Liberia - Current economic situation and prospects

RESTRICTED COPY Report No. AW-5a 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 The report may not be published nor may it be quoted as representing their views.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 CURRENT ECONOMIC SITUATION AND PROSPECTS OF LIBERIA May 26, 1969 Western Africa Department CURRENCY EQUIVALENT The currency in 'use in Liberia is the United States dollar. THE CURRENT ECONOMIC SITUATION AND PROSPECTS OF LIBERIA Table of Contents Page No. BASIC DATA SUMM4ARY AND CONCLUSIONS i -v I. Introduction 1 II. Geographical and Political Background 1 III. Recent Economic Growth 3 A. Production and Income 3 B. Use of Resources 5 C. Balance of Payments 6 D. Foreign Trade 7 E. Currency and Credit 8 IV. Sectoral Developments 9 A. Agriculture 9 B. Mining 15 C. Manufacturing 18 D. Power 19 E. Transport 21 F. Education 22 V. Public Finance 24 VI. Prospects for Growth 30 VII. Financial Outlook 32 A. Private Sector 32 B. Public Finance 32 C. Conclusion 37 LIST OF TABLES IN THE TEXT 1. Growth Indicators, 1960-67 4 2. Use of Resources, 1965-67 5 3. Balance of Payments, 1964-67 6 4. Trends in Exports, 1960-67 7 5. Rubber Production and Acreage in 1968 10 6. Electric Power, 1961-68 20 7. Expenditures on Education, 1965-67 22 8. Government Current Revenue and Expend- iture, 1940-68 21 - 11 - Page No. 9. Government Finance, 1964-63 26 10. Tax Burden on M,ining and Rest of Economy, 1964-67 27 11. Public Sector Capital Formation, 1965-67 29 12. Growth Perspective, 1967-75 32 13. Public Development Expenditures, 1965-70 34 14. Financial Outlook for Public Sector, 1969-75 35 15. Financing of Public Sector Capital Formation, 1969-75 36 STATISTICAL APPENDIX IMA1P This report is based on the findings of a mission, consisting of Messrs. Cornelis J. Jansen and Frans D. van Loon, which visited Liberia in November 1968. BASIC DATA 1967 Area: 43,000 sq. miles Population: Total (thousand persons) 1,100 Average annual rate of increase 1.5% Population density 26 per square mile Gross domestic product: $330 million Average annual growth rate 1950-60 at current prices: 13% in real terms : about 10% Average annual growth rate 1960-67 at current prices: 6% in real terms : about 4% Gross national product: $240 million Average annual growth rate 1960-67 4.7% Per capita GNP $218 Industrial origin of GDP at factor cost 1964 1967 ($ million) (M) ($ million) () Agriculture, Forestry, Fishing 72.5 27.9 74.5 24.3 Mining 66.3 25.5 91.3 29.8 Manufacturing 11.3 4.4 13.7 4.5 Construction 15.2 5.9 19.4 6.3 Transport and Communications 15.2 5.9 17.1 5.6 Trade 29.5 11.4 30.5 9.9 Other services 49.7 19.1 60.3 19.7 Total 259.7 100.0 306.8 100.0 of which Subsistence activities 31.0 11.9 30.0 9.b Investment and savings: 1965-67 average (% of GNP at current market prices) Investment 30 Gross national saving 4 Capital imports 26 Credit: ($ million) end of June 1963 1967 1968 Credit to government (net) 11.7 9.3 7.9 Credit to private sector 20.3 20.7 21.1 Total domestic credit 35.2 30.0 30.0 Prices: Consumer prices: Average annual increase 1965-67: 2.8% - 11 - 1964-67 Public finance: average 1967 (% of GNP at current market prices) Revenue 20.0 20.0 Current expenditures 17.4 17.7 Surplus 2.6 2.3 Capital formation 8.5 9.6 Debt amortization 2.1 1.2 Overall deficit 8.1 8.5 Financed by: Foreign loans 7.1 7.2 Foreign grants, capital 1.1 O7 Change in balances - 0.6 Balance of payments (US$million): 1964-67 1967 average Merchandise exports, f.o.b. 1439 150 Factor payments abroad (net) 85 90 "Net" export earnings 58 69 Merchandise imports, c.i.f. 114 126 12' Non-factor services (net) -7 -7 Current account deficit 63 64 Official loans (net) 11 14 Official grants 13 13 Private capital, change in reserves, errors and omissions 39 37 IIF position (US $ million): Jan.1969 Quota 20.0 Drawings outstanding 13.0 External public debt (US $ million): 1964-67 average 1968 Public debt outstanding 185.180.1 Debt service payments 10.5 12.1 Debt service in percent of: exports f.o.b. 7% 7% "net" export earnings 18% about 16% government revenue 24% 23% SUP14ARY AND CONCLUSIONS Recent Developments 1. Liberia continues to enjoy political stability under President Tubman who has been in office since 1944. Under his firm leadership, an effort has been made to reduce the social, cultural and political differ- ences between the country's numerous tribes and the small urbanized elite. This policy is helping to cement national ties. A beginning has been made with the modernization of the countryside while serious strife among the various segments of the population has been avoided. 2. Another important feature of President Thbman's rule is the liberal policy regarding the private sector and, particularly, the fa- vorable treatment extended to foreign investment. This policy has been a factor in the encouragement of large-scale foreign investment in iron ore mines and rubber plantatians. Mainly due to the six-fold increase of iron ore production during the 1960's and expanding rubber production, GDP growth has been rapid, about 6 percent a year during 1960-67. The growth rate would have been much higher (about 10 percent a year) but for a serious drop in iron ore and rubber prices. Per capita GNP in 1967 is estimated at $218, but income distribution is very uneven. Out- side the small modern sector of the economy, per capita incomes are pro- bably about $70 per year. 3. Iron ore mines and, to a lesser extent, the foreign rubber plantations are self-contained enclave operations which have exerted little impact on other sectors. Benefits in the form of employment and government revenue have been small and most of gross profits, as well as a large part of the salaries of expatriate staff, are transferred abroad. Development in the remainder of the economy has lagged. In most of the agricultural sector, virtual stagnation prevails, but there has been a certain expansion of infrastructure facilities and paid employ- ment (now about a quarter of the active population) and quite rapid ex- pansion of education, particularly in Monrovia and other towns. 4. The years since 1963 have been a period of stabilization and substantial improvement of fiscal performance. During the years 1958-62 Government had incurred large foreign debts on short-and medium-term to finance infrastructure investments, some of them of doubtful economic justification. The prospect of a tremendous increase in iron ore pro- duction and a consequent large increase in government revenues encouraged Government in its action. Owing to lack of efficient accounting, there was no full awareness at the time of the size of debt being accumulated and when export prices of iron ore and rubber dropped below what had seemed reasonable expectations, debt service suddenly became an insur- mountable problem. Debt servicing obligations in 1963 and following years threatened to take close to half of government revenue. Agreement was reached with principal creditors on a rescheduling of amortization payments during 1963-68. Meanwhile, a financial stabilization program was implemented with Fnd technical and financial assistance. - ii - 5. During the last six years, Government has made determined efforts to strengthen revenue and restore fiscal balance. By and large, these efforts have been successful. Strengthening of budgetary procedures and enforcement of existing tax laws have boosted revenue growth in 1968 and 1969 (budget) to around 7 percent, considerably more than the GNP growth rate. A modest level of public savings has been achieved, exceeding the rescheduled amortization payments. Short and medium-term borrowing (less than 12 years) has been avoided in accordance with the agreement with the Fund. Sectoral Policies and Problems 6. Eventually, the achievement of widespread economic development in Liberia will depend on effective promotion of agricultural production. At present, agriculture and forestry engage about 80 percent of the eco- nomically active population but the contribution of this sector to GDP is only 24 percent of the total and this includes the largely foreign rubber industry. However, at present it is far from clear how agricul- tural growth can be accelerated although there are a few obvious possibil- ities. The country has good climatic and soil conditions for certain tropical tree crcps, particularly rubber and palm oil, and the experience with rubber has shown the work force to be amenable to efficient perform- ance under adeauate management. An obvious opportunity to increase pro- duction and exports would be the rehabilitation and perhaps expansion of the considerable Liberian-held rubber acreage, which at present is showing poor economic results. The Malaysian example shows that schemes to im- prove smallholder efficiency can be very successful. Palm oil production is small but there are some projects under preparation. These should be evaluated in the light of the prospect of declining prices and the fact that Liberia, unlike several other palm oil exporting countries, does not have preferential access to important markets. The country also has good growing ccnditions for cocoa and more should be done to stimulate production. Conditions also appear to be good for coffee, cigar wrapper and certain tropical fruits, but here again more needs to be done to pro- vide the individual farmers with advice, planting materials and assistance in marketing. 7. Since the second World War, Liberia has become an importer of rice. Government would like to make the country self-sufficient in rice, but several experiments with upland and swamp cultivation have not shown conclusively that large-scale expansion of rice production is economically and technically feasible. Problems are similar to those in other West African countries: poor varieties, lack of suitable tools, lack of know- ledge about fertilization, weed and disease control. Research and patient institution building will be necessary to overcome these problems. 8. Action which could provide a strong stimulus to agricultural production by facilitating access to markets is improvement of the rural road system and expansion of the role of the Liberian Produce and Mar- keting Corporation. - iii - 9. Forestry production is increasing at a rapid rate now that forest resources in neighboring Ivory Coast are becoming depleted. Im- proving road access is important since most forest areas are presently inaccessible. Fisheries production has also increased. A modern pro- cessing and marketing enterprise has led to increased domestic consump- tion. There is scope for further expansion of fisheries production for the domestic market and exports. 10. The largest single economic activity in the country is iron ore mining. Deposits are large and of high grade. At present, four major companies are operating with an annual production of about 20 million tons. This makes Liberia the third largest exporter of this commodity. The mines are very capital intensive; employment amounts to only 10,000 persons. The long-term concession agreements under which the mining companies operate in Liberia provide for favorable fiscal treatment and as a result the contribution of mining to government revenue is smaller than might have been expected. The tax burden on the mining companies is much lighter than on the rest of the economy. Government is trying to close loopholes in the concession agreements and clarify ambiguous points. Some efforts in this direction have already shoi-m results. A policy aimed at bringing the agreements gradually in line with generally accepted international practice affords the one major opportunity to increase Liberia's public revenues and would also enable the Government to remove certain regressive fea- tures of the tax system without reduction of total revenue. 11. The country has other mineral resources which are currently being explored for commercial exploitation: petroleum on the continen- tal shelf, barite, and a number of other minerals. Recent exploration and concession agreements, including recently granted forestry concessions, provide for better protection of the government's interests. 12. Manufacturing industry is small and recent growth has not been very rapid. However, recently there have been a number of medium-sized projects, some of them involving Liberian entrepreneurship which show some dynamism in this sector. The role of the local development bank has become of increasing importance. 13. Power generation has expanded rapidly from a very low base. Present capacity of 57 MH in the public sector (190 MW including pri- vate capacity, mostly of the major concession firms) still leaves con- siderable unsatisfied demand and further expansion of the system is indicated. 14. A general transportation network consisting of about 2,500 miles of roads, four harbors, one international and a number of local airports, has been constructed in the last 15 years. The major problem is inadequate road maintenance, particularly under Liberia's climatic conditions. Further road construction aimed particularly at promoting the growth of agriculture and forestry is also needed. A country-wide study of road transportation requirements to establish priorities in - iv - road construction and rehabilitation appears needed. Such a study should also provide indications for the desirable development of ports. The dredging of the port of Monrovia, in order to allow handling of ore carriers of deeper draught (up to 90,000 dwt.) is of great significance for the competitive position of Liberian iron ore exports. 15. Expenditures on education are relatively high, about 5 percent of GDP in recent years, of which about one-third provided from budgetary resources and the remainder by foreign aid, missionary aid and other private sources. Primary school attendance is high in urban areas where literacy is rising rapidly. The rapid increase in enrollment in recent years has led to overcrowding of schools, particularly in Monrovia, and a shortage of teachers and school supplies. In order to overcome the shortage of professional personnel, Government has made generous, possibly excessive, provisions for foreign scholarships. The present conditicn of higher education provides opportunities in Liberia for most, if not all, instruction at undergraduate level and it is therefore suggested that scholarships should be reserved for the acquisition of professional qualifications that cannot as yet be obtained in Liberia and should therefore be reserved for graduates, preferably after an initial period of service. This should improve the motivation of candidates and chances for their eventual return and would 2nd to a smaller total outlay on foreign scholarships. Prospects for Growth and Creditworthiness 16. GDP growth in the next several years will be slower than in the past two decades, mainly because the rapid expansion of iron ore pro- dAuction has, at least for the time being, come to an end. RubberpIoduc- tion will probably grow fairly rapidly in the next four or five years as new and replanted acreage reaches maturity and then slow down considerably. The stage has not yet been set for accelerated growth of the rest of the agricultural sector with the exception of forestry and perhaps a few other products. Overall growth of GDP in real terms, taking into account the prospects for iron ore and rubber prices, leads to the expectation of GDP growth at a rate of 4.5 per- cent a year during 1967-75 and growth of export earnings of about 5 percent a year. 17. Private sector investment during the same period can probably continue to count on adequate inflow of foreign capital, which is facili- tated by the absence of exchange regulations and encouraged by attractive fiscal and other arrangements. The level of public investment will depend critically on the progress made in project preparation. The volume of projects under construction is on the decline and on the whole insufficient attention has been devoted in recent years to the preparation of additional development projects. There is no doubt that the treasury and planning departments, considerably strengthened in recent years as regards pro- fessional manpower, should be able to improve comprehensive development planning and step up, in cooperation with other government departments and foreign technical assistance where needed, the preparation of pro- jects. However, increased development orientation would require con- - v - siderable re-direction of government acticn and the decisive impulse to do this can only be given by the highest leadership of the country. 18. On the whole, it does not seem likely that public sector capital formation will expand rapidly in the next several years, even if project preparation is stepped up. Taking account of the fact that past public investment has included a number of foreign-assisted pro- jects with low economic justification, the mission has tentatively assumed that public investment during 1969-75 will amount to $20-25 million a year, which is about the same level as in the past several years. Maintaining a reasonably favorable rate of revenue growth and exercising cntinued restraint on the growth of current expenditures, Government should be able to achieve a rising level of current savings which should permit Government to contribute 25-30 percent to the financing of public investment after making amortization payments on existing and new public debt. Since amortization payments in 1969-71 show a sharp peak, Government has been negotiating a rescheduling of part of these payments to the first half of the 1970's. 19. As far as the financing of the remainder of the projected capital formation is concerned, Government can probably count on a certain amount of assistance on concessional terms. Foreign aid expen- ditures amounted to $30 million in 1966 and 1967, of which about three- quarters were provided by the United States. However, a sharp decline in aid inflow is in prospect in view of the rapid depletion of the pipeline (less than $20 million at the end of 1968 as compared to at least twice this amount two years before) and the lack of projects which are ready to be implemented. Even if in the next several years progress is made in project preparation, it is unlikely that con- cessional aid will return to its previous generous level. However, in view of the possibility of increased public savings for which govern- ment's fiscal restraint in recent years has laid the foundation, there is probably scme scope for conventional borrowing at long repayment terms if insufficient finance is forthcoming to finance all high priority projects in the public sector. The mission estimates this mar- gin for conventional borrowing at about $3-5 million a year during 1969-75. This would bring the ratio of debt service to public revenue during the years 1969-75 from 21.8 percent to 23.5 percent. After 1975 service on existing debt will decline rapidly. Any increase in shorter term indebtedness would, of course, reduce this small creditworthiness margin. 