Press Release: Statement by IMF Mission on Liberia's Progress Under the Staff Monitored Program
July 28, 2006Press Release No. 06/166
The following statement was issued today in Monrovia by Mr. Robert Powell, the International Monetary Fund (IMF) mission chief for Liberia:
"The IMF mission team visited Monrovia during July 20-28, to assess progress under the IMF's Staff Monitored Program (SMP). The Mission held discussions with Minister of Finance Sayeh, Minister of Planning McIntosh, and other senior officials of the government and the Central Bank of Liberia (CBL), as well as members of the donor community. The mission also liaised with the World Bank team in Liberia.
"Despite severe capacity limitations, the government has made considerable progress in recent months in implementing key policies under the staff-monitored program (SMP). We welcome this progress, and the government's continued commitment to achieving the goals of the SMP in the period ahead.
"The available economic indicators suggest a continued improvement this year. The economy is expected to continue to recover during 2006, with projected real GDP growth reaching about 8 percent, and inflation remaining in single digits. Let me briefly highlight a few things.
"The SMP's quantitative targets for end-June 2006 were achieved. In particular revenues exceeded the program target and the Government has been implementing a balanced cash-based budget while strengthening the system through which spending commitments are being controlled. The Central Bank of Liberia (CBL) also achieved its quantitative targets through end-June.
"Progress has also been made in implementing many of the structural benchmarks under the SMP, while delays have been encountered regarding some others. The government has commenced a program for reviewing concessions, contracts, and licenses originated under the National Transitional Government of Liberia (NTGL). Under the Governance and Economic Management Assistance Program (GEMAP), international financial experts have been deployed to most of the key revenue-generating agencies. Measures have also been taken to strengthen the management and operations of the CBL and to boost tax collection. Further progress is needed in developing an anti-corruption strategy and verifying the stock of domestic debt.
"The government has submitted a cash-based balanced budget for 2006/07 to the Legislature for approval, consistent with the goals of the SMP. The budget is based on an ambitious, but achievable, revenue target. Given some of the uncertainties about the pace at which revenues are expected to increase over the course of the year, the government intends appropriately to adhere to prioritized monthly cash plans so that adjustments to actual expenditures can be made during the year, should the need arise.
"Timely approval of the budget is critical to the success of the program. It will provide clarity to line ministries on their resource envelopes and support the continued strengthening of Liberia's fiscal policy framework. Similarly approval of legislation to merge the Bureau of the Budget and the Bureau of Maritime Affairs into the Ministry of Finance would help further strengthen public financial management, and make budget implementation more effective.
"On a cautionary note, Liberia's external debt is clearly unsustainable. However, continued progress under the SMP in the coming months would provide a basis for generating the support from the international community required to resolve Liberia's large external debt overhang."