Monrovia – Liberia’s economy is so shredded because President Ellen Jonson Sirleaf started her government’s economic policy wrongly by focusing on supply-side economics, according to Dr. Lester Tenny, assistant lecturer of economics at the University of Liberia Graduate School.
“Our problem can be dated back with the formation of this government – the nature of the policy in place – the government adopted what we call supply-side economics,” he said.
Speaking on UNMIL Radio’s Business and Economy program recently, Dr. Tenny explained supply-side economics as “A kind of economic system where you tend to incentivize multinational [companies] who want to invest in your country.”
“Incentivize means you try to give them tax break, tax holidays and that was not prudent”.
He linked supply-side economics to the regime of former U.S. President Ronald Regan in the ‘80s – Reaganomics – which plunged the American economy into an acute deficit of almost a trillion United States dollars.
“So supply-side economics is not a prudent form of economic system that should have been adopted by our government,” he noted.
He referenced the 25-year tax holiday the government offered the China Union.
“No country survives in the absence of domestic resource mobilization, meaning that you cannot survive in the absence of taxes.”
“But this is the case where you have given 25-30 tax break to a concession company.”
“How do you intend to mobilize resources when you have intentionally surrendered your right to raise revenue simply because you want them to come and invest,” he averred.
Scavenging The Budget
According to the Economics lecturer, a research through econometrics analysis has shown that Liberia’s budget shouldn’t be half a billion dollar, instead of a quarter million.
The continuous inflation of the national budget, he said,…