## cr17348

## Source details

**Canonical URL:** [cr17348](https://www.imf.org/-/media/files/publications/cr/2017/cr17348.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2017/cr17348.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2017/cr17348.pdf.json)

---

### Executive summary and program request
- Lingering effects of the Ebola epidemic, the commodity price decline, and the withdrawal of the United Nations Mission in Liberia (UNMIL) are delaying the economic recovery.
- Growth is below expectations; fiscal space is constrained; sharp decline in net foreign exchange inflows has put pressure on the exchange rate and inflation and led to a loss of international reserves.
- Two end-December 2016 performance criteria (PCs) were not met: government revenue and gross public external borrowing.
- Three end-June 2017 PCs were not met: government revenue; the net foreign exchange position of Central Bank of Liberia (CBL); and CBL’s gross direct credit to the government.
- The Liberian authorities request:
  - (i) a waiver for nonobservance of the end-2016 and end-June 2017 PCs on the basis that corrective actions have been taken; and
  - (ii) the completion of the seventh and the eighth (and final) reviews.

### Fiscal stance, risks, and key fiscal numbers
- Fiscal stance: appropriately tight given limited fiscal space and elevated expenditure pressures (health, education, infrastructure, and US$25 million for election and related security).
- Fiscal risks concentrated near term; pre-election capital flight, potential re-emergence of Ebola, further deterioration in commodity prices and aid flows identified as downside risks.
- Key fiscal figures (Millions of U.S. dollars; government budget, FY2017–18 as presented):
  - Revenue and Grants: 569 533 562 537
  - Revenue: 499 466 502 491
  - Tax: 403 382 399 392
  - Income and profit: 145 144 148 147
  - Goods and services: 60 49 54 53
  - International trade: 192 185 190 185
  - Non-tax: 96 83 10 39 8
  - of which: Import fuel surcharge: 43 28 36 34
  - Grants: 70 67 60 47
  - Total Expenditure: 576 548 552 524
  - Excluding election cost: 556 531 527 499
  - Current expenditure: 539 497 517 495
  - Compensation of employees: 255 289 289 289
  - Goods and services: 155 132 128 123
  - Capital expenditure: 375 135 30
  - Overall balance: -7 -15 10 13
  - in percent of GDP: -0.3 -0.7 0.5 0.6
  - Financing: 7 15 -10 -13
  - Borrowing: 182 300
  - Amortization: -13 -6 -12 -15
  - Deposit financing (+: withdrawal, -: deposit): 2 -2 22
  - Memorandum: Nominal GDP: 2183 2084 2154 2154
  - Tax-GDP ratio (percent): 18.7 18.3 18.5 18.2
  - Revenue and grants, including off-budget grants: 695 611 635 635
  - Expenditure, including off-budget projects: 860 766 774 762
  - Overall balance -165 -155 -140 -127

- Fiscal reform and PFM measures:
  - Renewed PFM reform strategy and action plan in July 2017 for three years covering legal framework, cash management, expenditure control, public investment management, budget formulation, fiscal transparency and governance, and SOE monitoring.
  - Amendments to the 2009 PFM Act submitted to the Legislature in July 2017.
  - IFMIS covers more than half of ministries and agencies; TSA installation delayed (TSA expected by July 1, 2018).

### Revenue mobilization and tax policy
- LRA measures: desk audit system for large taxpayers; taxpayer education; new compliance management framework in H1 2017.
- VAT: planned implementation in 2019; VAT Steering Committee reconstituted and VAT preparation activities to commence by December 2017.
- Liberia Revenue Code review underway; proposed amendments submitted in conjunction with FY2016/17 budget and approved in September.

### Monetary policy, exchange rate, and CBL corrective measures
- Key constraints: deposit dollarization about 80 percent; credit dollarization about 90 percent; weak CBL balance sheet limits sterilization; inactive interbank market; large excess reserves at CBL.
- Current stance: appropriately tight; increased reserve requirements on Liberian dollar deposits; reserve requirements on U.S. dollar deposits lowered simultaneously.
- Gross reserves: will decline in terms of next year’s import cover in 2017 but expected to rise above three months by end-2018 due to a pick-up in export activity (mining) and reserve-protection measures.
- CBL three-year financial plan: full implementation essential; CBL established an Asset and Liability Committee (ALCO) (first meeting August 8th 2017).
- CBL corrective and safeguard actions after FIBLL resolution and forensic audit:
  - Revised Board Charter; established ELA framework; preliminary work towards Special Bank Resolution Regime (SRR); published redacted executive summary of audit and a detailed time-bound Action Plan.
  - Interim safeguards: monthly reports on foreign exchange withdrawals to Board; semi-annual external audits of CBL foreign exchange reserves (external auditor engagement as prior action).

