Statement at the Conclusion of an IMF Staff Mission to LiberiaPress Release No. 10/370
September 30, 2010
An International Monetary Fund (IMF) mission led by Mr. Christopher Lane, visited Liberia September 21–October 1, 2010 to conduct discussions for the fifth review under the Extended Credit Facility and the 2010 Article IV Consultations.1 The mission met with: Minister of Finance, Augustine Ngafuan; Central Bank of Liberia Executive Governor, Joseph Mills Jones; other senior officials and members of the Legislature; representatives of the private sector, civic society, and development partners, and briefed President Johnson Sirleaf.
At the end of the mission, Mr. Lane issued the following statement in Monrovia:
“After a slowdown in 2009, economic activity is strengthening in 2010 with subdued inflation and a stable exchange rate. Real GDP growth is expected to rise to above 6 percent from 4½ percent in 2009. Exports have rebounded on account of rising rubber production and prices. Foreign direct investment commitments have increased sharply following the ratification of several iron ore and palm oil concession agreements. A number of legislative acts that will significantly support private sector development and strengthen governance have been approved by the Legislature.
“Performance under the Fund supported economic program has been good. All quantitative performance criteria under the program through end-June 2010 were observed. Implementation of structural benchmarks through end-September has been generally satisfactory, although completion of national accounts data and a computerized registry of government assets have faced delays.
“The 2010/11 Budget was approved in September along with amendments to the Revenue Code. The budget envisages an increase of revenue and grants on account of budgetary grants and signature payments for concession agreements. Tax revenue growth is modest on account of a reduction of top rates of corporate and personal income tax effective January 1, 2011. Details of expenditure are being finalized. Budget financing is presently limited to a drawdown of uncommitted deposits. A supplementary budget will be tabled should new financing sources become available.
“The mission discussed with the authorities the significant medium-term challenges, including financing of the development strategy, Liberia Rising Vision 2030, and accelerating growth outside of mining and agricultural concessions. Discussions focused on funding sources for infrastructure over the medium term based on detailed fiscal projections and financial models of concessions. Concessions are projected to provide additional government revenue to finance a significant share of infrastructure development needs. However, tackling deep-seated structural impediments to private sector investment outside concessions will be critical to facilitate growth and employment opportunities for the young and growing population. In this regard, the mission discussed the efforts to transform the financial system to support inclusive growth and the development of small and medium size enterprises. The mission and authorities recognized that the pace and quality of growth would also depend on training and capacity building, securing property rights and maintaining security.
“Following the conclusion of discussions on technical issues relating to the 2010/11 budget, the fifth review of the ECF-supported program will be submitted for consideration by the IMF’s Executive Board. Liberia would receive a disbursement of SDR 4.44 million (approximately US$6.9 million) on completion of the review.
“The mission wishes to thank the Liberian authorities and its other counterparts for the constructive and cooperative discussions that took place in Monrovia.”
1 The ECF has replaced the Poverty Reduction and Growth Facility as the Fund’s main tool for medium-term financial support to low-income countries. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years. In the Article IV Consultation, IMF staff discuss a country’s economic situation with country authorities to identify and forestall future financial and macroeconomic problems.