20. The financial situation of the public sector is the main con- straint on borrowing on conventional terms. Since Liberia uses the U.S. dollar as its currency, there is no transfer problem and the questicn whether the Government or other borrowing agency can service additional debt depends on its ability to raise sufficient domestic resources. It may be added, however, that the country's export earnings are large. Debt service payments on existing debt are estimated by the mission to average 7 percent of prospective export earnings during 1969-75. If factor pay- ments abroad of the private sector are deducted from export earnings, the prospective debt service ratio would average 15 percent. Western Africa DeDartment March 1969 CTURRENT ECONOMIC SITUATION AND PROSPECTS OF LIBERIA I. INTRODUCTION 1. Developments in Liberia during recent years have proceeded on the lines observed in the last economic report 1/. The country has continued to enjoy political stability. Mainly due to the expansion of iron ore production, overall economic growth has remained at a fairly high level. The Government, assisted by the Fund, has continued its stabilization effort and achieved an improvement in the fiscal situation, but has not yet become much more active in the promotion of economic development. The economic outlook for the near future is less favorable than earlier expected because of deterioration of terms of trade. This has prompted the Government to enter into negotiations about a rescheduling of principal payments on public debt due in 1969-71. Preliminary agreement on this matter has been reached with the major creditors. II. GEOGRAPHIC AND POLITICAL BACKGROUND 2. Liberia is situated on the West Coast of Africa, and north of the equator. Its neighbors are Sierra Leone, Guinea, and Ivory Coast. The country has a surface of 43,000square miles and consists chiefly of low-lying terrain which in coastal areas is partly swampy. The country is part of the tropical rain forest of West Africa but large areas have lost their original forest cover due to slash-and-burn cultivation and are now covered with fairly low secondary growth. Rainfall during the rainy season (May through September) is extremely heavy but light during the rest of the year. 3. Population density is low: about 26 percent per square mile. The 1962 population census, the first one held in Liberia,counted 1,016,000 inhabitants, of whom 12,200 non-Africans. Population pressure on the land is not as yet a serious problem. Farmers generally make extensive use of the soil under the method of shifting cultivation and there is no evidence that scarcity of land is compelling them, as is happening elsewhere in Africa, to shorten the fallow periods. The population growth rate, estimated at 1.5 percent a year, is also comparatively low. There are no reliable vital statistics but available evidence suggests high mortality and medium to high fertility. The level of mortality is influenced by high infant mortality. The expectancy of life at birth at the time of the 1962 census was estimated at 36 years for men and 39 years for women. As far as fertility is concerned,there is almost no practice of birth control, but the number of children born per woman is on the low side because of diseases influencing fertility. Some observers believe that death rates are now on the decline owing to improving medical facilities and food intake and that as a result 1/ The Current Economic Pbsition and Prospects of Liberia, AF-45a, dated June 16, 1966. - 2 - population growth has recently started to accelerate. However, there is not sufficient statistical information to confirm this. h. In the next several years a sharp increase in population growth could occur if government programs to combat measles and smallpox are successful in reducing infant mortality. This factor and general improve- ments in health conditions could lead to a rather abrupt increase in the population growth rate in the not so distant future. The economic effect of an increase in the number of surviving children would be felt almost immediately at the family level and would certainly increase the economic difficulties of a large part of the population. Another effect would be the increase in the number of children asking for admission to primary and secondary schools thus aggravating the already serious problems of the education system (see paras. 5h-60). In view of these difficulties on the horizon, efforts should be undertaken to improve information on the demographic situation and to start, perhaps in cooperation with ap- propriate advisory agencies, a study of the many social, cultural and medical problems connected with a possible population control program. 5. Liberia was founded as an independent state in 1847, after an agreement was reached between freed Negroes from the United States who had settled in Liberia and tribal chiefs. The inflow of settlers from the United States had been going on since the early 1820's. The Ameri- can Colonization Society which promoted the settlements originally had the intention to relocate in this fashion a considerable portion of American Negroes but the number who eventually settled in Liberia did not exceed 15,000. Initially the new state led a precarious existence. The settlements near the coast derived modest incomes from agriculture, commerce and government administration. The population in the interior continued its traditional tribal existence, mostly living on subsistence agriculture. Most of them remained outside the effective political con- trol of the Government. 6. An important change took place in 1926 when the Firestone Company obtained a concession to an extensive land area and started a major rubber plantation. This event broke Liberia's isolation from the rest of the world. The second World War brought further interna- tional contacts with the building by the United States of the port of Monrovia, which came into operation in 1948, and the establishment of an important air base. The discovery and subsequent exploitation of rich iron ore deposits was an even more important development, which has greatly influenced further economic events. Iron ore production has expanded rapidly during the last two decades; at present Liberia is the third largest exporter of this commodity. 7. The political system bears close resemblance to that of the United States. The President, elected to a four-year term by popular vote, has wide executive powers. Legislative authority is vested in a bicameral congress. The country is divided in nine counties which have limited autonomy. Since 1944 the Government has been led by Pre- sident Tubman, the leader of the True Whig party, which has been in power in Liberia since 1870 and which is in fact the only political party. President Tubman's firm leadership has provided political sta- bility to the country and his liberal economic policies have encouraged large-scale foreign investment and a significant beginning of moderni- zation of the country. His unification and integration policies are designed to reduce the differences between the numerous tribes and the small urbanized elite group. Participation of tribal people in the so- cial and political life of the country has been encouraged by nomination of tribal chiefs to the House of Representatives, the promotion of edu- cation in the countryside and the expansion of the road network. These policies are helping cement national ties between Liberia's inhabitants and have so far prevented serious strife among the various segments of the population. 8. Another important feature of President Tubman's policies has been the liberal attitude towards private sector initiative and particularly the favorable treatment extended under the Government's open door policy to foreign investment. This policy has been a fac- tor in encouraging large scale foreign investment in iron ore mining and rubber plantations. The fast growth of these activities has been the main cause of the rapid increase of gross domestic product since the second World War. However, mining and to a lesser extent rubber planting are, in many respects, enclave operations which have exerted limited impact on other economic sectors apart from transport and commerce. Benefits in the form of employment and government revenue although significant have been small relative to the size of the en- clave operations and most of the gross return to capital as well as a large part of the salaries of expatriate staff are transferred abroad. On the whole, the economic condition of the majority of the population has been less affected by the exploitation of the country's natural resources than might have been expected. III. RECENT ECONOMIC GROJTH A. Production and Income 9. Growth of GDP during the 1950's has been estimated at around 13 percent a year at current prices (perhaps 10 percent a year in real terms). The main factor in this economic growth was the increase in iron ore and rubber production during the period. Subsequent large investments, totaling about $hOO million, in three additional iron ore mines resulted in a spectacular further produc- tion increase in the 1960's. Economic growth during the 1960's is summarized in the following aggregate figures. Table 1: GROWTH INDICATORS, 1960-1967 (current prices) (in millions Annual of dollars ) growth rate 1960 1967 1960-67 GDP at market prices 222 330 5.8% Factor payments abroad (net) 48 90 9.4% GNP at market prices 174 240 4.7% National income 139 174 3.3% Population about 1.5% Per capita income about 1.8% Source: Statistical Appendix Tables. 10. GDP growth during the 1960's, estimated in the above table at 5.8 percent a year, would have been much more rapid but for a serious drop in iron ore and rubber prices. At 1960 iron ore and rubber prices the growth rate would have been just over 10 percent a year and GDP in 1967 would then have amounted to t450 million instead of $330 million. Moreover, net factor payments abroad rose during the 1960's because of the completion of major investments from 20 percent of GNP in 1960 to 38 percent in 1967 with the result that GNP increased at a much lower rate than GDP. Due to the large investments in fixed capital in the last decade, depreciation charges have also risen sharply, thus reducing the growth rate of national income during the 1960's to 3.3 percent a year, which is not a very high growth rate. Taking into account popula- tion growth, per capita incomes probably have increased by less than 2 percent a year. 11. This unfavorable development of per capita incomes provides a striking contrast with the estimated 10 percent increase in the over- all volume of production. Falling export prices and the characteristics of an enclave economy have combined to reserve the benefits of increased production to foreign investors and the consumers of rubber and iron ore. 12. In spite of this sluggish development, per capita income still appears fairly high in comparison with other West African countries: $158 in 1967 (per capita GNP $218, per capita GDP $300). However, these figures could give a misleading impression of general prosperity in Li- beria since income distribution is very uneven. Returns to capital mostly accrue to foreign investors and are transferred abroad in the form of interest and dividends as well as amortization and depreciation allowances. Distribution of the remaining income, mostly income derived -5- from labor, is very uneven. The more modern, "dynamic" sectors 1/ pro- duce almost two-thirds of GDP (63 percent in 1964), but employment in these sectors occupies less than a quarter of the total active popula- tion, including around 9,000 expatriates. Compensation for African la- bor in these sectors is roughly estimated at about $550 per worker per year. By contrast, compensation for African labor in non-dynamic sec- tors is estimated at only $170 a year. Taking into account the average number of family members dependent on each worker, this means that in the non-dynamic sectors, which account for the livelihood of the over- whelming majority of the population, per capita incomes are only about $70 a year. Visual observation of the poverty in Liberia's countryside confirms this conclusion of a generally very low income level. B. Use of Resources 13. An illustration of a few major relationships in the Liberian economy (partly based on tentative calculations by the mission) is pro- vided by the following figures. Table 2: USE OF RESOURCES, 1965-67 Percent of GNP 1965 1966 1967 (average 1965-67) (in millions of dollars) 1. GDP at market prices 297 317 330 138% 2. Net exports goods and services 24 33 27 12% 3. Resources 273 284 303 125% 4. Capital formation 56 64 85 30% 5. Consumption 217 220 218 96f 6. Factor payments abroad (net) 81 88 90 38% 7. GNP (1-6) at market prices 216 229 240 100% 8. National savings (7-5) -1 9 22 Source: Statistical Appendix Tables; Ivission estimates. 1/ The dynamic sectors are defined for this purpose as comprising all large firms in Liberia (the dividing line is the use of power equip- ment or employment of more than five persons) and all public sector agencies and enterprises. Dynamic private sector activities are con- centrated in mining, agriculture (rubber, forestry), trade and construction. The dynamic sector concept was used in the national income statistics for Liberia, 1964-67. - 6 - 14. The table illustrates a few important characteristics of the economy. First, as earlier mentioned there is a wide gap between GDP and GNP because of large net factor payments abroad. Second, capital formation is large relative to GDP. From year to year capital forma- tion is apt to fluctuate sharply because of the lumpy nature of the few major investments that account for a large portion of the total: invest- ments in ore mining and processing installations and a few large foreign aid projects. To this were added in recent years investments in a cement factory and an oil refinery. Third, national savings are only a small proportion of GDP and of capital formation which illustrates the major role of foreign investment in Liberia. Not too much significance should be attached to the increase in savings during 1965-67 shown in the table because the savings estimate, arrived at as a residual, is subject to a substantial margin of error. C. Balance of Payments 15. The characteristics of an enclave economy are clearly re- flected in the structure of the balance of payments. Exports were large in relation to GNP but the outflow of dividends and interest payments and the transfer of expatriates' salaries left less than half available as "net" export earnings. It is not known to what extent depreciation reserves of the major concession firms and others are kept outside Liberia. However, in view of the fact that the most im- portant companies have been adding continuously to their capital stock in Liberia in recent years, it may be assumed that this would not re- present a very large amount of funds. The importance of foreign aid to Liberia is shown by the fact that during 1964-67 official grants and loans were estimated at 10 percent of GNP. The mission's rough calculation of the balance of payments during 1964-67 (there is no official balance of payments estimate) is shown in the following table. Table 3: BALANCE OF PAYMENTS, 1964-67 (in millions of dollars) Percent of GNP 1964 1965 1966 1967 (average 1964-67) Merchandise Exports, f.o.b. 126 135 151 159 64% Factor payments abroad (net) -79 -81 -88 -90 38% "Net" export earnings 47 54 63 69 26% Merchandise Imports, c.i.f. -111 -105 -114 -126 510f Non-factor services -10 -7 -4 -7 30 (Continued) -7- Current account deficit -74 -58 -51 -64 28% Official loans 8 21 18 17 6% less repayments -6 - - -3 Official grants 12 12 13 13 6% Private capital, change in reserves, errors and omissions 60 30 28 37 18% Source: Statistical Appendix Tables; Mission estimates. D. Foreign Trade 16. During the 1960's the value of exports has been increasing at a rate of about 9 percent a year in spite of the sharp drop of rubber and iron ore prices. The most important factor has been the six-fold in- crease of iron ore exports after 1963 when three major mines (LAMCO, NIOC and Bong mines) came into production. The adverse price trend is to some extent being countered by increased exports of premium products. The value of iron ore exports is being increased by ore washing and pelletizing plants. Liberia is providing about one-third of the world consumption of liquid latex which is used in the production of foam rubber and other rubber products with high flexibility. This product receives a 3 cents per pound premium. Trends in exports are summarized in the following table. Table 4: TRENDS IN EXPORTS, 1960-67 Annual Volume: 1960 1967 growth rate Rubber (lbs. million) lo6.7 136.7 3.6e Iron ore (tons million) 2.9 17.2 29.00 Value ($ million): Rubber 42.0 26.6 -6.5% Iron ore 34.6 115.1 18.8% Other exports 8.9 17.1 9.8% Total 97.7 15.7 9.37 Unit Price: Rubber (cents per lb.) 39.4 19.5 -9.5% Iron ore ($ per ton) 11.9 6.7 -8.00 Source: Statistical Appendix Tables. - 8 - 17. Imports have increased during the 1960's at approximately the same rate as exports, from $69 million in 1960 to $125 million in 1967. Machinery and equipment imports were very high during the in- vestment boom of the early 1960's. They reached a peak of $54 million in 1962, but have since then fluctuated around $35 million a year. Other imports closely related to the level of capital formation in Li- beria are those of cement and structural steel, which are valued at about $7 million a year. The new cement factory and the proposed as- bestos roofing plant and a plywood mill may lead to some import substi- tution in this field. Reflecting the small size of the manufacturing sector, imports of raw materials and intermediate products are small. The major part of such imports consists of fuels, fertilizer, explosives for mining, a few other raw materials and chemical products. Most of the remaining imports consist of semi-final or final consumer goods. Together they averaged during 1965-67 $47 million, which is about 21 percent of GNP. Because of lack of sufficient data it is difficult to estimate consumer good imports at the beginning of 1960, but a rough approximation shows that these imports probably were then a much smaller proportion of GNP, about 14-15 percent. Dependence on imported consumer goods is thus rising rather rapidly. Imports of food products have doubled since 1960 to an annual level over $20 million. Rice is the largest food import ($6-8 million per year), followed by imports of meats, dairy products, fruits and vegetables. Other important items are beverages and tobacco. E. Currency and Credit 18. The principal currency in circulation and legal tender is the U.S. dollar. The official monetary unit is the Liberian dollar with a gold content equivalent to that of the U.S. dollar but no Li- berian dollar notes have been issued. It is not possible to estimate the money supply since there is no information about the amount of U.S. dollars in circulation. There are no restrictions on exchange transactions. A balance of payments deficit leads automatically to reduction in internal liquidity and surplus has the reverse effect. 