### Financial sector conditions and vulnerabilities
- Banking sector stressed by high NPLs despite lending growth:
  - U.S. dollar-denominated credit growth: 21.7 percent year-on-year to end June 2017.
  - NPL ratio: 14 percent as of June 2017.
  - Return on equity (ROE): around 0.9 percent as of June 2017.
- Provisioning expected to rise as grace period for remaining non-performing legacy loans from FIBLL ends at end of September.
- AML/CFT: legislative steps taken and IMF TA provided; on-site examinations completed for all nine commercial banks.

### External sector, debt stock, and debt management
- External debt stock as of end-June 2017: US$736 million or 35 percent of GDP.
- FY2018 authorities expect to ratify loans worth about US$100 million, all on strictly concessional terms.
- Debt sustainability:
  - Current DSA: risk of debt distress moderate but close to high; improvement since December 2016 due to increased gold and iron ore exports.
  - MTDS for 2017–20 developed; new borrowing to be concessional and focused on growth-enhancing investments (energy and infrastructure).
- Projected external borrowing program (by source; Millions of U.S. dollars):
  - Concessional debt, of which: 98 100 50 100 50 100
    - Multilateral debt: 61 62 29 58 29 58
    - Bilateral debt: 37 38 21 42 21 42
  - Uses (infrastructure, social spending): Infrastructure: 67 69 35 70 35 70; Social Spending: 30 31 15 30 15 30
- Type and currency of new external debt (FY2017): Fixed Interest Rate: 98; Variable Interest Rate: 0; USD denominated loans: 0; Loans denominated in other currency: 98.

### Program performance, breaches, and corrective actions
- End-December 2016:
  - Missed ceiling on external borrowing by about US$7.8 million (PV terms) due to project loan ratified but omitted from reporting.
  - Missed government revenue by US$2 million (0.1 percent of GDP).
- End-June 2017:
  - Missed government revenue by US$28 million (1.3 percent of GDP).
  - Swap arrangement with government led to breaches: CBL net foreign exchange position breach by US$12 million (0.6 percent of GDP); CBL gross direct credit to government breach by US$26 million (1.2 percent of GDP). Swap reversed in 2017Q3.
  - Large deviation of CBL’s net domestic assets indicative target due to reduced NFA and higher NDA from donor fund withdrawals.
- Corrective actions taken:
  - DMU began monthly reporting on signed and ratified loans starting end-May 2017.
  - Unified discretionary surcharge rates on fuel import and direct transfers of collected charges to budget accounts for FY2017/18.
  - US$30 million swap reversed; CBL seeking operational savings and implementing financial plan measures.
  - CBL engaged external auditor for semi-annual foreign exchange reserve audits (prior action).

### Structural benchmarks, prior actions, and safeguards
- Structural benchmarks status:
  - Seventh review: 3 of 6 SBs met; 2 completed with delay; 1 not completed (formalization of revenue deferral agreement with four largest concession companies).
  - Eighth review: 2 of 4 SBs met (ALCO set up; quarterly CBL financial statement submitted); other deliverables completed with delay or planned (procurement plans, SOE reports).
- Prior action: engage external auditor to conduct semi-annual audits on CBL foreign exchange reserves (terms of reference agreed with Fund staff).
- Safeguards: November 2015 assessment confirmed weak governance and control environment at CBL; forensic audit of FIBLL confirmed governance failures; Action Plan published to address recommendations including legal amendments and internal audit strengthening.

### Outlook and macro projections
- Growth and inflation:
  - Real GDP: rebound to around 2.5 percent in 2017; medium-term growth projected to rise to about 6 percent (pre-Ebola level 8 percent).
  - Real GDP contracted by 1.6 percent in 2016.
  - Inflation: expected to close 2017 at about 12½ percent; medium-term inflation projected to decline to 7 percent.
- External sector outlook:
  - Trade and current account improved in 2016 due to import declines from UNMIL drawdown and export changes.
  - Gross official reserves (millions of U.S. dollars): 446 469 452 501 426 476 488 509 548 616 (as presented in projections/tables).
  - Months of imports of goods and services: 3.0 2.9 2.9 3.2 2.7 3.2 3.2 3.3 3.4 3.6.
- Medium-term objectives: prioritize concessional external borrowing, utilize undisbursed loans before signing new commitments, and reduce fiscal deficit toward about 3 percent of GDP.

