Liberia Suffers From Dysfunctional Economy

Liberia Suffers From Dysfunctional Economy, UN Panel Says

With more than half of the people of Liberia estimated to be living on less than 50 cents a day, a United Nations-appointed expert panel says the West African country is suffering from "widespread financial improprieties by government officials, extremely low economic growth, a high foreign and domestic debt burden" and about 80 per cent unemployment.

In a report to the UN Security Council, the five-member Panel of Experts on Liberia says instead of spending its funds on health care, education, water and roads, the National Transitional Government (NTGL) appropriated 52 per cent of the annual budget for personnel and 15 per cent for security, although the UN Mission in Liberia (UNMIL) currently bears the major responsibility for security.

The panel was appointed to monitor Security Council sanctions against Liberia, imposed in 2001 and re-imposed last year. They include diamond exports, an arms embargo, restrictions on the export of round logs and timber products and travel bans on individuals posing a threat to Liberia's stability and security.

In the 23-page report, the panel says the Government is willing to satisfy the requirements of the Kimberley Process certification that would authenticate local rough diamonds and allow them to be sold internationally, but lacks the finances and trained personnel to stop illegal mining.

As a consequence, "violations of the Security Council embargo on the export of Liberian diamonds are set to increase in the short to medium term," it predicts.

In response to an offer of funding from the United States, the NTGL has drawn up lists of equipment and other necessities to ensure Kimberley compliance, but "it appears to be experiencing difficulty in achieving an actual, accurate financial costing."

Reliable sources told panellists that "up to five small, ad-hoc diamond-buying offices have opened in (the capital) Monrovia that are purchasing production from both Nimba County and the Lofa River basin."

The Forestry Development Authority (FDA), meanwhile, has enforced widespread compliance with sanctions against timber exports, despite security concerns in the field, the panel says.

Few of the needed reforms have been implemented, however, and "a growing domestic market is being supplied by ex-generals who are hiring ex-combatant labourers," it says, calling for a professional management team to run FDA.

The Government has not accounted for the money allocated in the previous two budgets, but has overspent, "most of the revenue-generating parastatals or units have not been audited" and many teachers have not been paid for up to 24 months.

"In addition to unapproved excess spending, it appears that the National Transitional Government is tolerating substantial leakage of revenue. The Panel documented three major sources: loss of customs duties, loss of taxation on petroleum imports and loss of revenue from the sale of iron ore," the panel says.

The NTGL sold 700,000 tons of iron ore in January for $10 per ton, instead of the going rate of $40 a ton, and then failed to deposit the proceeds in the Central Bank of Liberia, as required. Sued by civil society organizations, the Justice Ministry pledged to the Supreme Court of Liberia in September that all future proceeds would be properly handled, the panel reports.

On the question of the action the Security Council requested against certain associates of ousted President Charles Taylor, the report says the Ministry of Justice gave two of the 26 people designated to have their assets frozen, Benoni Urey and Emmanuel Shaw, enough time to dispose of their holdings.

No action was taken against the others and when the panel asked the Ministry for an explanation, "no reply was furnished."

The panel has also learned that Mr. Taylor, who is in exile in Nigeria, is still receiving money from Liberia, but it has been unable to collect direct evidence since "the general lack of any type of financial control and rampant corruption" facilitate the diversion of funds.

The five experts are: Chairman Atabou Bodian of Senegal, Arthur Blundell of Canada, Damien Callamand of France, Caspar Fithen of the United Kingdom and Tommy Garnett of Sierra Leone.

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