19. There is no central bank. The Bank of Monrovia, a subsi- diary of the First National City Bank of New York, handles the Govern- ment's accounts. Deposits in the banks, which are all subsidiaries of foreign banks, amounted by the end of June 1968 to $74 million. As against this, the banks had only $142 million on loan in Liberia and of this about a quarter consisted of loans made to the Government before 1963 and which are now being amortized under debt rescheduling agree- ments. Most of the remaining funds are on deposit abroad. The main function of the banks is to finance foreign trade and foreign finan- cial transactions rather than financing of domestic activities. - 9 - IV. SECTORAL DEVELOPMENTS A. Agriculture 20. Liberia lies almost wholly within the tropical rain forest region of West Africa. Rainfall is heavy and highly cyclical result- ing in alternating erosion and drought. The country has a uniform climate even though temperature, rainfall and humidity decrease as one moves inland. The generally acid soils are of low or medium fer- tility but improve inland where there is less rainfall. Shifting crop cultivation has destroyed much of the indigenous high forest. At present 40 percent of total land surface in Liberia is covered by heavy forest. Mbst of the remaining area is under cultivation or covered with low and broken bush in various stages of regeneration. 21. Although about 80 percent of the population of working age is still engaged in agriculture and forestry, the contribution of this sector to GDP in 1967 is estimated at only $75 million or 24 per- cent of the total. These figures include the estimated contribution to GDP of all subsistence activities. To the extent subsistence acti- vities comprise non-agricultural pursuits, these figures would be to some extent over-estimated. Rubber is the most important of Liberia's agricultural products. The contribution to GDP of rubber production amounted in 1967 to $26 million, more than one-third of the total GDP of agriculture. Cash crops of lesser significance are coffee, palm oil, palm kernels, and cocoa. 1. Cash Crops 22. Climate and soil are well suited to rubber cultivation. The Firestone Plantations Company, which was granted a concession more than 40 years ago, dominates the industry. Its plantation at Harbel is the largest rubber plantation in the world (75,000 acres). Firestone is gradually replanting its acreage with high-yielding trees. Present average yield is 1,261 lbs. Firestone's success has attracted other foreign rubber interests to Liberia and has also stim- ulated considerable production by Liberian smallholders. The other rubber concessions have started their plantations after 1955 entirely on the basis of high-yielding material. - 10 - Table 5: RUBBER PRODUCTION AND ACREAGE IN 1968 Yield per Acreage Production mature acre mature immature millions of lbs. lbs. dry content Total concessions 88,500 45,700 101.5 1,150 Firestone Plantation Co. 70,100 15,700 88.4 1,260 B. F. Goodrich 8,500 4,500 8.8 1,035 African Fruit Co. (AFC) 2,800 2,600 1.5 540 Liberia Co. (Cocopa) 2,600 2,100 2.0 770 L.A.C. (Uniroyal) 2,200 16,000 0.6 270 Salala 1,200 3,900 0.3 250 Todee 1,000 1,000 - - Private farmers 75,000 69,700 38.0 505 Source: Estimates, based on actual figures for the first eight months of the year,from the Rubber Planters Association. 23. The rubber industry is the largest source of paid employment in the country. In 1967 employment was estimated at 42,000 of whom 24,000 were employed by the foreign concessions. The work force of Fire- stone numbers about 16,000 persons, and the population living on its plantations 60,000. The company has built villages, schools, churches, markets, hospitals, sports fields, etc. and subsidizes rice on the plan- tation markets. After major strikes in 1963 and 1966 it appears that labor relations have improved. Basic wages were increased and a consid- erable element of incentive payment was introduced in the wage struc- ture. Partly as a result of the incentive payments (but to a lesser extent also because high-yielding clones are coming into maturity) la- bor productivity has increased in a striking fashion. As a result, wage costs per pound of rubber could be kept at the same level although average daily wages increased by almost two-thirds. In addition to cash wages which average $1.05 a day at Firestone's, the company also provides medical and social facilities valued at about one-third of the cash wage. 24. An interesting feature of the development of the Liberian rubber industry is the considerable acreage cultivated by Liberian planters. The origin of this production is the provision by Firestone and later by the Uniroyal plantation of planting materials on credit to prospective cultivators and the assurance that the company would buy the output. The total acreage under cultivation by about 4,000 Liberian planters amounts to about 145,000 acres, of which about half is mature. About two-thirds of these Liberian rubber farms are small- holdings which cover less than 10 acres and account for less than a - 11 - third of total mature Liberian-owned acreage. The remaining Liberian p.ar-L-t tions are frequently the property of absentee owners. 3lthough the planting material used on these plantations is of good quality, effi- ciency of production is generally much lower than on the big estates because of less efficient plantation maintenance and supervision of labor. In spite of low wages, many Liberian planters have not been able to break even at the low rubber prices in 1967 and much of 1968. A price support scheme set up with financial support from the two major buyers ensured the planters of a guaranteed minimum price. Prices were supported from November 1967 till July 1968, when world market prices had risen sufficiently to allow repayment. The scheme may be brought back in operation when needed. In spite of this price support, many rubber groves were deserted when prices dropped in 1967 and have not been brought back in production since then. The rubber industry has an excep- tional place in Liberia's agriculture because of the high efficiency of pro.- duction on the concession estates and the push the estates have given to production by smallbolders. However, there is considerable scope for improving the efficiency of private farms and in fact this is one of the obvious areas in which Liberia could achieve significant production and export increase. The Government and the Liberian Rubber Planters Associa- tion are planning to set up an agency offering technical assistance, training, distribution of bigh-yielding seedlings and stumps, as well as credit to local planters to help finance replanting with high-yielding materials. Experience in Malaysia has shown that such action, if proper- ly organized and financed, can be very successful. 25. There are no other fields of production which have shown develop- ment comparable to thit of the rubber industry. As far as other tree crops are concerned, production has remained small, although climate and soils are not unfavorable to production. Marketing and export of these crops - coffee, cocoa, palm kernels, and piassava - are handled by the Liberian Produce Marketing Corporation (LPMC) in which the Government and East Asiatic Company, the Danish trading firm, have equal shares. East Asiatic also manages the Corporation. 26. Coffee exports from Liberia have varied between 3,000 and 8,000 tons a year without showing a definite trend. Variations in export volume are partly due to the fact that changing (but not precisely known) quantL- ties of coffee grown in neighboring countries are sold through Liberia. In 1967, Liberia joined the International Coffee Agreement and received a basic quota of 3,600 tons a year, which will be increased annually by 10 percent until it reaches 6,000 tons. Coffee is grown by smallholders. LPMC is starting a program of providing high-yielding seedlings to small- holders for the replacement of overage- trees. 27. Cocoa has grown steadily during the last five years but produc- tion is still quite small. In 1968 exports amounted to 1,900 tons, of wric. as much as 50 porcent may have originated outside Liberia. Prices offered by LPMC were higher than the guaranteed prices in neighboring countries. - 12 - The potential for cocoa cultivation in Liberia is probably quite good and more shonld be done to stimulate production. LPMC intends to establish nurseries for seedlings and to do research regarding soil conditions and disease control. 28. Palm oil. LPMC exports of palm kernels amount to some 13,000 tons. Most of the kernels originate from wild trees that grow in most parts of the country. The palm oil is used for consumption in the subsistence sector and the kernels are sold for cash income. There are also some small estates. Soil condition in many parts of the country and climatic conditions are favorable by West African standards to oil palm production. The experience with natural rubber indicates that large-scale cultivation of tree crops in Liberia is possible at competi- tive production cost, provided management is highly efficient. However, whether large-scale palm oil planting is economically feasible, given the prospect of declining prices, deserves careful study. This is the more important because Liberia, unlike certain other developing countries, would not have preferential access to EEC and the United Kingdom. The only major investment undertaken so far is a 7,500 acre plantation, in- cluding an oil mill by Tidewater Company. This plantation has recently come into production. The company is encouraging snallholders' produc- tion around the plantation by providing bigh-yielding seedlings, techni- cal advice and an assured market. A feasibility study has been made by IRHO1/ in the South East of the country for a proposed government planta- tion project of 7,500 acres plus 2,500 acres for smallbolders. This study received financial assistance from the Bank. A private Liberian entrepreneur, finally, is trying to obtain finance for a 3,500 acre oil palm plantation in the western part of the country. These projects taken together would produce far more than domestic requirements, so that a large part of the production would have to be exported. 2. Rice 29. Rice is grown in all parts of the country as one of the basic foodstuffs of the subsistence sector. Almost all of the rice is grown in upland areas according to the traditional slash-and-burn pro- duction method. There are no reliable data about the total size of production and there is also no good indication of production trends. Up to the end of the second World War Liberia was self-sufficient in rice, but growth in demand, particularly in the monetary sector of the economy, has led to imports averaging L0,000 tons per year (about one- third of estimated consumption). Little domestic rice is sold in the cities, where imported (mostly American) rice is sold at a premium over local rice. 30. The Government would like to make Liberia self-sufficient in rice and for this purpose it has been promoting a number of experiments and studies during the last decade, with technical assistance provided by the United States, the Republic of China, and FAO. Altogether, however, 1/ Institut de Recherches pour les Huiles et 016agineux, a French research organization. - 13 - these experiments and studies have been inconclusive as regards the economic and technical feasibility of a large increase in Liberian rice production. In fact this means that it has not been clearly established that Liberia should concentrate its energies on rice growing or on the cultivation of other crops. A major choice to be made is whether to improve and expand the prevailing upland cultivation or to turn to swamp cultivation. The shifting upland cultivation followed at present has not only low productivity but also would lead eventually to soil deterioration through erosion, particularly on sloping lands. Satisfactory methods to raise productivity and control the erosion danger have not been established. The problems are similar (and apparent- ly as difficult) as those in other West African countries: poor varieties, lack of suitable tools among the farmers, lack of kIowledge about fertilization, weed and disease control. The Liberian Agricultural Corpora- tion (Uniroyal) is carrying out a large experiment with mechanized upland cultivation, but results have been disappointing thus far because of erratic rainfall and disease. The experience gained thus far will perhaps benefit production in 1969 and lead to more favorable results. However, on the basis of experience in other African countries it may be questioned whether mechanized upland cultivation of rice will prove economic or will effectively cope with the problems of erosion. 31. Most of the research on rice has centered on exploring the possibilities cf swamp rice cultivation. There are considerable swamp areas with probably suitable alluvial soils along riverbeds in many parts of the country, but traditionally the population has not been interested in swamp cultivation. The experimental station at Suakoko has made some progress, with technical assistance from the U.S. and FAO in selecting rice varieties suitable for domestic swamp conditions. There are also a few other small swamp rice experiments. The most important practical effort has been made at Gbedin in the North East by a technical assis- tance group from Taiwan. The project was successful in its first two years when several local farmers who had resettled in the project area made average net incomes of $580 per year and yields of up to 4,000 lbs./acre were obtained. (Tribal upland rice production with slash-and- burn methods may have yields of 700 lbs./acre or less.) The demonstration effect of the project on other local farmers was diaappointing however, and swamp cultivation has been taken up by very few. While the reasons for this poor result are not altogether clear, it is probable that the labor-intensive methods of cultivation promoted by the Chinese have not appealed to farmers and that the labor requirements involved are not readily reconcilable with those for other traditional crops. In theory, mechanized cultivation could overcome the manpower problem, but experience in other countries indicates that this might be uneconomic. In any event high yields would have to be obtained to cover the costs, and these may not be attainable without further research on pest and disease problems, soil fertility and varietal improvement. The LEMC proposes to experiment with new methods of rice cultivation by establishing a 500 acre mechanized swamp rice farm which will be irrigated by pump. - 14 - 32. While further research and experimentation on the problems of upland and swaip rice cultivation are needed, there are certain measures which would probably stimulate growers almost immediately to increase their production according to traditional methods. The most important difficulty besetting all peasant cultivation in Liberia is the lack of roads and transport facilities which makes it impossible to move larger quantities of product to the market and does not expose the farmer sufficiently to consumer goods which could give him an incentive to increase his production. It is possible that swamp cultivation of rice (and other crops) would be taken up by Liberiaifarmers if access to swap areas were provided. It is interesting that German and U.S. aid offi- cials and LPIC have felt encouraged by the effects of road construction undertaken by them in recent years on the economic activity in the areas served by the roads. It would be very useful as a guide in future road construction if a more rigorous appraisal of these effects were attempted. It is also important to explore the feasibility of encouraging production through the establishment of a government-guaranteed price at the beginniny of the season. Reportedly, the Government has recently decided to increase the role of LPHC in the marketing of rice; this may be an importan't step in the right direction. 3. Other agricultural products 33. Soils and climate are favorable to a number of other products, but progress so far has been small. Interestingly a number of Liberian entrepreneurs have taken the initiative to start a number of commercial agricultural ventures. In 1967 the first pineapple exports from Liberia took place. The quantity was small, but the quality satisfactory. Growing conditions also are good for a number of tropical fruits and there is some supply of these on the domestic market. Good quality cigar wrapper has been obtained in the two instances where tobacco growing has been tried. Export has been difficult because of lack of graders and grading facilities. Apart from its efforts to grow rice, the LAC-Uniroyal research station has been experimenting with .corn, vegetables, and hog raising. A livestock project will be started in 1969, Results, particularly in hog raising, are encouraging. 34. Efforts to shift farmers from traditional subsistence cultivation to some production for the market will undoubtedly depend on the extent to which traditional farmers will experience a growing need for cash income. The opportunities to market their produce and to buy goods which will be afforded by road construction will presumably provide a stimulus. On the other hand, it is also possible that the more enterprising people in the traditional sector have availed themselves of the opportunities for wage employment in the mining, plantation and transport sectors, and that they return some of their money income to those left behind in the traditional tribal economy. How far this has afforded incentives to produce in the traditional sector is uncertain but it is possible that the response to efforts to stimulate output will be slow in forthcoming. - 15 - 4. Forestry 35. The depletion of hardwood forests in neighboring Ivory Coast has focussed the attention of foreign and Liberian investors on the exploita- tion of Liberian forests. Production in 1966 amounted to 13 million board feet, mostly used to satisfy domestic needs, but rose to 18 million board feet in 1967. Most of the increase in production was exported. Lack of roads is the most important difficulty facing forest exploitation. A recently completed German forest survey indicates that of a total of 8 million acres of forest only 1.5 million are at present accessible. The road from Greenville to Tchien, which was built with assistance from Germany, opened up a hitherto inaccessible part of the country and led to the start of logging operations along the road. An agreement with LACO permits use of the LA1CO railroad for the transportation of logs to Buchanan. The increased interest in forestry is shown by the recent issue of a number of large exploration and logging concessions and proposals to establish a core veneer plant, a plywood factory and sawmills. Given these new operations, the target in the development plan of a production of 40 million board feet a year by 1970 should be within reach. 