### Staff recommendation and program decisions
- Based on authorities’ commitments and corrective measures, staff supports:
  - Waivers for nonobservance of specified performance criteria.
  - Completion of the seventh and eighth program reviews.
  - Return to the 12-month cycle for Article IV Consultations.

### Annex — achievements and program legacy (selected)
- ECF arrangement concluded its maximum length of five years on November 18, 2017; original access 40 percent of quota (SDR 51.68 million); augmentations including SDR 32.3 million (25 percent of quota) during the Ebola epidemic and SDR 27.68 million (10.7 percent quota) in December 2016.
- FY2016/17 outcomes:
  - Real GDP growth estimated at 2.5 percent for 2017 in one projection; other presented series include multiple year series for sectoral growth and nominal GDP figures as presented in the source tables.
  - FY2016/17 budget resources US$556 million, US$45 million (2.1 percent of GDP) lower than approved budget; budget deficit US$15 million (0.6 percent of GDP).
- Road Fund established (Road Fund Act passed October 2016); FY2017/18 financing plan: US$16 million from Road Fund Levy and US$10 million from MCC (projection later revised to expect US$5 million from MCC for FY2017/18).
- NASSCORP legacy obligations: US$52.08 million since January 1984 to be cleared over 15 years (~US$3 million a year).
- Social safety nets: World Bank US$10 million and USAID US$6 million support; NSSN secretariat to implement registry and MIS.

*Source: EXECUTIVE SUMMARY and selected chapters/excerpts from cr17348 (IMF staff report).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- Lingering effects of the Ebola epidemic, the commodity price decline, and the withdrawal of the United Nations Mission in Liberia (UNMIL) are delaying the economic recovery.
- Growth is below expectations, while fiscal space is constrained.
- A sharp decline in net foreign exchange inflows has put pressure on the exchange rate and inflation, and led to a loss of international reserves.
- The Presidential election is adding near-term uncertainty.

### Program performance
- Two end-December 2016 performance criteria (PCs) were not met: government revenue and gross public external borrowing.
- Three end-June 2017 PCs were not met: government revenue; the net foreign exchange position of Central Bank of Liberia (CBL); and CBL’s gross direct credit to the government.
- Three of six structural benchmarks (SBs) for the seventh review and two of four SBs for the eighth review were met. The rest except one was met with delay.

### Request
- The Liberian authorities request:
  - (i) a waiver for nonobservance of the end-2016 and end-June 2017 PCs on the basis that corrective actions have been taken; and
  - (ii) the completion of the seventh and the eighth (and final) reviews.

### Key risks
- Risks are concentrated in the near term.
- Pressure on the exchange rate and inflation induced by pre-election capital flight is expected to ease, but anything less than a smooth transition of power to the new government with fiscal discipline could undermine confidence and economic activity.
- Other downside risks include re-emergence of Ebola, even on a small scale, or further deterioration in commodity prices and aid flows.

### Policy recommendations
- Respond to reduced fiscal revenue and lower donor budget support with restraint on expenditure, while avoiding a disproportionate impact on the poor.
- Contain the loss of gross reserves through rigorous implementation of the three-year financial plan of the CBL.
- Allow for greater flexibility in the exchange rate.
- Sustain the momentum of the structural reforms, including governance reforms of the CBL.

### Program status
- The IMF Executive Board completed the fifth and sixth ECF reviews and approved augmentation (10.7 percent of quota) in December 2016.
- Prior actions:
  - Rapid Credit Facility (RCF) disbursement (25 percent of quota) in February 2015;
  - debt relief under the Catastrophe Containment and Relief Trust (20 percent of quota) in February 2015;
  - ad-hoc ECF augmentation (25 percent of quota) in September 2014.

