193.2 193.4 194.4 198.9 203.6 207.9 211.7 217.5 million lbs: 95.8 96.0 96.3 97.9 l0l.4 106.3 111.7 119.2 129.9 Source: Northwestern University Team and Firestone. Table 8 Total Rubber Production and Estimated Value 1962-1970 Assumed Average Production Price per Lb. Value Year Millions of Pounds US Cents Millions of US$ (f.ob.) 1963 96.0 23 2? 1964 96.3 22 22,0 1965 97.9 19 18.6 1966 101.4 18 18.2 1967 106.3 17 18.0 1968 111.7 17 18.9 1969 119.2 17 20.2 1970 129.9 17 22.0 Table 9 Value of Foreign Trade (Millions of U.S. $T Year Total Exports Lmpnrts Balance 1940 565 3.3 2.2 + 1.0 196 1408 11.3 3.5 + 7.8 1950 38.2 27.6 10.6 +17.0 1955 68.8 42.8 26.0 +16.8 1956 71.3 44 5 26,8 +17.7 1957 78.6 0.4 38.2 + 2.2 1958 81,5 53.7 27.8 +25.9 1959 109.9 66.9 43.0 +23.9 1960 151,8 82.6 69.2 +13.4 1961 152.5 61.9 90.6 -28.7 1962(a) 53.4 19.h 34.0 -14.6 (a) First quarter 1962. Source: Liberian Treasury. Table 10 Value of Imports by Products (Millions of U.S,$) 1957 1958 1959 1960 1961 1962(a) Food 5.5 3.8 5.6 8.3 10.0 2.4 Beverages and Tobacco 1.6 2.0 2.3 2.7 4.1 1.2 Inedible Crude .4 .1 .3 06 .8 23 Mineral Fuel and Oil 1.7 2.1 2.8 2.9 3.h .8 Oil and Fats 1l .1 .1 .1 .1 .1 Chemicals 2.3 2.0 2.7 4.7 4.3 1.2 Manufactured 10,6 6.4 11.8 16.2 21.6 12.0 Machinery and Transport Equipment 11.4 7.5 10.4 23.3 35.o 12.4 Miscellaneous Manufactured 4.6 3.7 6.9 10.0 9.9 3.3 Others - - .3 1.4 .3 TOTAL 38.2 27.7 42.9 69.1 90.6 34-o (a) First quarter 1962. Source: Bureau of Economic Research, Table 11 Value of Exports by Products (Millions of U.S. $) 1957 1958 1959 1960 1961 1962(a) Rubber 27.4 26.1 30.8 39.0 25.5 8.7 Palm Kernel 1.2 1.0 2.2 2.0 1.1 .2 Piassava .2 .4 .2 .4 01 - Coffee .3 .3 .6 5 .4 .3 Cocoa .2 .4 .5 .5 .3 .1 Total Agriculture 293 28.2 34.3 42.4 27.4 9.3 Iron Ore 8.5 21.5 28.2 34.7 29.4 8.2 Diamonds 1,2 2.3 2.1 2.3 2.2 .9 Total Minerals 9.7 23.8 30.3 37.0 3106 9.1 Others 1.3 1.7 2,2 3.2 2.9 1.0 GRAND TOTAL 4o3 53.7 668 82.6 61.9 19.4 Ta) First quarter 1962. Source: Bureau of Economic Research. Table 12 Export Forecast 1962 1963 1964 1965 1966 1967 1968 1969 1970 Rubber Million pounds 95.8 96.0 96.3 97.9 101.4 106.3 111.7 119.2 129.9 Price per pound (in cents) fob 28 23 22 19 18 17 17 17 17 Value in million US$ 26.8 22.0 22.0 18.5 18.2 18.0 18.9 20.2 22.0 Timber Million board feet - 11.0 33.0 52.0 89.5 100.8 111.9 111.9 111.9 Value in million US$ @ 120 per board foot fob - 1.3 4 6.2 10.7 12.0 13.4 13.4 13.4 Iron Ore Mllion tons 3 8 12.5 15.0 16.5 17.0 17.0 17.0 17.0 Value in million US$ @ $8 per ton fob 24.0 64.0 100.0 120.0 132.0 136.0 136.0 136.0 136.0 Miscellaneous 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 Total value in million US$ 57.8 94.3 133.0 151.8 167.9 173.0 175.3 176.6 178.4 Table 13 Bank Deposits and Advances at End of Year (Millions of U.S. $) Year Deposits Loans and Advances 1958 13.7 11.9 1959 23.9 21,7 1960 18.8 18.6 1961 22.7 29.7 1962 29 35 Source: Individual banks? statistics.