5. Fisheries 36. Fish resources off Liberia's coast are considerable and activity of foreign fishing companies off that part of the West African Coast has been growing. Until recently little of the catch was consumed in Liberia but in the past few years a modern processing and marketing operation has been set up. The fish is frozen at sea and landed by foreign fishermen, who operate trawlers on contract with a local company, or frozen in the company's quick freezing plant in Monrovia. The frozen fish is distri- buted throughout the country by a fleet of insulated trucks and kept in cold storage in every town and several villages. It took some time to acquaint the people farther from the coast and in tribal areas, who had previously only eaten small river-fish, to bigger and frozen sea-fish and to the way of preparing them. There now exists a ready market for this cheap source of protein in all parts of the country. The experience obtained in marketing the fish is interesting in that it proves how a well-run marketing organization can change consumption patterns and establish a market even in tribal areas. The same domestic company has recently started exporting fresh frozen shrimp and lobster to the United States. B. Mining 37. The country is rich in mineral resources. The most important resource is iron ore of which there are extensive high-grade deposits. Iron ore and diamonds are the only minerals being mined at present. Diamond exports amounted to 750,000 carats valued at $7.7 million in fiscal 1968. However, a substantial but not precisely known portion - 16 - of this was smuggled into Liberia from neighboring countries. MJany other minerals 1/ are found in Liberia, but the economic potential of these finds has in most cases not yet been established. Systematic geological exploration and resources appraisal has been in progress, with U.S. technical assistance, since early 1964. Reconnaissance mapping of the entire area and initial evaluation of the results should be completed by 1972. Several interesting results have been obtained already and the possibility of exploitation of certain deposits is under investigation by mining interests. The most important thus far is the concession given in 1968 to a foreign investor for mining of barite deposits about 50 miles northeast of Mlonrovia. 38. An aerial magnetic survey of the country carried out in 1966 found some evidence of oilbearing formations on Liberia's part of the continental shelf. The Government subsequently signed an exploration concession with Standard Oil and Continental Oil for detailed seismic surveys along the coast. The first results from this survey are expected to become avail- able to the Government during the first months of 1969. 39. Iron ore mining is the single most important economic activity in the country. In 1967 it accounted for 26 percent of GDP and 72 percent of exports. The total value of iron ore exports in 1968 is estimated at $120 million. Production started in 1951 and remained until 1962 at a level of about 3 million tons. At that time three new mines came into operation and production rose abruptly to its present level of around 20 million tons. Iron ore deposits are found in many parts of the country. Proven reserves are around 600 million tons and unproven reserves another 900 million tons. This reserve position guarantees production at the present or a higher level of output for many years to come. 40. The economic significance of iron ore mining for the development of the economy has been relatively small because of the enclave character of the operations and because of the nature of the concession agreements under which the mining companies operate. The enclave character is due to the lack of linkage effects on other economic sectors. The fixed investment of the mining companies is concentrated in isolated mining sites, railroads, and harbor facilities. Neither the construction nor the operation of these facilities have led to any significant demands for products or services from other sectors. The employment provided by the very capital-intensive mines is also small. Total employment by the four companies amounts to only about 10,000 persons, and most of the engineering and managerial positions are filled by foreigners. Con- struction and operation of the mines are nevertheless contributing significantly to the development of labor skills. Some of the mines have set up technical schools in order to be able to fill supervisory 1 Among them are: barite, manganese, bauxite, kyanite, monazite, ilmenite, magnetite, corundum, chromite, tin. - 17 - and managerial positions with Liberians. The long-term concession agree- ments under which the mining companies operate in Liberia provide for favorable fiscal treatment and as a result the contribution of the mining sector to government revenue is also comparatively small. This point is more fully discussed in paras. 66 and 67. 41. The four mining companies operating in Liberia are: _/ 1. Liberia I-lning Company (LMC). The mine of this company, the first to start iron ore exploitation in Liberia, is located at Bomi Hills. The company's equity was provided by Republic Steel Co. and a group of U.S. investors. Production started in 1952 and amounts to about 3 million tons a year. A concentrator increases the average iron content of the ore from 40 to 68 percent before the ore is transported over the company's 4O-mile railroad to the port of Monrovia. 2. National Iron Ore Company (NIOC). NIOC's production started in 1962. The mining site is on the Hano River near the Sierra Leone border. Equity capital has been provided by Government (50 percent fully paid), LMC, U.S. and Liberian investors. Production amounts to about 4 million tons a year. The mine has a rail connection with the LMC railroad line to Monrovia. 3. Bong 1ining Company BMC). This company has a concession for the Bong range iron ore deposits. The ore is of relatively low iron content and is concentrated up to 65 percent before being shipped over the company rail- road. Annual production amounts to 4 million tons. Equity invesment in the Bong 1ining Company was provided by German (Aug. Thyssen) and Italian investors. Government received a 50 percent share of the equity. A $h5 million washing and pelletizing plant will come on stream in 1971 and production will then reach 5 million tons a year of which 2 million tons of pellets. 4. Liberian-American-Swedish Minerals Company (LAMCO). LAMCO started production in 1963 and is now the largest producer in the country. The concession area is in the Nimba mountains close to the borders of Guinea and Ivory Coast. The ore has a very high iron content (average of 65 per- cent). Last year LAMCO's $51 million washing and pelletizing plant came into production at Buchanan. LAMCO's annual production of 8 million tons could be expanded further without considerable additional investment to 10 or 12 million tons. LAMCO's equity capital was provided by Bethlehem Steel (23 percent) and a combination of mrinly Sweedish investors (37.5 per- cent) in which Gran-esberg Oxelosund has a majority interest. Grangesberg provi'es the management of the company. Government received a 37.5 percent ;3hre of the equity 2/. V See also Statistical Appendix, Table 16, in which the principal features of major concession agreements are summarized. A fifth company, Liberian Iron and Steel Corporation. (LISCO), has been making expl6ForatTo ThhEj legisi range. 2/ Bethlehem Steel pays 50 percent tax over its share of profits, so that Government's total share in LAMC's profits is 50 percent. - 18 - 42. Although most of the iron ore is sold in the free market, a proportion is sold in captive markets, i.e.,to the companies that run the mining operations. Liberian ore (c.i.f. Europe) has, on the average, been sold at lower prices than comparable ore from other sources, although this difference has apparently diminished to some extent with the general decline in world iron ore prices over the last four or five years. It is not entirely clear why Liberian ore should fetch lower prices, but the fact that Liberia's ore expansion in the mid-1960's coincided with a sharp decline of the market probably offers part of the explanation. A factor which has weakened the competitive position in recent years is that Monrovia port, which accounts for about half of the ore exports, cannot accommodate ore carriers larger than 45,000 dwt. A dredging project which will allow the port to accommodate carriers of up to 90,000 dwt.has recently been started. The Buchanan port through which the other half of ore production is exported (production of LAINCO) can currently accommodate vessels up to 70,000 tons. As yet there is no plan to expand the capacity of the Buchanan port. C. Mianufacturini 43. Manufacturing industry in Liberia is small and growth in recent years has not been very rapid. The gross domestic product originating in manufacturing in 1967 is estimated at $114 million which is about 4 per- cent of GDP, and employment in manufacturing is estimated at about 3,500. These figures do not include the processing of rubber on rubber estates and the processing of ore (concentrating, washing, pelletizing) by the iron ore companies. Most of the manufacturing enterprises (there are about 300 registered plants) are small. Production is centered on the provision of the small domestic market with food products and other consumption goods (reconstituted milk, beer, soft drinks, soap, plastic slippers, furniture) and a limited number of intermediates such as paint, oxygen and explosives (for the mining industry). A number of these manufactu- rin- ventures were established by Firestone to provide for the require- ments of the company and its personnel. Furthermore there are a few sawmills which process, mostly for local consumption, the until now rather small timber production. 44e Recently there has been an increase in the number of industrial projects being implemented or under consideration. Part of this is due to direct promotion by the Government. A recently completed oil refinery, which has a capacity of 10,000 barrels per day, has been established by U.S. companies (Sunray DX Oil Co. and Hydrocarbon Research Inc.) at an investment cost of $11.5 million. The concession agreement with the Government gives the refinery a monopoly position on the local market. Negotiations with existing distributors about pricing are in progress. The GovernmentIs intention is to hold the consumer price at the present level and to maintain the level of government revenue from petroleum products. - 19 - Another project is a 125,000-ton cement plant which has been in operation since early 1968. The concession agreement under which this plant operates provides for protective tariffs which in effect give the plant a monopoly of the domestic market. 4$. Government has tried to encourage investment by an investment code, introduced in 1966. This code affords to approved projects import duty exemption for capital goods and raw materials for five years and income tax exemption for ten years. Since the code was adopted, 20 pro- jects have been given approved status with a total approved (but not necessarily realized) investment of about $3.5 million. This figure does not include the two bigger projects mentioned above and a logging and sawmilling venture which operates under a special concession agree- ment. In practice the general provisions of the investment code are apparently applied to smaller investment projects (mostly expansion of existing plants), while investments in larger ventures are subject to specific agreements. 46. An important new element in recent years has been the activity of the Liberian Bank for Industrial Development and Investment (LBIDI). Since the middle of 1967, LBIDI has made 15 loans for a total amount of $1 million. The projects are for a variety of small industrial projects, but also include the logging and sawmilling operation mentioned above and a number of loans to commercial firms for poultry, pineapple, tobacco, and hog raising. While a large part of existing manufacturing is spon- sored and managed by foreign investors it is interesting that among these new projects several are sponsored by Liberian businessmen. 47. A number of new projects are under consideration in Liberia and several of them have been presented to LBIDI. They include an asbestos roofing plant, a core veneer plant, a plywood factory, a shrimp fishing project and several smaller projects. Generally speaking these projects seem attuned to the limited requirements of the domestic market or to export possibilities. The amount of Liberian participation in these pro- jects is encouraging. Under continued liberal government policies further progress of the manufacturing sector should be possible although obviously within the limits set by a small domestic market and the general lack of skills. Government has participated in discussions with other West Afri- can nations regarding regional cooperation. If successful,regional arrangements could perhaps provide increased scope for certain industries. D. Power 48. Power generation has expanded at a very rapid rate during the 1960's as shown by the following figures: - 20 - Table 6: ELECTRIC P0WER, 1961-68 Installed Capacity Production (MW) Annual rate (million KWH) Annual rate of increase of increase 1961 1967 1968 1961-67 1961 1967 1968 1961-67 Public 7 54 57 h2% 47 161 183 23% Private 13 136 8% 50 298 35% 20- 190 W 97 M9 -30 Source: Public Utilities Authority 49. Private installed capacity consists primarily of the plants operated by the major concessionnaires in Liberia but includes also a number of small private facilities which are scattered throughout the country. The public capacity is owned and operated by the Public Utili- ties Authority (PUA), an autonomous public sector agency. PUA provides electricity in Monrovia, Robertsport, Buchanan, Greenville, Harper and Gbarnga. The installed capacity of PUA consists of a 34 MW hydroelectric plant, and 23 MW diesel generating capacity. The most important part of the system is the Mt. Coffee hydroelectric project. The first two units of this project, together amounting to 34 MW, came into operation in 1966. Production is based on run-of-the-river flow, which is insufficient during part of the year. A 15 MW gas turbine generator is to be installed in early 1969 to increase generating capacity during the dry season. 50. The main consumption center is Monrovia. In 1967 the Monrovia system accounted for 80 percent of the electricity generated by PUA. During 1964-67 power generation for Monrovia increased at an annual rate of 15 percent. There is still considerable unsatisfied demand and for the next several years a rapid increase in consumption (about 13.5 per- cent a year) is foreseen by PUA. Moreover, the latter has undertaken to provide power to two iron ore companies, LMC and Bong. In the case of Bong, power will be needed for the operation of the pelletizing plant now under construction. In order to satisfy demand of the companies and in view of the rapid growth in demand from other quarters, PUA intends to expand its power generating capacity. Bank group has been requested to consider long-term financing for this purpose. The completion of the Mt. Coffee project will require the installation of four more units of 17 MW each. Upstream storage for this project would allow year-round operation of four units. This would leave two units to supply peaking requirements. - 21 - E. Transport 51. A considerable part of the transport system is designed to meet the needs of the concession ccmpanies. The railroads (about 235 miles) are owned by the mining companies and used almost exclusively for ore transportation while the ports serve to a large extent for the export of ore. On the rubber and mining concessions there are, moreover, about 1,200 miles of road. However, in the past 15 years a general road network of some significance has come into existence. Most of the fi- nance and technical assistance were provided by the United States, Ger- many, United Kingdom and the Bank while until 1962 foreign contractors' finance was an important source of road financing. In 1950 there were only 300 miles of unsurfaced public roads, but at present the system consists of 1,180 miles of primary roads, 960 miles of secondary roads and 500 miles of feeder roads. The primary road system consists of 200 miles of asphalt-paved roads and about 900 miles with laterite sur- face. Concurrently with the expansion of the road system there has been an increase in motorized traffic. The number of motor vehicles in operation increased from 650 in 1949 to 13,500 in 1967. In the last several years, the vehicle fleet has increased at a rate of 12 percent a year. There was a similar increase in gasoline consumption. In spite of this rapid increase vehicle density is still low, and the total length of the road network is very modest in relation to the number of inhabitants and the size of the country. 52. Recent additions to the primary road network are two roads built with German assistance (Harbel-Buchanan and Greenville-Tchien) and two roads built with Bank assistance (Kle-Pujehun and Monrovia- Robertsfield). The secondary road system is being expanded with about 175 miles of roads presently under construction of which about 75 miles involve self-help contributions. The Government is considering the ex- pansion of the present primary road system by road sections that would complete the Monrovia-Harper connection and by improvements to the Totota-Ganta section on the main highway from Monrovia inland. Other additions to the primary road network in the South Eastern area of the country are also under consideration. For the secondary road system, Government adopted in its 1967-70 development plan a target for con- struction and rehabilitation of 60 miles a year and moreover 25-50 miles of feeder roads, partly to be constructed with self-help. Since these targets appear roughly in line with the volume of road construc- tion during the last decade, it would seem to be possible that these targets would be achieved. However, in order to establish priorities in road construction and rehabilitation, a country-wide study of road transportation requirements appears needed. In view of the importance of the road network for economic development, such a study, which should also provide indications for the desirable development of ports, appears urgently needed. 