*Source: EXECUTIVE SUMMARY (cr17348)*

### 11. The resulting fiscal program entails an appropriately tight policy stance, but risks are

### 11. The resulting fiscal program entails an appropriately tight policy stance, but risks are

### Fiscal stance and overall assessment
- Expenditure pressure is elevated, with needs in health, education and infrastructure, especially roads and electricity, and tension from the need to allocate US$25 million for election and related security.
- Rising—though still moderate—risk of debt distress places real limits on borrowing options; fiscal space remains tight.
- Authorities’ recent efforts to enhance revenue mobilization (policy measures ¶8 and administration reforms ¶13) are welcome.
- Prioritizing expenditure according to socio-economic needs while containing it in line with available resources is appropriate.
- Staff considers that the use of contingent revenue and expenditure outlined in the program could help the government maintain orderly budget execution.
- Nonetheless, risks related to both revenue and expenditure remain high and reflect underlying uncertainty in the domestic and external economic situation and in the political transition.

### Key fiscal numbers (Text Table 1: Liberia: Government Budget, FY2017–18)
- Revenue and Grants: 569 533 562 537 (Millions of U.S. dollars)
- Revenue: 499 466 502 491
- Tax: 403 382 399 392
- Income and profit: 145 144 148 147
- Goods and services: 60 49 54 53
- International trade: 192 185 190 185
- Others: 6 5 8 8
- Non-tax: 96 83 10 39 8 (note: table entries show "Non-tax 968310398" in sequence)
- of which: Import fuel surcharge: 43 28 36 34
- Grants: 70 67 60 47
- of which: Road Fund support: 10 5
- Total Expenditure: 576 548 552 524
- Excluding election cost: 556 531 527 499
- of which: Spending from the road fund: 26 21
- Current expenditure: 539 497 517 495
- of which: Compensation of employees: 255 289 289 289
- of which: Goods and services: 155 132 128 123
- Capital expenditure: 375 135 30
- Overall balance: -7 -15 10 13
- in percent of GDP: -0.3 -0.7 0.5 0.6
- Financing: 7 15 -10 -13
- Borrowing: 182 300
- Amortization: -13 -6 -12 -15
- Deposit financing (+: withdrawal, -: deposit): 2 -2 22
- Memorandum: Nominal GDP: 2183 2084 2154 2154
- Tax-GDP ratio (percent): 18.7 18.3 18.5 18.2
- Revenue and grants, including off-budget grants: 695 611 635 635
- Expenditure, including off-budget projects: 860 766 774 762
- Overall balance-165 -155 -140 -127

(Note: table footnote: this table summarizes fiscal operation only under the budget; numbers differ from other tables that include off-budget activities.)

### Fiscal reform and public financial management (PFM)
- Renewed public financial management reform strategy and action plan in July 2017 for a further three years, focusing on: legal framework, cash management, expenditure control, public investment management, budget formulation, fiscal transparency and governance, and state-owned enterprise monitoring.
- Amendments to the 2009 PFM Act were submitted to the Legislature in July 2017 to address identified legal and regulatory weakness.
- Advanced Procurement Framework Agreement introduced to accelerate procurement activities for better expenditure control.
- Integrated Financial Management Information System (IFMIS) now covers more than half of ministries and agencies, including most of the large Ministries for timely expenditure monitoring.
- Outstanding needs: delayed Treasury Single Account (TSA) installation; PIMA (2016) identified weaknesses including project monitoring; public investment monitoring remains weak despite a public investment database; MFDP quarterly SOE reports often delayed and comprehensive SOE activity data unavailable due to limited resources and low capacity.

### Domestic revenue mobilization
- LRA, supported by donors, implemented measures to improve tax compliance and reduce leakages: desk audit system for large taxpayers; taxpayer education through workshops.
- New compliance management framework introduced in the first half of 2017 for further improvement of revenue mobilization.

### Monetary and exchange rate policy
- Key constraints on monetary policy effectiveness:
  - Deposit and credit dollarization are about 80 percent and 90 percent respectively.
  - CBL’s weak balance sheet limits ability to sterilize excess liquidity.
  - Liquidity operations have limited effectiveness due to an inactive interbank market and poor transmission to deposit rates.
  - Large excess reserves of the banking system at the CBL reduce the effectiveness of reserve requirements.
- Current monetary policy stance: appropriately tight, aimed at containing growth of Liberian dollar liquidity, reflected in an increase in reserve requirements on Liberian dollar-denominated deposits.
- Offsetting action: reserve requirements on U.S. dollar deposits were lowered at the same time, offsetting some tightening effects.
- Impact: tight monetary policy caused reserve money growth to be slower than anticipated; impact on broad money growth was limited.
- Gross reserves: will decline in terms of next year’s import cover this year, but expected to rise above three months by end-2018. CBL auctions proceeds collected from surrender requirements (CFM introduced end-2016).
- Expected rebound in gross reserves in 2018 due to pick-up in export activity (mining) and measures to ease pressure on reserves (¶4).

