Liberia: Country and Foreign Investment
Economy and Currency
For several years, up to the advent of the civil war in 1990, the Liberian economy relied on the extractive sector, which consisted mainly of iron ore and which generated over fifty percent of Liberia's export earnings. Other basic products such as raw timber, rubber, diamonds, iron ore, coffee and cocoa accounted for the remaining 50%. The manufacturing sector remained relatively small and predominantly foreign-owned. Political instability introduced by the military coup d'etat of 1980 and superimposed upon by ten years of civil war, has had a devastating impact on the Liberian economy. The iron ore sector has come to a complete stop, as the three major concessions in Bong Mines, Nimba and Bomi Hills were constrained to close their operations.
Endowed with plentiful water, mineral resources, forests and a climate favourable to agriculture, Liberia's major export earnings today come from raw timber and rubber with, diamonds, coffee and cocoa on a lesser scale. Prospects also exist for commercially exploitable offshore crude oil deposits in Liberia. The local commercial economy remains dominated by foreigners, mainly Lebanese.
Liberia's success story, however, has been its shipping and corporate registry, which after some problems in the 1980s is now rapidly growing back to its former prominence. Currently it is the world's second largest maritime registry - previously it was the largest registry - and continues as the premier quality open registry for safety, security and compliance with international environmental protection requirements.
The revitalization of the economy, and the restoration of basic infrastructure and services, destroyed as a result of the civil war, depend on the re-establishment of a conducive environment for peace and stability in the country, coupled with good governance, and the implementation of sound macro- and micro-economic policies, including the encouragement of foreign investment, and generous support from donor countries.
A Governance and Economic Management Action Plan was created in October 2005 by the International Contact Group for Liberia to help ensure transparent revenue collection and allocation - something that was lacking under the Transitional Government and that has limited Liberia's economic recovery. The reconstruction of infrastructure and the raising of incomes in this ravaged economy will largely depend on generous financial support and technical assistance from donor countries.
The local currency is the Liberian dollar (LRD), quoted at 55-60 to the US dollar in 2005, after a period of rapid inflation. In September 2013, one US dollar was worth LRD78.
In its report on the Liberian economy in January 2008, the International Monetary Fund (IMF) noted that the government has continued to make good progress in implementing key policies under an IMF-monitored programme, despite severe capacity limitations.
The economy has continued to recover, growth for 2012 is estimated at 8.3%, for 2011 this was 7.9% and 6.1% in 2010. Inflation in 2012 was 6.9% (8.5% in 2011) and nowhere near the peak of 27% in August, 2008, and unemployment is rife. GDP per head is USD700.
International trade is conducted in the US dollar.