53. An equally serious problem is the lack of road maintenance. Under the climatic conditions prevailing in Liberia, roads deteriorate rapidly unless they are maintained. The organization of and the bud- - 22 - getary resources devoted to road maintenance have not kept pace with the expansion of the road network in the last 15 years, and secondary roads in particular have deteriorated. Assistance for road maintenance has been provided by the United States, the United Kingdom and the Bank (maintenance equipment under the road loan). However, due to lack of mechanical skills and spare parts, part of the maintenance equipment is in bad condition. Germany is providing assistance for the establishment and initial operation of a regional road maintenance training depot at Buchanan which is aimed at imparting to domestic personnel the required administrative and mechanical skills while improving road maintenance in the Buchanan area. Another project, at Greenville, is under considera- tion. However, these projects cover only part of the country and an ex- pansion of the efforts to improve maintenance is required. The road transportation survey suggested in the preceding paragraph would help in establishing priodities for road rehabilitation and maintenance. F. Education 54. Expenditures on education in Liberia are relatively high. Government expenditures on education averaged 13-14 percent of total budget resources in recent years, and there have been foreign aid receipts for education of almost the same magnitude. In addition a large number of schools are operated by missions and, to a lesser extent, by the major concession firms working in Liberia. Table 7: EXPENDITURES ON EDUCATION, 1965-67 (in millions of dollars) 1965 1966 1967 Budget expenditures 6.0 6.7 6.9 Foreign aid 5.5 6.3 6.6 Mission, concession, and other private sources 2.7 3.0 3.2 Total expenditures on education 1-4.2 16. 19.7 of which capital expenditure 1.4 1.0 3.3 Source: Economic Survey 1967. Altogether expenditures on education averaged5 percent of GDP during 1965-67. Current expenditures for all levels of education amounted in 1967 to $118 per student, which is very high compared with per capita GNP in Liberia and with the level of such expenditures in most other African countries. Expenditures excluding foreign aid amounted to $81 per student. However, efficiency in the allocation and use of funds for education leaves much to be desired and as a result the school sys- tem as a whole is not in a very satisfactory condition. School buildings - 23 - are not well maintained, there is serious lack of textbooks and other school supplies and teachers are poorly paid. 55. Perhaps the most important development in education is the extremely rapid increase in school enrollments. In primary and secon- dary schools, the number of students increased between 1965 and 1967 by 14 percent per year. The increase in the number of teachers was also rapid but did not quite keep pace, and the student/teacher ratio rose. At 32 in primary schools and 18 in secondary schools the ratio is not exceptionally high. However, the demand for education is not evenly distributed over the country and in urban areas, particularly,schools are badly overcrowded. In Monrovia, residential buildings are rented for use as schools and although schools run three shifts a day, a considerable number of children (6,000 in 1967) are waiting for ad- mission. Textbooks and other school supplies are also scarce. 56. Construction of school buildings, largely financed by foreign aid, has vastly increased opportunities for obtaining primary education throughout the country compared with only a decade ago. School attendance, at the primary level for the country as a whole, is roughly estimated by the mission at about 65-70 percent. School attendance in Monrcvia is probably near 100 percent for boys and very high for girls. Continuing urbanization will lead to a further increase in the number of students in urban areas. 57. Increase in the number of students at the secondary level is proceeding even faster than at the primary level (17 percent increase per year between 1965 and 1967). The number of students in secondary schools amounts to about 10 percent of the number in primary schools. Urbanization will probably make for continued rapid increase in the demand for seccndary education. The number of students in vocational and technical schools is relatively small (less than 1,000 compared to 12,000 in general secondary schools) and not growing very rapidly although voca- tional training has received considerable U.S. aid. In addition major concessions are also providing vocational training (Firestone, Bong, and LAMCO with Swedish Government assistance). 58. Higher education is provided at the University of Liberia, Cuttington College (a private institution) and two teacher training institutes. The total number of students amounted to about 1,100 in 1967 and the student body, particularly that of the University of Li- beria, is growing very rapidly (33 percent a year between 1965 and 1967). In addition about 250 scholarships were provided for study abroad. 59. Among the several needs of the educational system the following may be noted. In the first place, curricula at all levels need to become better adapted to the economic and social needs of the country. Instruction in agricultural skills and understanding of agricultural production methods should be given a more important place at all levels of instruction, from the beginning years of primary edu- - 24 - cation. At the secondary level increased emphasis should be given to the expansion and improvement of vocational and technical training. Government is at present considering obtaining foreign assistance for three rural high schools and an Agricultural College. The establish- ment of these facilities should provide opportunity for increasing the emphasis on practical knowledge of agricultural problems and agri- cultural skills. 6o. A second point is the provision of foreign scholarships. The amount spent on foreign scholarships ($1.1 million provided in 1968 government budget) is extremely high in relation to the total size of government resources. The present condition of institutions for higher learning provides opportunity in Liberia for most, if not all, instruction at the undergraduate level. Scholarships should generally be reserved for the acquisition of professional qualifica- tions that cannot as yet be obtained in Liberia and should, therefore, be given to graduates, preferably after an initial period of service. This should improve selection and motivation of the candidates and increase the chances for their eventual return, while leading to a big reduction in the total volume of scholarships. V. PUBLIC FINANCE 61. One of the effects of postwar economic growth was a tremen- dous increase in government revenues and expenditures. From less than a million dollars at the end of the second World War these increased to over $50 million in 1968. Table 8: GOVERNMENT CURRENT REVENUE AND EXPENDITURE , 1940-68 (in millions of dollars) Year Revenues Expenditures Surplus 1940 0.7 0.6 0.1 1950 3.8 4.9 -1.1 1960 32.3 33.3 -1.0 1962 36.1 32.1 1.O 1965 42.5 36.6 5.9 1966 46.3 41.3 5.0 1967 48.1 42.6 5.5 1968 51.6 Source: Treasury Department. 62. The revenue increase was, as the table shows, fastest during the 1950's. After 1962, revenue growth slowed down to 6 percent a year in contrast with a yearly increase of 21 percent during 1950-62. At the - 25 - end of the 1950's there had been little to indicate such a slowdown. The impending huge increase in iron ore production had given rise to the expectation of corresponding fast increases in government revenue. This expectation was based on price projections which at the time appeared quite reasonable. Under these conditions government felt en- couraged to undertake a large volume of infrastructure investments. These investments were undertaken by the various government departments with little central coordination or screening. Most of the expenditure remained outside the budget and was financed with short and medium-term credits. Because of the absence of efficient budgeting and accounting, the government was not fully aware of the total increase of debt obliga- tions. As a result of this rather uncontrolled spending, debt obliga- tions soared and when export prices dropped sharply in 1962-63 and the prospects for government revenue derived from iron ore and rubber had to be lowered considerably, a difficult financial situation arose. Debt servicing obligations in 1963 and following years threatened to take close to half of government revenue. 63. Negotiations with the principal creditors in 1962 led to a moratorium on principal repayments due in 1963-68. Meanwhile a finan- cial stabilization program was implemented with technical assistance from the Fund. The program was aimed at strengthening the tax system and improvement of budgetary procedures, particularly budget prepara- tion and expenditure controls. The Fund, moreover, provided financial assistance under a standby agreement. As part of this agreement, the Government undertook to refrain from contracting additional foreign debt other than long-term (at least 12 years). 64. Government has lived up to its obligations under the agreements with its creditors and the Fund, and acute fiscal difficulties have been avoided. The following table summarizes public finance developments during 1964-67. Appendix tables 13-15 provide additional details on the composition of revenue and expenditures. It appears that government revenue during recent years has increased at about the same rate as GIP. The increase in current expenditures financed from government revenue was kept down to about the same growth rate, which permitted government to realize in each of the years under consideration a modest amount of public savings. These savings however were barely sufficient to cover the (rescheduled) debt amortization. As a result, foreign assistance on grant and loan basis accounted in effect for almost all of the fi- nancing of public sector capital formation. - 26 - Table 9: GOVERNMENT FINANCE, 1964-68 1964 1965 1966 1967 1968 1964 1965 1966 1967 (in millions of doll ars (Budget) Tpercent ofGNP7 Current revenue -1 39.9 42.5 46.3 48.1 50.8 19.9 19.7 20.2 20.0 Current ex- penditures 33.9 36.6 41.3 42.6 42.9 16.9 17.0 18.0 17.7 Surplus 6.0 5.9 5.0 5.5 7.9 3.0 2.7 2.2 2.3 Capital formation 8.7 21.3 23.1 23.0 23.0 4 4.3 9.9 10.1 9.6 Debt amorti- zaticn 6.3 5.1 4.0 2.9 6.2 3.1 2.4 1.7 1.2 Overall deficit 9.0 20.5 22.1 20.4 21.3 4.5 9.5 9.7 8.5 Financed by: Foreign loans 7.5 20.7 18.4 17.2 3.7 9.6 8.0 7.2 Foreign grants, capital 2.5 3.0 2.3 1.8 1.2 1.4 1.0 0.7 Change in reserves -1.0 -3.2 1.4 1.4 -0.5 -1.5 0.6 0.6 Not including foreign grants used for current expenditures: 2/ 9.1 9.4 10.6 11.6 4.5 4.4 4.6 4.8 Preliminary actual $51.6 million. M Mission estimate. Source: Economic Survey 1967. 65. Government has taken a number of steps in recent years to in- crease revenue. An austerity tax applicable to Liberians was introduced in 1967 ( .2 percent of salaries over $600 a year and 2.1 percent of lower salaries) and a $10 education levy per family was extended for two years. The auditing of the concession companies was improved. In 1968 a further number of tax measures were taken which have had some effect on 1968 revenue collections but which will mostly be reflected in future revenue. The most important of them are: - Extension of the austerity tax to foreigners (yield about $3 million). - Preliminary agreement with Sweden on a double taxation treaty. The effect will be an increase in the profits of LAMCO, the biggest iron ore company and a corresponding increase in government revenue (yield about $1 million). - Establishment of a tax on dividend and interest incomes earned by non- resident foreigners. - 27 - - Increase in the rate of the corporation tax by $ percent for all ex- cept the top bracket, which remains at 45 percent (10 percent becomes 15 percent, etc., 15 becomes 20, etc.). This tax does not apply to the iron ore companies which have special arrangements with the govern- ment. - Introduction of penalties against late payment of certain taxes. Chiefly as a result of these measures it is expected that 1969 revenue will rise to $55.5 million as compared to an estimated $51.6 million in 1968 (increase of 7.6 percent). 66. The impact of recent steps to close tax loopholes and enforce payment of tax obligations is limited by the existing contractual arrange- ments with foreign concessionnaires, particularly the iron ore companies which enjoy generous tax treatment under their concession agreements. The tax liability ("profit sharing") of the companies was established at 50 percent of net profits but most of the agreements and their actual imple- mentation contain elements leading to a low level of net profits such as: special selling prices for part of the ore to foreign steel companies who own shares in the company; depletion allowance of the ore body in addition to regular depreciation allowance on other assets; high selling costs; allowance for exploration expenses beyond what is needed to maintain opera- tions at the current level. In addition, all the companies have very high debt equity ratios (in the case of the largest company, equity capital amounts to only $15 million while total investment of this company in Liberia is estimated at $275 million). These features have kept the con- tribution to government revenue by the ore companies at a low level. Al- though the companies, together with the few other modern enterprises in the country, should be the backbone of the tax system, tax payments by the mining companies represent a smaller proportion of gross value added than in the remainder of the economy. This is shown by the following calculation by the mission, which shows tax payments (including profit- sharing by the mining companies) as a percentage of gross value added of the iron ore companies and of the rest of the economy. Table 10: TAX BURDEN ON MINING AND REST OF ECONOMY, 1964-67 (Taxes /including "profit-sharing" 7 as percentage of gross value addedy 1964 1965 1966 1967 Iron ore companies 11.3 9.6 11.1 11.4 Rest of the economy 16.6 17.7 17.7 17.2 Total economy 15.4 15.3 15.6 15.6 67. A systematic review of the concession agreements has improved the Government's awareness of the ambiguity of several elements in the agreements and has led to the estimate that adequate enforcement of the -26 - existing agreements by itself could lead to an increase of government revenue in the order of $4 million, an increase of about one-third over the estimated total revenue from concessions of $12.2 millicn in 1968. Steps already taken to improve the Government's position are an agree- ment with two companies to convert part of their debt into equity and the negotiation of a double taxation treaty with Sweden. New concession agreements will provide the Governient with a greater share of revenue. This appears to be the case with the recently approved forestry concessions, and the exploration concessions for barite and petroleum. 68. The relatively higher tax burden in the part of the economy out- side the ircn ore companies indicates the regressive nature of the tax system. Taxes press hard on the rural people from whom according to various estimates 30 to 50 percent of annual monetary income is taken in the form of various levies such as the education levy, hut tax, and assess- ments by counties and local chiefs. 69. As part of the stabilization program current expenditures have been tightly controlled since 1963. The structure of these expenditures is still very much determined by the compensation of a large staff of government servants. Government salaries account for about 70 percent of total government consumption expenditures. Considering the size of the population (1.1 million) and the tasks actually undertaken by the Government, the number of government servants (13,000) appears excessive and many government workers are obviously under-employed. At the same time, provision for current purchases of goods and services amounts to only about 30 percent of government consumption resulting in too low provisicns for operation and maintenance. In fact, a major criticism about the overall allocation of government funds is the insufficient provisions to operate and maintain capital works completed in the public sector. As a result recently constructed roads have been deteriorating, schools and government buildings are in bad state of repair and results of research projects in agriculture are not being utilized. To the ex- tent this is the case a certain amount of dis-saving is taking place, which in fact should be deducted from the figure for government savings during the past several years although it would be difficult to estimate this dis-saving. 70. Capital formatioi in the public sector amounted in the years 1965-67 to $22.3 million on average. The composition by economic sector was as follows: - 29 - Table 11: PUBLIC SECTOR CAPITAL FORMATION, 1965-67 Annual Average 1965-67 (Millions of dollars) (Percent of total) Agriculture 0.1 0.4 Power 9.6 42.7 Transport and Communications 6.2 27.6 Education 1.9 8.4 Health 1.7 7.6 Community Services 1.7 7.7 Other 1.3 5.8 Total 22. 100.O Source: Economic Survey 1967. 