### CBL balance sheet, governance, and corrective measures
- Full implementation of CBL’s three-year financial plan essential to strengthen balance sheet and protect gross reserves (MEFP ¶29).
- In H1 2017, CBL adhered to its allotment plan; in H2, capital expenditure expected to exceed plan mainly due to cost of printing well-overdue new banknotes.
- CBL seeking savings on operating expenses; established an Asset and Liability Committee (ALCO) in April 2017 to oversee risk management, balance sheet, and financial performance. ALCO had its first meeting on August 8th 2017.
- First International Bank Liberia Limited (FIBLL) resolution (June 2016) via purchase and assumption; CBL incurred losses of over US$19 million from large unsecured liquidity assistance.
- May 2017 final forensic audit of FIBLL confirmed: (i) serious governance failures and mismanagement at FIBLL; (ii) enabling role by CBL through ineffective supervision and prolonged uncollateralized funding.
- CBL corrective actions: revised Board Charter; established Emergency Liquidity Assistance (ELA) framework; preliminary work towards Special Bank Resolution Regime (SRR); prepared and published redacted executive summary of audit and a detailed time-bound Action Plan to address governance, internal control, supervision, and crisis management gaps.
- Interim safeguards until Action Plan implementation: (i) compilation of monthly reports on foreign exchange withdrawals and submission to CBL Board at every Board meeting; (ii) semi-annual external audits of CBL foreign exchange reserves based on terms of reference prepared with IMF staff. CBL to confirm as a prior action that an external auditor has been engaged to conduct the semi-annual audit. Reports to be shared with IMF staff without delay.

### Financial sector development and vulnerabilities
- Banking sector remains stressed by high NPLs despite growth in lending.
- U.S. dollar-denominated credit growth increased 21.7 percent year-on-year to end June 2017 (after virtually no private sector credit growth in 2016).
- NPL ratio: 14 percent as of June 2017.
- Profitability: return on equity (ROE) around 0.9 percent as of June 2017.
- AML/CFT: three counter terrorism financing pieces of legislation recently sent to the Legislature and approved. IMF TA provided on AML/CFT supervision to a new dedicated CBL unit. On-site examinations completed for all nine commercial banks and five additional follow-up inspections. FIU assisting DNFBPs regulatory bodies.
- CBL monitoring: banking sector remains adequately capitalized; provisions expected to grow as grace period for remaining non-performing legacy loans from FIBLL ends at end of September. CBL conducting on-site examinations.
- Other reforms/advances: improvements in bank supervision and regulation; advances in financial sector infrastructure; steps to enhance competition and consumer protection; promotion of financial inclusion.

### External sector, borrowing space, and debt sustainability
- Debt stock increased rapidly since HIPC debt relief of 2010.
- December 2016 PC on external borrowing was missed due to slippage in reporting; since then authorities respected debt limit under fifth and sixth review; June 2016 PC target met.
- As of end-June 2017: total external debt stock US$736 million or 35 percent of GDP.
- FY2018 authorities expect to ratify loans worth about US$100 million, all on strictly concessional terms (Text Tables 2 and 3).
- Current DSA: risk of debt distress remains moderate but close to being high; improvement since December 2016 mainly due to downward revisions in PV of debt-to-exports attributed to increased gold and iron ore exports; tolerances are slim and vulnerability to external shocks remains.
- Staff welcome development of a medium-term debt strategy (MTDS) for 2017–20 in consultation with IMF and World Bank; MTDS stresses new external borrowing should be concessional and restricted to growth-enhancing investments (energy and infrastructure). Staff emphasized priority on implementing existing undisbursed loans over signing new commitments.

