Under Elon Musk’s leadership, the Department of Government Efficiency (DOGE), on Saturday, February 15, 2025, shocked Liberia’s development agenda by canceling a crucial $1.5 million project designed to bolster voter confidence in the country. The cancellation came on the heels of Musk’s earlier decision to halt a $17 million tax reform initiative to modernize Liberia’s tax policies. In a statement via social media platform X, Musk questioned the allocation of such funds, asking, “Why would anyone think that this is a good use of YOUR tax money?” His decision to terminate both projects represents a broader strategy of scrutinizing government spending, particularly projects that Musk believes do not align with the interests of American taxpayers. For Liberia, however, the consequences of this move are devastating.
These cancellations are part of a larger trend as the Trump administration, through DOGE, continues to reevaluate foreign aid expenditures. While fiscal responsibility is vital, critics argue that these cuts will do more harm than good, especially for developing countries like Liberia. The canceled projects were crucial in helping Liberia strengthen its fiscal infrastructure and improve its democratic processes. With these vital initiatives now shelved, Liberia faces a future clouded by uncertainty and economic instability.
The cancellation of the tax reform project, which was intended to assist Liberia in reforming its tax policies, would have provided the country with much-needed technical advice on improving tax collection and revenue management. This reform was expected to play a key role in modernizing the country’s fiscal system, offering a critical avenue for increasing domestic revenue at a time when Liberia’s budget is heavily reliant on foreign aid. Unfortunately, these plans were thwarted by DOGE’s decision, leaving Liberia in a more vulnerable position.
While some support Musk’s approach to cutting unnecessary government spending, the timing of these cancellations could not be worse for Liberia. The country’s heavy reliance on foreign aid, particularly U.S. support, has long been a source of concern. Since the end of Liberia’s civil war in 2003, the U.S. has been one of the country’s largest development partners, investing billions of dollars in critical sectors such as health, education, and infrastructure. However, recent developments suggest that this reliance is now a double-edged sword.
In addition to canceling the tax reform and voter confidence projects, the Trump administration took a further step in December 2024 by freezing all U.S. foreign aid. This decision halted the operations of the United States Agency for International Development (USAID) for three months, leaving over 232 ongoing projects in limbo. Projects crucial to Liberia’s economic stability, including agriculture, governance, and public health initiatives, now face significant delays. This freeze has put at risk more than $150 million in funding, which would have been allocated to essential programs.
Liberian activist Martin K.N. Kollie has long warned of the dangers of excessive dependence on foreign assistance. He argues that the country’s reliance on external aid has left it vulnerable to sudden policy shifts and decisions made far from its borders. In his recent commentary, Kollie noted that Liberia risks severe financial strain without alternatives to foreign aid. The aid freeze and the loss of key development projects only amplify these concerns, casting a dark cloud over the country’s economic future.
Liberia’s 2025 national budget stands at $851 million, yet a staggering 87.5% of this amount is allocated to recurrent expenditures, such as salaries, allowances, and benefits for government officials. Only a small fraction is left for actual development projects, highlighting the failure of Liberia’s leadership to invest in sustainable economic growth. Kollie’s criticism is pointed: the government’s failure to build a self-sufficient economy has exposed the country to external decisions, like the Trump administration’s cuts to foreign aid, which have intensified the nation’s financial crisis.
Despite receiving over $2.4 billion in aid from the United States since 2003, Liberia remains one of the world’s poorest countries, with an unemployment rate surpassing 90%. This continued reliance on aid has not translated into long-term development. In 2020, the U.S. approved a $640 million aid package for Liberia, but nearly half of that funding remains unspent. The freeze on USAID projects now risks derailing these initiatives entirely, leaving Liberia with no clear path to recovery or progress.
The impact of the aid freeze is already being felt on the ground. Thousands of Liberians employed through USAID-funded projects are now out of work, with no immediate alternatives in sight. A former USAID-funded Liberia Food Security Activity (LFSA) project employee shared that his job had been suspended due to the aid freeze. With fewer people contributing to the country’s tax base, Liberia faces a significant shortfall in revenue at a time when the government desperately needs funds to support essential services.
This freeze also has a ripple effect on the broader economy. Liberia is heavily dependent on U.S. dollars, and without the influx of aid, the country faces a severe shortage of foreign currency. This has already begun to drive up inflation, depreciating the Liberian dollar and making imports more expensive. For businesses that rely on USD transactions, sustaining operations has become increasingly difficult, while ordinary citizens face the brunt of price hikes on essential goods.
Moreover, the freeze on aid jeopardizes Liberia’s eligibility for a second Millennium Challenge Corporation (MCC) compact. In 2024, Liberia was selected to develop this second compact, which could have provided between $350 million and $500 million in additional funding for critical development projects. However, with the aid freeze in place, the future of this potential funding remains uncertain, and Liberia could lose out on this much-needed support.
Critics argue that President Boakai must take decisive action to reduce the country’s reliance on foreign aid as the situation worsens. Kollie suggests that Liberia needs to adopt a more aggressive approach toward economic self-sufficiency, focusing on sectors like agriculture, tourism, and local manufacturing. With domestic revenue collection falling short and foreign aid in jeopardy, Liberia must explore new avenues for growth.
The Liberia Revenue Authority (LRA) collected $700 million in domestic revenue in 2024, yet much of it was diverted toward non-essential government expenses. Kollie highlights that such spending is symptomatic of a larger governance failure, where personal enrichment often takes precedence over national development. The government’s failure to invest in meaningful reforms has left Liberia vulnerable to external decisions like Trump’s aid freeze.
President Trump’s actions, while part of his “America First” policy, remind Liberia’s leaders that they must take full responsibility for their development. The suspension of foreign aid is a stark message that the days of relying on external assistance may be numbered. The question now is whether Liberia will rise to the challenge of building a more self-sufficient and prosperous future, or whether it will continue down the path of dependency, hoping for the next foreign bailout. The stakes are high, and Liberia’s future hangs in the balance.