71. The emphasis in public sector capital formation in the past three years has obviously been on the expansion of "heavy" infrastructure - power, transport and communications. The large proportion devoted to power is due to the Mt. Coffee project. In view of the still meager pro- vision of infrastructure such emphasis is in the right direction. The power and road programs fulfill obvious needs, but as mentioned before, the road program has bcen suffering from inadequate maintenance provisions. In principle the amount provided for development of agriculture (and also current expenditures for agriculture which averaged only $1.5 million) appears much too low in relation to requirements. However, in practice the wisdom of increasing these allocations is necessarily contingent on working out sound agricultural programs. Certain education, health and community services projects have been constructed according to standards which seem too high for Liberia and to the extent tis is the case capital expenditure has been wasteful. The mission roughly estimates that this judgment may apply to perhaps 15-20 percent of expenditures, but the re- mainder of public sector capital formation would by and large be econo- mically justified. Probably this represents an improvement over the situa- tion in the early 1960rs. The responsibility for mistakes in allocation is of course shared by the aid donors who provide most of the finance. There is not sufficient information to determine to what extent public sector capital expenditures have been directed to the needs of the foreign concessions but since the foreign concessions have provided themselves for almost all their infrastructure requirements (railroads, power, estate roads, housing, schools, clinics, etc.) the proportion is obviously minor. Recently two mining companies have contracted for power deliveries from the Public Utilities Authority. Some of the infrastructure facilities constructed by the concessionnaires such as campany roads and medical clinics are also used by the general public. - 30 - 72. An important feature of the development of public finance in recent years is the strengthening of budgetary procedures and expendi- ture controls. Until the financial crisis of 1963 the relation between budget and actual expenditures was often tenuous and the resulting con- fused state of public finance was itself an important cause of this crisis. Since then budget preparati qn has become more rational and the accuracy of estimates has improved.Y In the early stages of budget pre- paration, departments are consulted by the Bureau of the Budget about their expenditure requests which they have prepared in accordance with general guidelines. Development expenditures are screened by the planning department. Meanwhile, revenue estimates are prepared by the treasury. The President then prepares a final draft which he sends to Congress for its approval. Expenditures are authorized by the treasury on the basis of quarterly allocations. Faulty procedures are still leading to allocations in excess of budget provisions and there is also outstanding a certain amount of unauthorized expenditures (around $1 million). But the amounts of such expenditures have been declining. The introduction of data processing equipment should soon lead to fur- ther improvement of expenditure control. VI. PROSPECTS FOR GROWTH 73. The Government's development plan (1967-70) is mainly a public sector investment program which does not give a systematic analysis of the eccnomy's growth prospects. In addition to indicating public sector investment during the plan period it describes other intended Government actions for development. However, no attempt is made to assess the effects of investment and other action on sectoral growth rates. The mission has attempted to make its own rough assessment of growth per- spectives of gross domestic product, foreign trade and investment for the years 1967-75. This assessment indicates that GDP growth in the years ahead will probably be considerably slower than in the past two decades. The rapid expansion of the enclave industries has come to an end and development in the rest of the economy will probably not yet attain considerable momentum. As far as the enclave industries are concerned, the growth of iron ore production, the chief factor in post- war economic growth, will slow down markedly now that the mines are working at or close to capacity, and early development of new mines seems unlikely. Unless ongoing exploration (particularly for petroleum) shows very favorable results the growth of mineral production will be much slower than in the past. Rubber production will probably grow rapidly in the next four/five years as new and replanted acreage reaches maturity but towards the mid-1970's production growth will probably de- cline. Over the period 1969-75 production growth should be 5 percent a year. Budget preparation proceeds approximately on the same lines as in the United States. - 31 - 74. Growth of production in the rest of the agricultural sector is likely to be slow. No significant acceleration of production growth seems imminent in the large sections of the countryside that have poor access to markets and which mostly depend on subsistence activities. It is un- likely that the required action to stimulate broad based development in this sector of the economy will soon be undertaken and production growth will probably be about at the same rate as the increase in population. 75. There are, however, a number of activities which in recent years have begun to show greater dynamism. As far as agriculture is concerned, this is the case with the production of coffee and a number of fruits and vegetables. Production of poultry, fish and forest pro- ducts is also likely to grow rapidly, but in each case from a rather small base. The development of manufacturing is also entering a new phase with a variety of promising medium-sized projects, many of them agro-industrial in nature. The growth of these agricultural and manu- facturing activities is one of the most promising elements on the Li- berian scene. It has a potential of wider diffusion of economic growth, which would draw increased numbers of Liberians into more productive activities while reducing dependence of production and exports on the enclave industries. A relatively large power program and improved transportation facilities are required for the realization of these growth possibilities. Another prerequisite is the availability of sufficient long-term funds to finance private sector investments. In view of the dearth of domestic private savings this will require fur- ther financial assistance from abroad for the local development bank and for suitable private sector projects. 76. Activity in the construction industry will grow at best slowly in the next several years since investment in iron mines and related facilities, which has been the mainstay of the construction sector for many years, will continue to slow down and a number of major aid-assisted projects are nearing completion. 77. Tentative estimates prepared by the mission on the basis of these and other considerations indicate a GDP growth rate in real terms during 1967-75 of about 4.5 percent a year. Major assumptions underlying this estimate are that Liberian ore prices will hold approximately at the 1967 level, mainly because of improvements in quality (washing and pelletizing), while natural rubber prices would share in the expected gradual decline (about 3.5 percent a year) after 1970. Any drop of prices below these levels would of course mean a correspondingly lower growth rate of GDP and exports. On these assumptions concerning export prices, it seems likely that growth of export earnings will proceed at a rate of about 5 percent a year. Factor payments abroad will continue to take a large share of export earnings (59 percent on average during 1964-67) and although this share should decline during the 1970's as some of the ircn ore companies' private debt is being paid off, "net" export earnings will remain at a level far below total exports. This rough out- line of the growth perspective as viewed by the mission can be summarized as follows: - 32 - Table 12: GROWTH PERSPECTIVE, 1967-75 1967 1970 1975 i1n millions of dollarsT 1. GDP 308 357 442 2. Exports 159 194 237 3. Net factor payments abroad 90 105 116 4. "Net" export earnings (2-3) 69 89 121 Source: Mission estimates VII. FINANCIAL OUTLOOK A. Private Sector 78. Private savings outside the enclave enterprises, although never properly estimated, 1re certain to be small and probably will remain so in the near future - The financing of private sector investment has depended in the past to a very large extent on inflow of foreign private capital in the form of credits and direct investments. Almost certainly this inflow will be at a lower level during the next several years because of the completion of major investments in the enclave enterprises (the construction during the next few years of the $45 million pelletizing plant of Bong mine is the major exception). However, Liberia will pro- bably remain attractive to foreign investors because of its liberal investment incentives which the Government intends to maintain. It seems very likely, therefore, that, as in the past, sufficient private finance will be available to the extent attractive investment possibili- ties come up. Evidence that this will be the case is the interest shown by foreign investors in recent investment possibilities. However, in or- der to insure the possibility of Liberian initiative in some ventures and participation in others, it is important that a certain amount of domestic long-term credit be available through the banks, particularly through the industrial development bank (LBIDI). B. Public Finance 79. The prospects for government revenue are to a large extent de- termined by the success the Governmont will have in closing loopholes in the present tax system, achieving further improvements in tax collection Savings by the Lebanese traders are probably considerable. However these traders form an enclave by themselves and not unlike the enclave industries they appear to keep minimum balances in Liberia and transfer abroad as much of their funds as possible. - 33 - and increasing its revenues from the foreign concessionaires. Government has made some headway in the first two fields. The draft 1969 budget forecasts a total revenue of $55.5 million which is 7.6% higher than esti- mated 1968 revenue. The main factors in the increase, which is much higher than the expected growth rate of GDP (4 to 5 percent) are improved auditing procedures, the treaty with Sweden to avoid double taxation,increased volume of iron ore and rubber production, and reduction of abuses of duty-free privileges. Presumably more revenue increase can be obtained in future years from improved interpretation and enforcement of tax laws although after a few years marginal revenue increases from these efforts would pro- bably diminish. On the other hand, it would be highly desirable to lighten the tax burden on the lowest income groups and to the extent this were done an initial tax loss would be sustained. Our estimate of prospective govern- ment revenue has taken into account the above considerations, as well as the projected growth in imports and the output of iron ore and rubber. The resulting overall increase on government revenue during 1970-75 amounts to 6 percent a year, which is significantly higher than the projected 4.5 percent GDP growth rate. However, no allowance has been made for increase of government revenue arising out of a possible revision of concession agreements. The revenue potential of such a revision is considerable, but so far the Government has not decided to what extent this can be accomplished without serious adverse consequences on the investment climate. 80. As far as current expenditures are concerned important economies should be possible without harm to the fulfillment of the Government's tasks. As mentioned before this is particularly true for the number of government employees. Government is aware of this and is considering measures for re-training and re-deployment of government personnel while keeping the total size of the establishment as much as possible unchanged. Obviously this is a difficult task and success cannot be immediate or considerable. Moreover, Government will continue to face serious pressures to hire high school leavers and university graduates, who have little alternative employment opportunity. Meanwhile, there are pressing demands on the Government to improve teachers' salaries, increase the number of teachers and agricultural extension workers and provide for increased current government outlays on goods and services for operations and main- tenance (see next paragraph). Under these conditions, it is highly un- likely that current expenditure growth could be decelerated during the coming years. Gradually, however, the allocation of these expenditures should become sounder, leading to a more effective contribution to eco- nomic development. 81. Capital expenditures. The development program for 1967-70 was inspired by the objective of reducing the dependence of the economy on en- clave industries and of stimulating economic growth on a broader basis involving the majority of the population. To this end, Government pro- posed to continue its efforts towards improvement and expansion of the country's infrastructure but devote greatly increased attention to the promotion of agriculture and industry. The promotion of agriculture was to rely mainly on agricultural research and education directed at domes- tic food crops and new export crops and expansion of transportation - 34 - (feeder roads) and marketing facilities. In the overall allocation of government funds increased provision would be made for the working capital needs for public sector projects completed and to be undertaken, such as furniture and teaching materials for schools, instruments and medical supplies for hospitals, spare parts and gasoline for road maintenance equipment, etc. The lack of provision for these items led in the past to less than optimum use of available capital stock. The proposed amount of fixed capital formation in the public sector was however to go down compared with the years 1965-67. Table 13: PUBLIC DEVELOPMENT EXPENDITURES, 1965-70 Annual average Annual average 1965-67 1967-70 (actual) (Development Plan) A. Capital expenditures 21.8 18.0 Education 1.7 1.0 Transport 5.7 3.4 Health 2.4 1.2 Public Utilities 11.4 5.9 Agriculture 0.1 1.7 Other o.5 4.9 B. Non-capital expenditures 1.9 4.5 C. Total 23.7 22.5 Source: Development Plan 1967-70. 82. The plan is a commendable effort to establish sector priorities and formulate government policies directed towards economic development. However, the projects mentioned in the plan were almost all in an early stage of preparation or not yet fully identified. Government has never clearly defined the status of the plan and the preparaticn of the budget and of extra-budgetary foreign aid agreements appears to be only loosely connected with it. Its relevance is mainly as a relatively well-considered statement of proposed government action in the interest of economic devel- opment. On an annual basis, public sector development expenditure was to amount to about $22.5 million compared to the annual average of $23.7 million actually spent during 1965-67. However the proposed sectoral dis- tribution with its increased emphasis on agriculture (9.4 percent of the total) and on working capital needs is very different from the past pattern. 83. Although the plan includes certain investment activities ex- tending beyond 1970, such as the power program, not sufficient informa- tion about sector development programs is available for a reliable fore- cast of the levels of public sector capital expenditures beyond 1970. To some extent the level of public sector capital formation in recent years - 35 - has been on the high side if viewed in terms of the development require- ments of the economy because it included a few large politically-inspired projects financed by foreign aid which will probably contribute little to economic growth. It is unlikely that such projects will occur to the same extent in the future. Tentatively it is therefore estimated that public sector capital requirements will initially be lower than in the recent past and will gradually rise from an annual level of $18-20 million to $25 million by 1975. The assumption underlying these magnitudes is that the public sector,with technical assistance where needed, will make con- siderable progress in the preparation of suitable projects. The only in- vestment program which appears well identified relates to the power sec- tor. Feasibility studies are underway or to be undertaken regarding rice cultivation, oil palm estates, road construction, low cost housing and perhaps telecommunications. Government is preparing an education project (rural high schools), and wants to expand the port of Harper in South East Liberia. Altogether, however, the current level of activity in project preparation seems to be small compared to the development needs of the economy and not sufficiently coordinated. There is no doubt, however, that the government should be able to step up project preparation. The treasury and the planning departments have been considerably strengthened from a professional point of view in recent years and should be able to improve comprehensive development planning and to speed up, in coopera- tion with other departments and foreign technical assistance where needed, the preparation of projects. However, a decisive impulse to do this will require a certain reorientation of government action which can only be riven by the hi-hest leadership of the country. 