Liberia - Economy

The Liberian economy has come to a virtual standstill since civil war broke out in 1989. The country has an agricultural economy with the majority of the population earning its living in this sector. The principal crops are rice, cocoa, coffee, palm oil, sugar cane, and cassava. Financial mismanagement and the effects of civil war have divided the country into two economic zones, one centered in and around the major urban centers, the other comprising the bulk of the country's rural hinterland. Although the country is rich in natural resources—particularly minerals (gold, diamonds, and iron ore) and forests—little investment has entered the country since hostilities began. The 1996 Abuja peace accords initially provided some hope of an economic recovery in the coming decade, but fighting broke out again in 1999 and was ongoing in 2003.

Even prior to the civil war, Liberia faced serious financial problems. Deficits created in the 1970s were deepened by a wave of military spending resulting from the 1980 coup. To try to compensate, cuts in civil service salaries and currency manipulation were used as policy tools. A US-led effort to bring better fiscal management to the Liberian economy failed, and in 1988 the World Bank closed its offices in Monrovia. In March of 1990, the IMF threatened to expel Liberia for nonpayment of its debt.

The civil war has left most of Liberia's infrastructure in shambles. Businessmen and capital have left the country and continuing turmoil has prevented normal economic life. The remaining economic assets were plundered or destroyed by factional forces. In addition, President Charles Taylor's support for rebels fighting in Sierra Leone has negatively impacted the climate for foreign investment. Although there are no official statistics, it is estimated that 85% of the population was unemployed in 1999.