United States President Donald Trump announcement of a 90-day freeze on USAID activities has sent shockwaves through the Liberian economy as the country braces for significant job losses and a steep decline in revenue.
The freeze affects crucial programs that have long supported local employment and economic growth.
An analysis from the Liberian government reveals that the freeze could lead to the termination of services for thousands of Liberians employed directly or indirectly through 39 non-governmental organizations (NGOs) funded by USAID.
Approximately 10,000 employees are estimated to be directly engaged in projects that rely on this American aid, including consultants, contractors, and administrative staff. For many, the loss of these jobs represents not just a setback but a complete lack of income for families dependent on this work.
Economic Impact and Revenue Loss
The freeze is expected to have cascading effects on the national economy. It will directly reduce revenue collected through personal income taxes, procurement taxes, and real property taxes, according to official government review of the situation.
The initial financial analysis suggests that the elimination of these programs could lead to a revenue shortfall of around $3.8 million for 2025, with a quarterly loss anticipated to reach $950,000.
“USAID has been a cornerstone of our economic framework, contributing $3.6 million to the FY2024 budget through tax revenue, with 88 percent sourced from income tax,” the document stated
“The immediate loss of jobs and diminished payroll will drastically reduce revenue collection at a time when our economy is already under pressure.”
Local businesses that supply goods and services to USAID projects are also facing a dire situation. The anticipated decline in demand for these services will not only affect business owners but also create a ripple effect within the community, diminishing overall economic activity and further diminishing tax revenue.
This includes crucial income from import duties, taxes on road usage, and excise duties stemming from transportation improvements funded by USAID.
Moreover, the freeze is expected to delay critical initiatives, such as the implementation of a Value Added Tax (VAT) scheduled for January 2026, further endangering the country’s long-term revenue stability.
**A Call for Support
The ramifications of the aid freeze will exacerbate existing challenges, particularly for small businesses that rely on USAID’s training, grants, and financial support. Without these resources, many businesses may struggle to survive, further escalating unemployment rates.
The authorities are worried that the U.S. government’s decision to suspend aid will generate widespread hardships and poverty.
USAID FUNDED INSTITUTIONS