8h. The financial outlook which results from these varicus tentative projections is summarized in the following table, which also takes into account the agreements reached in principle by the Government with its principal creditors about a rescheduling of amortization payments due in 1969-71 to following years. Table 14: FINANCIAL OUTLOOK FOR PUBLIC SECTOR, 1969-75 (Tentative projections by mission) 1967 1970 1975 1969-75 Government revenue 48.1 58.8 78.7 465.5 Surplus of public agencies 1.3 5.4 5.2 37.5 Public revenue 49.4 64.2 83.9 503.0 Current expenditures 42.6 48.7 60.9 374.1 of which interest on existing debt 6.9 5.8 2.6 32.1 Public saving 6.8 15.5 23.0 128.9 Amortization of existing public dEt 2.9 8.5 12.3 77.5 Balance 3.9 7.0 10.7 51.4 Capital formation 23.0 20.0 25.0 15h.0 Overall deficit 19.1 13.0 14.3 102.6 Service on existing public debt in % of public revenue 19.3 22.3 17.8 21.8 - 36 - 85. The overall deficit during the 1969-75 period resulting from the projections amounts to about $15 million a year on average. This figure takes into account amortization on existing public debt 1/ averaging $11 million a year and also makes allowance for anticipated current savings of autonomous public agencies. An important feature of these projections is that the public sector should be able, under the assumptions we have made regarding revenue and current expenditures, to realize a significant increase in savings in the next several years. These savings would allow Government, in spite of the persistent high level of debt service payments, to increase its contribution to the financing of capital formaticn and to assume at the same time a modest increase in conventional debt. The magnitude of the conventional debt the Government could prudently contract would probably be of the order of about $4 million a year during 1969-75. This would result in an in- crease in the ratio of debt service to public revenue by 1.7 percent on average during this period. After 1975, service on existing debt will decline sharply which means that Government could perhaps increase to some extent its borrowing on conventional terms towards the mid-1970's. Of course, this judgment is based on a number of tentative projections including the assumption that Government will continue to guard tightly the growth of current expenditures and that the terms of trade will not deteriorate drastically (see paragraph 76). Any deterioration in the financial situation due to an unfavorable turn in these or other factors or an increase in government's indebtedness on short or medium-term could quickly erase this small margin of creditworthiness. The following table shows a tentative financing scheme for public sector capital formation during the period 1969-75. The contribution from government savings has been projected at over onc-quarter of the total which uould mean a large improvemcnt over the past performance (6-1/2 perccnt durin- 1065-67). Table 15: FINANCING OF PUBLIC SECTOR CAPITAL FORIMATION, 1969-75 (Tentative scheme prepared by mission) Requirements ($ million) Capital formation 1969-75 154 less Pipeline of aid at beginning 1969 20 plus Pipeline end 1975 20 Sources 1. Public savings 1969-75 129 Amortization existing debt 78 Amortization new debt 9 Domestic contribution to capital formation: 2 2. Conventional loans (6-1/2%-20 years) 28 (debt service over 1969-75: $8.6 million) 3. Soft aid (grants and soft loans) 84 1/ Excludin, repayments to the Fund (total outstanding amount $13.0 7.llion) To the extent the net outstandin,7 debt to the Fund is reduced during the Period under consideration, domestic resources available for capital formation would be diminished beloi Uhe prcjec.ed level. - 37 - 86. The inflow of foreign resources projected for 1969-75 in the above table amounts to about $16 million a year which would mean a sharp decline compared to the annual inflow of $21 million (excluding foreign grants for current expenditures) during 1965-67. This projection is consistent with the expected development of the most important aid pro- grams. The amount of undisbursed foreign aid at the end of 1968 amounted to probably less than $20 million. The pipeline of U.S. aid at the end of June 1969 is projected at $7.4 million, down from $35.9 million at the end of June 1966. New commitments of U.S. aid have been at a relatively low level for a few years now ($6.1 million during U.S. fiscal year 1969). Prospects for German aid are also declining; for the next few years German aid disbursements are unlikely to exceed $2-3 million. No major aid re- mains to be disbursed or is about to be ccmmitted by other donors, except for the consideration by the Bank Group of the Monrovia port dredging pro- ject. The prospect for the immediate future is therefore that almost re- gardless of the actions of the Government and of potential aid donors, a decline will occur in the inflow of foreign financial resources. C. Conclusion 87. In recent years Government has shown determination in its efforts to improve the fiscal situation. With rising prices and in- creasing demands for public services, particularly education, current expenditures also had to rise, but the growth of these expenditures has been kept uithin the growth of revenues. The acceleration of revenue growth in 1968 and probably in 1969 is chiefly due to better enforcement of existing laws and introduction of tax measures which will contribute to a more modern tax structure. This approach will give the Government scope for gradual elimination of regressive features of the system and make an increased domestic contribution for public sector capital forma- tion possible. However, as yet there is no clear evidence of a rela- tive increase in the contribution of the ore mining companies to public revenues. In the long run, such an increase is the most important possi- bility to achieve an improvement of the fiscal situation. 88. In spite of these improvements in fiscal performance, Govern- ment has not yet become very effective in promoting economic development. The open-door policy has helped in attracting substantial foreign invest- ment but this has not led to wide diffusion of economic growth. The period of stabilization and improvement in fiscal improvement of the years 1963-68 should now be followed by more active development promo- tion. We have noted some elements of dynamism, such as the power program, the industrial development bank, developments in forestry and fisheries, and a number of agro-industrial ventures which seem to indicate that the stage is set for a determined drive by the Government to accelerate and to widen the process of Liberia's economic development. 89. A legacy of the past is the heavy debt burden. Even with the relief afforded by the new debt rescheduling agreements the Government's financial situation remains difficult. The ratio of service payments on - 38 - existing public debt to prospective total public revenue is estimated by the mission at 22 percent on average during the years 1969-75. After 1974 a rapid decline would set in. A modest increase in conventional debt on long repayment terms would be justified, however, if Government succeeds in increasing significantly the volume of public savings and if insufficient concessional finance is forthcoming to finance all high priority projects in the public sector. The order of magnitude of such conventional borrowing should, however, not exceed $3-5 million a year. 90. The financial situation of the public sector is the main con- straint on borrowing on conventional terms. Since Liberia uses the U.S. dollar as its currency, there is no transfer problem and the question whether the Government or other borrowing agency can service additional debt depends on its ability to raise sufficient domestic resources. It may be added, however, that export earnings are large. Debt service pay- ments on existing debt are estimated by the mission to average 7 percent of prospective merchandise export earnings during 1969-75. If private sector payments abroad are deducted from export earnings, the debt service ratio would average 15 percent. STATISTICAL APPENDIX Table No. External Public Debt External Medium- and Long-Term Public Debt including Undisbursed as of December 31, 1967 1 Estimated Contractual Service Payments Due in Future on External Medium- and Long-Term Public Debt 2 Estimated Public Debt Service Payments (Amortization Pay- ments Due in 1969-71 Rescheduled) 3 Population and Employment Age Group Structure of the Population, 1962 4 Estimated Age Group Structure of the Population, 1967 5 Population Growth, 1962-1972 6 Employment by Sector 7 National accounts GDP at Market Prices, 1950-1967 8 Gross Domestic Product at Market Prices 9 National Income 10 Industrial Origin of Gross Domestic Product at Current Factor Cost 11 Gross Investment by Major Investors in Liberia 12 Public Finance Public Sector Revenues by Source, 1961-1968 13 Public Sector Expenditures, 1964-1968 14 Public Sector Expenditures by Economic Categories (Incl. Foreign Aid) 15 Features of Principal Rubber and Iron Ore Concession Arrangements 16 Foreign Aid Expenditures by Donor and Sector, 1966 and 1967 17 Foreign Aid Project Expenditures by Donor and Government Contribution, 1965-1967 18 Banking Assets and Liabilities of the Commercial Banks, 1961-1968 19 Education Education 20 Production Rubber Production 21 Acreages of Rubber Concessions in 1967 and 1968 and of Private Rubber Farmers in 1968 22 Iron Ore Production and Exports 23 (continued) STATISTICAL APPENDIX (page 2) Table No. Foreign Trade Direction of Trade 1964-1967 24 Imports 1960-1967 25 Rice Imports by Quantity and Value 26 Value and Volume of Exports and Unit Export Prices, 1960-68 27 Exports by LPMC of Tree Crops 28 Table I EXTERNAL MEDIU-- AND LONG-TERM 1/ PUBLIC DEBT INCLUDING UNDISBURSED AS OF DECENBER 31, 1967 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Major Re- ported addi- Debt outstanding tions until Item December 31, 1967 Dec. 31 '68 Disbursed Including only undisbursed TOTAL EXTERNAL PUBLIC DEBT 155,6 182, h0 No major additions Privately-placed debt 48,274 48,274 Suppliers' credits 36,653 36,8 Private bank credits 11,21 11,421 IBRD loans 3,897 4,250 U.S. Government loans 86,018 109,726 Export-Import Bank 30,075 30,075 Other 5,943 79,651 Loans from governments of other IBRD members 17,265 20,290 Germany 16,785 17,hlo United Kingdom 400 2,880 1/ Debt with an original or extended maturity of one year or more. Source: Statistical Services Division Economics Department July 30, 1968 Table 2 ESTILATIED CO1TRACTUAL SERVICE PAY"NTS DUE IN FUTURE ON EXTERNAL MEDIUN- AND LONG-TERM PUBLIC DEBT OUTSTADING INCLUDING UNDISBURSED AS OF DECEMER 31, 1967 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Debt outst. Year (Begin of period) including Payments during period undisbursed Amortization Interest Total Grand Tota 1 1968 182,540 6,199 6,086 12,285 1969 176,341 12,029 5,941 17,970 1970 164,313 11,672 5,395 17,067 1971 152,643 11,607 4,804 16,411 1972 141,039 10,583 4,221 14,804 1973 130,458 11,096 3,693 14,789 1974 119,365 13,193 3,117 16,310 1975 106,172 10,675 2,652 13,126 1976 95,499 10,846 2,025 12,871 1977 84,654 9,616 1,495 11,111 1976 75,039 6,438 1,075 7,513 1979 68,601 4,052 908 4,960 1980 64,549 3,970 812 4,783 1961 60,579 3,984 723 4,708 1982 56,595 3,755 634 4,389 Privately-placed debt - Total 1968 48,174 5,328 3,189 8,517 1969 42,846 6,103 2,841 8,943 1970 36,743 5,580 2,503 8,082 1971 31,163 5,533 2,136 7,669 1972 25,631 4,273 1,782 6,055 1973 21,358 4,454 1,498 5,952 1974 16,904 6,261 1,181 7,442 1975 10,643 3,967 766 4,733 1976 6,676 3,974 471 4,445 1977 2,701 2,701 179 2,880 (Continued) Table 2 (Page 2) ESTDdATED CONTRACTUAL SERVICE PAYMNTS Debt outst. Year (Begin of period) Payments during period including undisbursed Amortization Interest Total Suppliers Credits 1968 36,853 4,335 2,591 6,929 1969 32,515 4,200 2,292 6,492 1970 28,315 3,801 2,052 5,853 1971 24,514 3,755 1,786 5,539 1972 20,760 3,244 1,525 4,768 1973 17,516 3,013 1,294 4,307 1974 14,503 3,860 1,054 4,914 1975 10,643 3,967 766 4,733 1976 6,676 3,974 471 4,445 1977 2,701 2,701 179 2,880 Private Bank Credits, Total 1968 11,421 1,090 603 1,693 1969 10,331 1,903 549 2,452 1970 8,428 1,779 451 2,230 1971 6,649 1,778 352 2,130 1972 4,871 1,029 258 1,287 1973 3,842 1,441 203 1,601 1974 2,401 2,401 127 2,528 IBRD Loans 1968 4,250 - 214 214 1969 4,250 - 234 234 1970 4,250 - 234 234 1971 4,250 - 234 234 1972 4,250 305 230 535 1973 3,945 325 212 537 1974 3,620 345 195 540 1975 3,275 365 175 540 1976 2,910 385 155 540 1977 2,525 405 133 538 1978 2,120 425 111 536 1979 1,695 445 88 533 1980 1,250 475 62 537 1981 775 510 35 5)45 1982 265 265 7 272 Table 2 (Page 3) ESTIMATED CONTRACTUAL SERVICE PAYMENTS Debt. outst. (Begin of period) Payments during period Year including undisbursed Amortization Interest Total U.S. Government Loans - Total 1968 109,726 162 2,067 2,229 1969 109,564 4,738 2,245 6,982 1970 104,827 4,889 2,056 6,945 1971 99,940 4,871 1,850 6,721 1972 95,072 4,802 1,644 6,445 1973 90,272 5,114 1,437 6,551 1974 85,160 5,173 1,214 6,387 1975 79,988 4,849 1,035 5,883 1976 75,141 4,993 983 5,975 1977 70,149 5,015 826 5,841 1978 65,135 4,839 667 5,506 1979 60,296 2,433 565 2,998 1980 57,863 2,322 537 2,859 1981 55,542 2,301 517 2,818 1982 53,241 2,316 498 2,814 U.S. Govt. EXIM-IBANIK Loans 1968 30,075 - 1,585 1,585 1969 30,075 3,537 1,552 5,089 1970 26,539 3,538 1,366 4,904 1971 23,003 3,520 1,179 4,699 1972 19,485 3,451 994 4,445 1973 16,036 3,408 812 4,220 1974 12,630 3,079 628 3,707 1975 9,552 2,701 473 3,174 1976 6,852 2,447 329 2,776 1977 4,406 2,175 205 2,380 1978 2,232 1,919 90 2,009 1979 313 277 10 287 1980 36 36 1 37 (Continued) Table 2 (Page ) ESTIMATED COHTIACTUAL SE2VICL PAYENTS Debt outst. (Begin of period) Payments during period Year including undisbursed Amortization Interest Total U.S. Government - Other Loans 1968 79,651 162 482 644 1969 79,489 1,201 693 1,893 1970 78,288 1,351 690 2,041 1971 76,937 1,351 671 2,022 1972 75,587 1,351 650 2,000 1973 74,236 1,706 625 2,331 1974 72,530 2,094 586 2,680 1975 70,436 2,148 562 2,70? 1976 68,289 2,546 654 3,139 1977 65,743 2,840 621 3,461 1978 62,903 2,920 577 3,497 1979 59,983 2,156 555 2,711 1980 57,827 2,286 536 2,822 1981 55,542 2,301 517 2,818 1982 53,241 2,316 498 2,814 Loans from Governments of other IBRD Hembers 1968 20,290 609 612 1,221 1969 19,681 1,189 621 1,810 1970 18,493 1,203 603 1,606 1971 17,290 1,203 584 1,787 1972 16,087 1,203 565 1,768 1973 14,883 1,203 546 1,749 1974 13,680 1,414 527 1,941 1975 12,267 1,494 476 1,970 1976 10,773 1,494 416 1,910 1977 9,279 1,495 357 1,852 1978 7,784 1,174 297 1,471 1979 6,610 1,174 255 1,429 1980 5,436 1,174 213 1,387 1981 4,262 1,174 171 1,345 1982 3,089 1,174 129 1,303 (Continued) Table 2 (Pae 5) ESTINATED COPTRACTUAL SERVICE PAY-MTS Debt outst. (Begin of period) Payments during period Year includint undisbursed Amortization Interest Total 3 e r m a n y 1966 17,410 609 572 1,181 169 16,801 1,174 557 1,731 1970 15,627 1,174 516 1,690 1971 14,453 1,174 475 1,649 1972 13,279 1,174 434 1,608 1973 12,105 1,174 394 1,568 1974 10,931 1,305 353 1,657 1975 9,627 1,305 305 1,610 1976 8,322 1,305 258 1,563 1977 7,017 1,305 211 1,517 170 5,711 985 164 1,149 179 4,726 985 134 1,119 1980 3,742 985 105 1,090 1981 2,757 985 75 1,060 1962 1,772 985 46 1,031 United KIingdomn 1968 2,880 40 40 169 2,880 15 64 79 1970 2,865 29 87 116 1971 2,836 29 108 138 1972 2,807 29 130 159 1?73 2,778 29 152 181 1974 2,749 109 174 283 1975 2,640 189 170 359 1976 2,451 189 158 347 1977 2,262 189 145 335 1970 2,073 189 133 322 1979 1,884 189 121 310 1980 1,695 189 108 297 101 1,505 189 96 285 1982 1,316 189 83 272 Source: Statistical Services Division Economics Dep)artment July 30, 1968. Table 3: ESTIMTED PUBLIC DEBT SERVICE PAYMENTS2/ (Amortization Payments Due in 1969-71 Rescheduled) (million $) Amorti- Total Debt (Rescheduled Year zation Interest Service amounts) 1964 6.3 5.2 11.5 1965 5.1 5.1 10.2 1966 4.0 6.3 10.3 1967 2.9 6.9 9.8 1968 6.2 6.1 12.1 1969 8.0 6.2 14.2 (-3.8) 1970 8.5 5.8 14.3 (-2.7) 1971 9.0 5.4 14.4 (-2.1) 1972 11.1 4.7 15.9 ( 1.1) 1973 12.8 4.1 16.9 ( 2.1) 1974 15.8 3.3 19.2 ( 2.9) 1975 12.3 2.6 14.9 ( 1.7) 1976 11.5 2.1 13.6 ( 0.8) 1977 9.6 1.6 11.2 ( 0.1) 1978 6.4 1.2 7.6 ( 0.1) 1979 4.1 1.0 5.o ( 0.1) 1980 4.0 0.9 4.9 ( 0.1) Mission estimate on the basis of preliminary agreements with principal creditors on rescheduling of amortization payments due in 1969-71. Table h AGE GROUP STRUCTURE OF POPULATION, 1962 (in thousands) Age Group Population % Male Female % All ages 1,016.4 100.0 503.6 100.0 512.9 100.0 0-4 165.4 16.5 81.6 16.2 83.8 16.3 5-14 212.4 20.8 112.3 22.3 100.1 19.6 15-24 167.7 16.5 74.0 14.7 93.7 18.3 25-h 305.3 30.0 142.8 28.4 162.5 31.6 45-64 125.2 12.2 70.9 14.0 55.3 10.6 65 40.5 4.0 22.0 4.4 18.5 3.6 Source: Population Census, 1962 Table 5 ESTIMATED AGE GROUP STRUCTURE OF THE POPULATION, 1967 (in thoiusands) Age Group Population % Male % Female %o Total ages 1,100 100 545 100 555 100 0 - 4 182.6 16.6 91.6 16.8 91.0 16.4 5 - l4 265.1 24.1 133.5 24.5 131.6 23.7 15 - 24 206.8 18.8 103.5 19.0 103.3 18.6 25 - h 275.0 25.0 136.3 25.0 138.7 25.0 45 - 64 136.4 12.4 65.4 12.0 71.0 12.8 65 and over 34.1 3.1 14.7 2.7 19.4 3.5 Source: Department of Planning and Economic Affairs; Economic Survey, 1967. Table ( POPULATICN GROWTH ('coo) 1262. 1/ 1967 L. 2/ 1 Total population 1,016 1,100 1,210 Increase in population over the past five years - 84 111 Population in age group 5-19 295 341 387 Increase in this group over the past five years - 46 46 Population in age group 15-64 595 609 670 Increase in this group over the past five years - 14 61 Total employment 411.8 422.5 Increase in employment over the past five years - 10.7 Labor participation rate 69.2% 69.4% Employment in monetary sector 92 113 Increase in paid employment over the past five years - 21 1/ 1962 population census figures. 