Press Release No. 07/160

Press Release: IMF Executive Board Discusses Liberia's Progress Under the Staff-Monitored Program

July 13, 2007

The Executive Board of the International Monetary Fund (IMF) met today to discuss the third review of performance under Liberia's Staff Monitored Program (SMP)¹. Liberia has been implementing an SMP since February 2006.

Following the Board meeting, John Lipsky, First Deputy Managing Director and Acting Chairman, made the following statement:

"The Executive Board of the IMF was informed today of progress in implementing policies under the staff-monitored program (SMP) for 2007. Despite difficult circumstances, the government has established an encouraging track record of policy implementation under their 2007 SMP, which meets the standards associated with arrangements in the upper credit tranches. Achievements under the SMP have supported a continued recovery in real GDP growth, relative price and exchange rate stability, and a significant improvement in public financial management and the financial position of the Central Bank of Liberia (CBL).

"Revenue collection in 2006/07 substantially exceeded the budget target. The government also strictly implemented the interim commitment control system. It will be important to resist any pressures to relax the interim commitment control system since this is an integral part of the government's strategy to prevent the reemergence of domestic payments arrears. It is also important for the government to work closely with the legislature to ensure passage of the 2007/08 budget as soon as possible.

"Raising civil service salaries and wages is an important step. It is, however important to develop a comprehensive civil service reform strategy to ensure that future salary increases are sustainable and consistent with the efficient delivery of public services.

"It is also important to begin implementation of the government's recently adopted anticorruption strategy that provides for establishing an independent anticorruption commission. Draft legislation for the commission's establishment should be submitted to the legislature, and the government seek early involvement of development partners in finalizing an operational plan for the commission.

"Liberia's external debt is unsustainable, and it is urgent to make progress in moving Liberia onto the path toward debt relief. This underscores the importance of mobilizing the necessary financing for arrears clearance and debt relief for Liberia. It is important that the IMF be in a position to assist Liberia to normalize its relations with the international community as soon as possible. Fund management has proposed a financing package that provides a reasonable basis for mobilizing the necessary financing and looks forward to specific commitments from a wide group of bilateral contributors to ensure that sufficient resources will be in place expeditiously," Mr. Lipsky said.

¹ A staff monitored program (SMP) is an informal agreement between national authorities and Fund staff to monitor the implementation of the authorities' economic program.