2/ Estimates. Source: Department of Planning and 3conomic Affairs: Population and employment, 1967. Table 7 EMPLOYMENT BY SECTOR ('000) 1962 1967 T Mometary Subsistence Total of Monetary Subsistence Total of INDUSTRY Sector Sector Total Sector Sector Total Agriculture, Forestry and Fishing 35.5 298.0 333.5 80.9 4o.0 287.5 327.5 77.5 Mining 12.7 1.7 14.4 3.5 13.0 2.5 15.5 3.7 Manufacturing 3.1 5.3 8.4 2.0 6.o 5.0 11.0 2.6 Construction 11.0 1.0 12.0 2.9 12.0 1.0 13.0 3.1 Utilities 0.3 - 0.3 0.1 0.5 - 0.5 0.1 Commerce 2.5 9 11.5 2.8 6.o 9.0 15.0 3.5 Transport 3.2 0.5 3.7 0.9 8.0 1.0 9 2.1 Services 2 4*5 28 Z0 0 2 TOTAL 91.8 320.0 411.8 112.5 310.0 422.5 V Estimate. Source: Department of Planning and Economic Affairs: Population and Ikployment, 1967. Table 8 GDP AT CURRENT MARKT PRICES, 1950-1967 (monetary ec onon) Year Millions of dollars 1950 48 1951 57 1952 66 1953 72 1954 78 1955 98 1956 112 1957 113 1958 120 1959 161 1960 191 1964 248 1965 266 1966 287 1967 299 Source: Economic Survey 1967. Table ) GROSS DiESTIC PRODUCT AT CURRENT %ARKET PRICES (million $) 1960 1965 1966 1967 Net domcstic product at factor cost 186.4 232.7 242.4 256.6 264.1 a) monetary economy (155.4) (201.7) (211.4) (226.6) (233.1) b) subsistence activities ( 31.0) ( 31.0) ( 31.0) ( 30.0) ( 31.0) Provision for domestic fixed capital consumption 20.0 27.0 35.6 39.6 43.7 Net indirect taxes 1 19.6 19.3 21.0 22.0 Gross domestic product at market prices 222.1 279.3 297.3 317.2 329.8 LESS subsistence activities -31.0 -31.0 -31.0 -30.0 -31.0 Gross domestic product at market prices (monetary eonomy) 191.1 248.3 266.3 287.2 298.8 Source: Department of Planning and Economic Affairs Table 10: NATICNAL INCOME AT CURRENT PRICES (million $) 1160 1964 1965 1966 19/7 1'et domestic product at factorcost 186.4 232.7 212.2 256.6 264.1 a) monetary economy (199.4) (201.7) (211.4) (226.6) (233.2) b) subsistence activities ( 31.0) ( 31.0) ( 31.0) ( 30.0) ( 31-0) Less factor payments to abroad -50.4 -82.0 -84.5 -91.6 9 Plus factor payments from abroad 2.6 3.2 3.2 3.3 National income (whole economy) 138.6 153.9 161.1 168.3 17',2 Less subsistence activities -31.0 -31.0 -31.0 -30.0 -31.0 National income (monetary economy) 107.6 122.9 130.1 138.3 1!3.2 Source: Department of Planning and Economic Affairs. Table 11: INDUSTRIAL ORIGIN OF GROSS DOMESTIC PRODUCT AT CURRENT FACTOR: COST (in million $) 1964 1965 1966 1967 Agriculture, forestry, fishing 41.5 44.8 45.3 44.5 of which rubber production 24.6 26.7 26.6 25.8 Mining and quarrying 66.3 86.8 87.2 91.3 of which iron ore mining 62.1 83.2 82.9 84.4 Manufacturing 11.3 10.4 12.0 13.7 Contract construction 15.2 10.6 15.1 19.4 Transport and communication 15.2 15.9 17.9 17.1 Wholesale and retail trade 29.5 23.8 30.8 30.5 Banking, insurance and real estate 1.4 3.5 3.1 2.7 Ownership of dwellings 13.2 13.4 1UA.0 14.3 Private services 6.0 5.8 6.7 6.9 Public sector agencies 22.6 25.0 26.5 27.3 Public sector enterprises 6.5 7.0 -7.6 9.1 Total, monetary economy 228.7 247.0 2c%.2 276.8 Subsistence activities 31.0 31.0 0.0 31.0 Total 259.7 278.0 2,;.2 307.8 Source: Department of Planning and Economic Affairs Table 12 GROSS INVESTMENT BY MAJOR INVESTORS IN LIBERIA 1/ (million $) 1965 1966 1967 Public Sector 21.0 23.0 23.0 Mt. Coffee Hydroelectric Project 12.5 9.7 2.7 Road Construction 5.5 5.0 6.0 Monrovia Water System 0.1 0.4 4.2 National Medical Center 0.2 0.9 2.5 Kiscellaneous 3.0 7.1 7.6 Iron Ore Concessionaires 22.0 27.0 45.0 Agricultural Concessionaires 5.0 5.0 5.0 Large anufacturers 1.0 1.0 3.0 ajor Investors 49.0 56.0 76.0 Total Gross Domestic Capital Formation (notional estimate by mission) 56.0 64.0 85.0 1/ The figures are based on full returns from a group of investors. The group includes all the iron ore and rubber concessions, the most important private sector industrial projects, the public autonomous authorities and Government agencies. Source: Economic Survey 1967 Department of Planning and Economic Affairs June 1968 Table 13 PUBLIC SECTOR REVEZUES BY SOURCE, 1961-1968 (million $) 1961 196L 1965 1966 1967 1968Y I. Direct levies on income and profits 12.82 14.43 15.58 16.78 18.11 19.5 1. Income tax 65 7.7 9.27 9.21 8.0 76 a. Firestone (5.54) (3.31) (4.26) (4.26) (3.51) (2.38) b. Bethlehem (--) (0.90) (2.09) (2.01) (1.80) (2.40) c. Other 1/ (1.41) (3.66) (2.92) (2.94) (3.19) (3.90) 2. Profit sharing 5.67 6.10 5.91 7.17 7.77 7.39 a. LMC (5.67) (3.65) (2.83) (3.45) (3.05) (2.84) b. NIOC (--) (--) (0.23) (0.33) (0.30) (0.31) c. LAMCO (--) (2.45) (2.51) (2.88) (3.67) (3.25) d. DELIMCO (Bong) (--) (--) (0.34) (0.51) (0.75) (0.99) 3. Lease tax 0.20 0.46 0.40 0.40 0.62 0.51 4. Austerity tax -- -- -- -- 1.22 2.96 11. Customs and external trade charges 13.60 17.30 17.10 19.21 19.33 20.46 1. Import duty 7 7.TF 8.7 2. Surtax 1.10 1.30 1.20 (16.10o2 (16.18.. (17.51 3. Luxury tax 1.90 1.80 2.10 ( ( 4. Public highway tax .1.70 2.10 2.10 ( ( 5. Export duty 0.40 0.60 0.50 0.70 0.76 1.26 6. Consular fees 0.90 0.90 0.70 0.80 0.80 0.72 7. Consolidated petroleum tax 0.10 1.10 1.30 1.16 1.14 ( 0.84 8. Entry charge- petroleum -- 0.60 0.30 0.20 0.29 ( 9. Other custom revenues 0.10 0.10 0.20 0.25 0.16 0.13 1 Other taxes and fees 5.38 7.80 9.40 9.88 10.02 9.88 1. Real estate tax 0.10 0.30 0.30 0.27 .07 2. General license fees 1.10 1.20 1.20 1.13 1.33 1.35 3. Motor vehicle tax 0.10 0.60 070 0.72 0.64 0.69 4. Excise and related taxes 0.10 0.60 0.60 0.79 0.96 5. Hut and per capita taxes 1.20 1.00 0.70 1.10 0.97 1.33 6. Education tax -- 0.40 1.30 0.98 1.07 1.13 7. Vessel taxes 1.00 2.80 3.60 2.58 3.53 3.76 8. Penalties, sales, etc. 0.40 0.70 0.50 0.43 0.49 ( 9. Miscellaneous ( 0.87 taxes 3/ 1.38 0.20 0.50 1.88 0.43 ( ontined' Table 1 (continued) PUBLIC SECTOR REVENUES BY SOURCE, 1961-1968 (million $) 1961 1964 1965 1966 1967 1968-' .V. Public service revenues 0.50 0.40 0.40 0.39 0.63 0.61 Total revenue 32.30 39.93 42.48 46.26 48.09 50.4p L/ Includes income tax on partnerships, individuals, other corporations. 2/ Effective 1966, the import duty, surtax, luxury tax, and public highway tax were ccnsolidated. 3/ Includes receipts from coinage conversion of $0.6 million in 1961 and $1.50 million in 1966. / Estimate repared by Treasury Department in October, 1968. Most recent (Jan. 1969) estimate for total revenue during 1968: $51.6 million. Source: IMF: 36/67. Bureau of Internal Revenues and information provided by Liberian officials. Table 14 PUBLIC SECTOR EXPENDITURES, 1964-1968 (million $) 1964 1965 1966 1967 1968 Government Revenue ) 39.7 48.2 49.5 $1.6 Foreign Loans ) 20.7 18.4 17.2 25.0 Foreign Grants 11.6 12.4 12.9 13.4 ) Total Government Resources 59.0 72.8 79.5 80.1 76.6 Consumption expenditure 34.1 35.6 39.6 42.0 National Agencies 25.9 27.0 29.8 31.2 Foreign Grants 8.2 8.6 10.0 10.8 Transfers and Subsidies 3.7 5.3 5.8 5.3 National Agencies 2.8 4.5 5.2 4.5 Foreign Grants 0.9 0.8 0.6 0 8 Interest on Public Debt 5.2 5.1 6.3 6. 6.1 Public Debt (principal) 6.3 r.1 4.0 2.9 6.2 Gross Capital Formation 8.7 21.3 23.1 23.0 National Agencies 6.2 18.3 20.8 21.2 Foreign Grants 2.5 3.0 2.3 1.8 Financial Transactions 1.0 0.4 0.5 - 1/ Mission estimates based on the Budget for 1968 and information provided by Liberian officials. 2/ Includes commission and fees to the Bank of Monrovia of $0.3 million. Source: Department of Planning and Economic Affairs. Table 15 PUBLIC SECTOR EXPENDITURES BY ECONOMIC CATEGORIES (INCL. FOREIGN AID) 1964-1968 (million $) 1964 1965 1966 1967 1968 Gvt. of Grants Gvt.of Liberia from Liberia Foreign (incl.loans) abroad (excl.loans)sources Economic Development 8.6 22.5 27.9 16.5 2.4 10.2 Agriculture 1.7 1.3 1.4 1.0 0.9 1.0 Power 1.6 13.3 12.2 4.0 - Ranufacturing 0.1 0.3 - 0.1 - 0.2 Transport and Commu- ni3ation 5.2 7.1 10.7 9.4 1.2 4.9 Other Economic Serv. - 0.5 3.6 2.0 0.3 Social Development 15.3 18.0 20.0 20.8 5.9 Education 10.7 11.8 12.8 8.6 4.9 5.9 Health 3.0 4.4 5.3 6.0 1.0 3.5 Welfare 0.4 0.6 0.5 0.9 - Community Services 1.2 1.3 1.4 5.3 - General Services 22.6 22.1 21.8 19.6 5.1 24.1 General Adm'n 15.0 14.4 15.3 12.6 2.7 justice and Police 3.7 3.3 3.3 3.2 0.4 General Research 1.2 1.6 0.4 0.5 2.0 Defense 2.7 2.8 3.8 3.3 - 2.9 Debt Service 11.5 10.2 9.8 9.82/ - 12.1 Financial Transactions 1.0 - - - - Total 59.0 72.8 79.5 80.1 76.6 1/ Mission estimates, based on the Budget for 1968 and information provided by Liberian officials. 2/ includes commission and fees to the Bank of Monrovia of $0.3 million. Sources: Department of Planning and Economic Affairs. btale 16 FATURES OF PRINCIPAL IER AND ION ORE CCBMSIO AMRANGENDITS Amount of Approxiate Products and Date orig. Period Date first equity total Taxing or profit-sharing Company (ownership) 1967 output agreement to run proditi on capital investmnt arrangerents Firestone Plantatiosa Co. (Firestone Rubber Co.,U.S.A.) 16bber 1926 99 years 1935 ... $30 million Subject to regular Liberian corporate (92 million (1961) income tax (m&xLmum 45% of net profits).2/ lbs.- 86,000 acres planted) B.F. Goocrich (B.F. Goodrich, U.S.A.) Rubber 195L ... 1963 ... .e. Tax exempt until 1973; then pays special (7 million lbe. corporate tax rate 25% of net profits for - 13,000 acres next 10 years; normal corporate tax applies planted) thereafter. Liberian Agriculture Curp, Rubber 1959 70 years (1968 ... ,e Tax exempt until about 1975: thereafter, as (Uniroyal, U.S.A. (production just projected) for B.F. Goodrich above. started - 18,000 acres planted) Liberia Mining Co. (mC) Iron ore 1946 ... 1951 ... $35-h0 mil- "Profit-sharing" equivalent to 50% of net (RePUihc Steel Corp., U.S.AJ.9 million lion (1962) profits 2/. tons exported in 1967/68) National Iron Ore Co. NIOC) Iron ore 1958 80 years 1962 $10 million $30 million Government receives dividends on its 50% 50A t.ber ian 6ovh/ (b.1 million (1962) shareholding in lieu of other income taxa- 35% private U.S. and tons exported tion. Liberian shareholders in 1967/68) 15% LMC) B in (C) Iron ore 1958 70 years 1965 ... $233 millim Government receives dividends on its share- (0% Liberian (4.4 million (Sacl.proposed holding, as above, but with minimum of 25 50% German (majority) and tons exported Wi5 millim cents per ton exported if dividends below Italian interests) in 1967/68) pelletising this level. 5/ plant) Liberian American-Swedish Minerals Co.LAMCO, Joint Venture a. 2 Bethlehem Steel ) $4.5 million ) Net profits subject to Liberian tax at Corp., U.S.A. ) entmanae fee") special flat rate of 50%. b. 75% LAMCo: of ehich Iron ore 1953 70 years 1963 $11.25 million )$275 million Government receives dividends on its 50% 50% Liberian Govt., ) exporic. shareholding, with a minimum payment of 50% Liberian Iron ) o& pelletising 50 cents per ton exported if dividends below Ore Ltd.(LI0) ) in 1967/68) )Plant) this level. L/ consisting of Swe- ) dish (majority), U.S) & Liberian investors) Liberian Iron & Steel Corp.(LISC0) (U.S. interests, Iron ore, 1967 ... ... ... Net income will be subject to special 50% bauxite end tax! additionally, royalty of 15 cents per manganese (not ton exported will be paid, of which only yet determined) 7-1/2 cents may be treated as a deduction from net income. 1/ Excluding rental fees and other minor taxes, and excluding taxes paid in Liberia by employees of the concessions, or subsidiary activilles. N.B. All concessions receive duty free entry of imported supplies and equipment related to their operations; most are specifically exempt from export duties and other indirect lavies. 2/ Maximum marginal rate applicable to incoae over $1 milliont prior to 1965, a Wmm as 35%. 3/ Was raised from 35% in 1965, by agreement between Government and compapy; the earlier agreement provided for this increase to take place in 1969. J/ In the case of NIOC, Govt. subscribed its equity in cash ($5 2lLUM), and 15W received its $1.5 million equity participation in return for relinquishing its rights to the iron ore properties. In LAMC and NC, the Government's shareholding ao received in return for the grant of the mineral rights. 5/ Per ton payments, where applicable, are treated as an advance against future dividends. Sources: IMF: SM 68/67. Information provided by the Liberian Government. Table 17: FOREIGN AID EXPENDITURES BY DONOR AND SECTOR, 1966 AND 1967 (million of dollars) Sector Year U.S.A. Ge IBRD U.N. U.K. Other Total Education 1966 4.83 .04 - .34 .04 .87 6.12 1967 5.71 .05 - .32 .04 .36 6.48 Agriculture 1966 .14 .01 - .10 - .16 .41 1967 .47 .21 - .11 - .16 .74 Health 1966 1.57 - - .11 - .01 1.69 1967 7.31 - - .12 7.43 Public Administration-Y 1966 1.25 - - .39 .01 - 1.65 1967 1.35 - - .39 - - 1.74 Transportation Communication & Power 1966 9.74 3.29 1.60 .10 .24 14.97 1967 3.69 3.74 1.34 .11 .08 - 8.96 All Others / 1966 5.04 .10 - .13 - - 5.27 1967 3.97 .02 - .18 - - 4.17 TotalsJ 1966 22.57 3.44 1.60 1.17 .29 1.04 30.11 1967 22.50 3.81 1.34 1.22 .12 .52 29.51 1/ Includes forestry and fisheries. 2/ Less than $10,000. Includes Police and Fire Departments and Department of Planning. 6/ Includes administration of projects and general research. 9/ Figures may not add due to rounding. Source: Economic Survey, 1967. Table 18 FOREIGN AID PROJECT EXPENDITURES BY DONOR AND GOVERNIMENT CONTRIBUTION, 1965-1967 (thousands of dollars) Donor Grants Loans Total Percentage Gvt. Donor Govt. Donor Gvt. Donor distribution U.S.A. 777 33,566 3,569 34,672 4,346 68,238 71 West Germany 203 674 - 11,734 203 12,408 13 I.M.F. 33 119 - 5,5501/ 33 5,669 6 I.B.R.D. - - 1,741 3,743 1,741 3,743 4 U.N. 796 3,405 - - 796 3,405 3 Others 553 2,649 - $60 553 3,209 3 Total 2,362 40,413 5,310 56,259 7,672 96,672 100 1/ Net loan assistance. Source: Department of Planning and Economic Affair:w Public Foreign Assistance to Liberia, 1965-1967. Table 19 ASSETS AN2D LIABILITIES OF THE COMMECIAL BANKS, 1961-196.8 (million $) (at December 31) 1/ 1961 1962 1963 1964 1965 1966 1967 1968 A3sets Cash 2.9 3.2 2.6 3.1 3.3 5.0 3.7 3.7 Net Foreign Assets -0.9 -6.8 -9.3 -11.5 -8.5 -10.2 -7.3 28.4 Credit to Government 12.9 15.4 14.9 13.5 13.7 14.5 10.3 9.7 Credit to Private Sector 13.2 15.7 20.3 20.8 18.2 17.8 20.7 21.7 Other Assets (net) 0.6 0.2 2.3 3.9 3.6 3.8 4.6 4.9 Total Assets 28.7 27.7 30.8 29.8 30.3 30.9 32.0 68.4 Liabilities Capital and Reserves 5.0 4.5 4.9 5.9 5.9 4.3 5.8 6.3 Private Deposits 23.7 23.2 25.9 24.0 24.4 26.6 26.2 62.2 Demand .. (13.7)(15.9)(14.4)(14.9)(13.7)(13.6)(12.3) Time and Savings .. (9.5)(10.o)( 9.6) (9.6)(12.9)(12.6)(49.9) Total Liabilities 28.7 27.7 30.8 29.8 30.3 30.9 32.0 68.4 Cash Ratio 12.4% 13.8/ 10.0% 12.9% 13.5% 18.7% 14.1% 5.9% ,'vances/Deposit ratio i. Government 110% 134% 136% 143% 131% 121% 118% 50% Avances/Deposit ratio excl. Government 56% 68% 78% 87% 75% 67% 79% 35% I/ At June 30. Source: Department of Planning and Economic Affairs: Annual Reports Economic Survey, 1967 Banking Statistics for the Quarter Ending June 30, 1968. Table 20: EDUCATION A. Enrollment by grade level 1965 1967 Level Pre-primary and primary 83,171 108,030 Secondary general 8,406 11,551 Vocational and technical 809 915 Primary teacher training 307 377 Sub-total 92,693 120,873 Higher education, teacher training 165 174 Other higher education 520 909 Sub-total, higher education 685 1,083 Grand total 93 378 121 920 B. Number of teachers by level of school Level 1965 1967 Pre-primary and primary 2,792 3,329 Secondary general 466 657 Vocational and technical 65 68 Primary teacher training 35 35 Sub-total 3,358 4,089 Higher education, teacher training 27 26 Other higher education 81 103 Sub-total, higher education 108 129 Grand total 31466 4,218 Source: Economic Survey 1967 Table 21 RUBBER PRODUCTION (thousands of pounds, dry content) 1964 1965 1966 1967 1968 1/ Production YieldAcre Production Yield/Acre lbs. lbs. Concessions 77,000 82,470 90,228 102,066 1,179 101,550 1,148 Firestone Plantation Co. 73,000 76,000 .. 92,285 1,298 88,365 1,261 B.F. Goodrich .. .. .. 6,924 813 8,762 1,025 African Fruit Co. .. .. 1,234 493 1,536 597 Liberia Co. (Cocopa) .. .. .. 1,407 756 1,962 751 L.A.C. .. .. .. 132 153 584 265 Salala .. .. .. 35 51 341 276 Private Farmers 20,000 28,287 31,970. 36,387 .. 38,ooo 507 Total production 97,000 110,757 122,198 138,453 .. 139,550 854 1/ Estimate based on actual figures for the first eight months of the year (based on conservative estimate; total production perhaps as high as 145 million pounds) Source: 1964-1966: Mission estimates based on data supplied by the Rubber Planters Asociation of Liberia, Inc. and on "National Income of Liberia, Department of Planning and Economic Affairs, April 1968." 1967-1968: Rubber Planters Association of Liberia. Table 22 ACREAGES OF RUBBER CONCESSIONS IN 1967 AND 1968 AND OF PRIVATE RUBBER FARES IN 1968 1967 1968 Mature Immature Mature Immature B.F. Goodrich 8,512 4,509 8,546 4,475 African Fruit Co. (AFC) 2,500 2,876 2,805 2,571 Liberia Co. (Cocopa) 1,861 2,819 2,613 2,089 LAC (Uniroyal) 860 17,310 2,200 15,970 Salala 689 4,397 1,236 3,888 Firestone Plantation Company 71,084 14,610 70,067 15,741 Todee 1,000 1,000 1,000 1,000 Total Concessions 86,506 47,521 88,467 45,734 Private Farmers .. .. 75,000 69,710 Totals ... ... 163,467 115,444 Source: Liberian Rubber Planters Association. Table 23 : IRON ORE PRODUCTION AND EXPORTS (million of long tons) Produc tion Ex ports -Y 1960 1961 1962 1963 1964 1964/65 1965/66 1966/67 1967/65 Lamco S.V. Operating Co. - - - 2.3 7.2 7.9 8.6 7.7 8.4 Bong Mining Company - - - - - 0.7 2.7 3.1 4.4 National Iron Ore Co. - - 0.6 2.3 3.1 1.8 3.5 3.9 4.1 Liberian Mining Co. 2.9 3.1 3.1 3.0 3.0. 3.6 2.0 2.1 1.9 Total 2.9 3.1 3.7 7.6 13.3 14.1 16.9 16.8 18.9 2 September 1 - August 31 Source: Annual Reports of the Bureau of Natural Resources; Data supplied by Liberian authorities; Current economic position and prospects of Liberia, IBRD, June 16, 1966. Table 24 DIRECTION OF TRADE 1964-1967 (million $) Exports 1964 1965 1966 1967 value % of value % of value % of value % of total total total total Africa 1.6 1.2 1.0 0.7 0.4 0.2 2.5 1.5 Europe 66.2 52.9 82.3 60.9 92.0 61.3 105.1 66.1 EEC (50.4)(40.3) (69.7)(51.6) (77.4)(51.6) (89.5)(56.2) Asia 0.3 0.2 2.0 1.L 2.2 1.1 1.9 1.1 North America 57.5 6.0 50.1 37.1 51.0 34.0 49.3 31.0 U.S.A. (57.3)(45.8) (50.o)(37.o) (51.o)(34.o) (47.5)(29.8) Other Regions - - 0.1 - 4.9 3.2 - - All Regions 125.7 100 135.4 100 150.5 100 158.8 100 Source: Department of Planning and Economic Affairs: Economic Survey 1967. Table 25 IMPORTS 1960-1967=1 1960 1961 1962 1963 1/64 1965 1966 1 6 -Dod, bevera-es and tcbacco 11.0 14.1 17.0 19.6 19.8 18.7 22.1 20..9 ichinery and vehicles 23.3 35.0 53.7 34.9 37.4 35.0 31.9 36.0 infactured goods 26.2 31.5 47.1 38.1 35.4 32.6 37.8 49.7 Che4icals 4.7 4.3 5.8 4.9 5.3 6.1 6.8 6.8 Futls and lubricants 2.9 3.4 4.3 7.5 10.0 8.3 10.3 8.2 Other 1.1 2.4 3.7 3.0 3.3 4.1 4.8 3.6 Total imports 69.2 90.7 131.6 108.0 111.2 104.8 113.7 125.2 1/ Lxcludes imports for re-export. -Dirce: Department of Planning and Economic Affairs- Economic Survey 19673 Annual reports. Table 26 RICE T1PORTS BY QUANTITY AND VALUE (1962-1967) Year Lbs.(1000) $ (000) 1962 60,163.1 3,865.9 1963 79,245.2 6,034.2 1964 92,367.7 6,012.0 1965 71,643.5 6,325.7 1966 102,075.4 7,536.5 1967 75,793.7 6,564.4 Average 80,214.7 6,053.1 Source: Department of Planning and Economic Affairs. Economic Survey, 1967. Table 27 .VALUE AFD VOLULi OF LXPG'RTS AlD UFIT .XPoRT PRICES, 1960-.ß 1960 1961 1962 1963 1964 1965 1966 1967 1968* Value (in % million f.o.b.) 85.5 62.3 68.3 80.2 125.7 135.4 150.5 158.8 Rubber 42.0 25.9 26.) 23.0 29.7 29.0 27.0 26.6 26.6 Iron ure 34.6 2-.4 32.4 45.0 80.6 96.0 106.3 115.1 130.4 Diamonds 2.3 2.2 4.5 4.0 1.7 1.4 3.1 5.4 5.6 Pal-a Kernels 2.0 1.1 0.8 0.6 0.8 2.1 1.6 1.8 2.1 Cocoa o.5 0.2 0.2 0.4 0.6 0.2 0.5 0,6 i..1 Coffee 0.5 0.4 0.6 1.5 6.G- 1.7 5.8 2.5 2.8 Piassava o.2 0.4 0.1 0.1 - - - - - Re-exports 3.4 2.7 3.3 5.6 6.0 4.5 4.8 5.6 -ther domestic cxports 0.1 0.5 1.4 1.2 Vølumae Rubber (million 1b., d.r.c.) 106.7 90.8 100.1 88.5 95.5 116.1 121.9 136.7 140.0 Iron Cre (rillion lon, tons) 2.9 2.8 3.7 6.4 12.0 15.1 16.3 17.2 19.5 Diamonds (thousand carats) 967.0 1095.0 854.0 700.0 200.0 300.0 300.0 600.0 600,0 Palm Iýernels (million ib.) 33.6 25.4 18.9 13.2 15.1 26.6 25.8 29.4 29.0 Cccca (million lb.) 2.2 1.5 l8 2.3 3.4 1.6 3.b 2.5 4.2 Coffee (million lb.) 2.0 2.2 4.2 8.1 17.3 7.0 19.6: 9.2 9..3 Piassava (million lb.) n.a. 2.9 1.9 1.4 1.5 1.3 0.5 1.0 .. l"r.it Prices iubber (cents- per lb.) 39.4 28.5 26.8 25.9 31.1 24.9 22.1 19.4 19.0 Iron Ore (%' per ton) 11.90 10.50 8.76 7.03 6.72 6.36 6.52 6.69 6.? Pari ernels (cents per ib.) 0.59 0.39 0.42 0.45 o.58 0.79 0.62 o.61 0.72 lission estimate. uirces: Department of Plannin- and Lconoiic Affairs: Economnic Surve-y 1967 Aninual reports and: IBiD; AF 45-a. Table 28 : EXPORTS BY LPMC OF TREE CROPS1/ 1964 1965 1966 1967 1968 Long tons Long tons Long tons Value $ Long tons Value $ Long tons Value $ million million million Robusta coffee 8,227 3,047 7,882 ) 4,041 2.7 3,914 2.7 ) 15.6 Liberian coffee 70 151 217 ) 219 0.2 252 0.2 Cocoa 1,168 545 1,082 0.4 1,452 0.8 1,865 1.1 Palm kernels 6,708 10,430 11,376 1.7 13,402 1.8 12,946 2.2 Piassava .. .. .. .. 20 - 129 - Total 5.4 6.2 Each year from October 1 until September 30 of year indicated. Sources: Liberian Produce Marketing Corporation (LPMC); Economic Survey 1967, Department of Planning and Economic Affairs. LIBERIA * one o~ / on Sl E R R A Kolhun L E O N E c q )Š LG U N E A LEONL .oe.,o. f ib-i BeOun fn.da g To o~II se lo PLAN AT/ON Mecco Bong Range CO A S Under CneStrUCnKok F ree Po PL ANTATAON nov. Bucharion - LAMCOF- . PELLETIZING PLNz---iub -..- - -re Ude r cnst.rctW,o Greenvile ---Tnplek Aifild 0.stwn PhF\ETN Airstips . - .LANTAp/ON pVEoF 196e,, V 0