### Projected external borrowing program (Text Table 2: Liberia: Summary Table of Projected External Borrowing Program, FY2018)
- By sources of debt financing: 98 100 50 100 50 100
- Concessional debt, of which: 98 100 50 100 50 100
  - Multilateral debt: 61 62 29 58 29 58
  - Bilateral debt: 37 38 21 42 21 42
  - Other: 00 00 00
- Non-concessional debt, of which: 00  00  00
  - Semi-concessional: 00  00  00
  - Commercial terms: 00 00 00
- By Creditor Type: 98 100 50 100 50 100
  - Multilateral: 61 62 29 58 29 58
  - Bilateral - Paris Club: 00 00 00
  - Bilateral - Non-Paris Club: 37 38 21 42 21 42
  - Other: 00 00 00
- Uses of debt financing: 98 100 50 100 50 100
  - Infrastructure: 67 69 35 70 35 70
  - Social Spending: 30 31 15 30 15 30
  - Budget Financing: 00 00 00
  - Other: 00 00 00
- Memo Items (Indicative projections)
  - Year 2: 10 05 0 50 50
  - Year 3: 10 05 0 50 50
- (Sources: Liberian authorities; and IMF staff calculation.)

### Type and currency of new external debt (Text Table 3: Liberia: Type of New External Debt, FY2017)
- By the type of interest rate:
  - Fixed Interest Rate: 98 (Millions of U.S. dollars)
  - Variable Interest Rate: 0
  - Unconventional Loans: 0
- By currency:
  - USD denominated loans: 0
  - Loans denominated in other currency: 98

### Program performance, monitoring, and risks
- Program performance was mixed; a sharper than anticipated slowdown in economic activity and shortage of U.S. dollar liquidity underlie deviations.
- End-December 2016 Targets:
  - Missed PC on ceiling on external borrowing by about US$7.8 million in PV terms due to a project loan ratified by legislature in October not included in total ratified loans.
  - Missed PC on government revenue by US$2 million (0.1 percent of GDP).
  - All other PCs and ITs were met.
- End-June 2017 Targets:
  - Missed PC on government revenue by US$28 million (1.3 percent of GDP) due to lower than anticipated economic activity.
  - Large decline in foreign exchange inflows led to excess demand for U.S. dollars by the government; government entered into a currency swap with the CBL, resulting in breaches:
    - Breach of PCs on CBL’s net foreign exchange position by US$12 million (0.6 percent of GDP).
    - Breach of PC on CBL’s gross direct credit to the government by US$26 million (1.2 percent of GDP).
  - Large deviation of CBL’s net domestic assets from end-June indicative target occurred as withdrawal of donor funds decreased NFA and raised NDA above programmed targets; net impact tightened monetary policy stance as reserve money growth underperformed expectations.
- Prior action: CBL to engage external auditor to conduct semi-annual audits on CBL’s foreign exchange reserves based on terms of reference agreed with Fund staff.
- Authorities requested waivers for nonobservance of program targets based on corrective actions:
  - Missed PC on gross external borrowing (end-December 2016): Debt Management Unit of MFDP began monthly reporting to the Fund on signed and ratified loans starting end-May 2017.
  - Missed PC on government revenue (end-December 2016 and end-June 2017): Government unified discretionary surcharge rates on fuel import (¶8) and introduced direct transfers of collected charges to budget resource accounts for FY2017/18.
  - Missed PC on net foreign exchange position (end-June 2017): The US$30 million swap arrangement was reversed in 2017Q3; measures taken on government side to reduce currency-mismatch situation (¶4) and on CBL side to look for operational savings (¶18).
  - Missed PC on gross direct credit to central government (end-June 2017): Missed due to accounting treatment of the swap agreement.

*Source: Liberian authorities; and IMF staff estimates and projections as presented in the provided chapter text.*

### 34. Structural Benchmarks: Three out of six structural benchmarks (SBs) for the seventh review

### 34. Structural Benchmarks: Three out of six structural benchmarks (SBs) for the seventh review

### Structural benchmarks and implementation status
- Three out of six structural benchmarks (SBs) for the seventh review were met.
- Two additional SBs were completed with delay:
  - Publication of quarterly state-owned enterprise (SOE) report: completed with six weeks delay.
  - Submission of the forensic audit final report to the IMF: completed with one week delay.
- One remaining SB for the seventh review was not completed: formalization of the agreement on revenue contribution deferral between the government and the four largest concession companies was not completed because three of the four companies meant to sign had become inactive due to low commodity prices.
- Two out of four SBs for the eighth review were met:
  - Setting up ALCO: met.
  - Submission of the quarterly financial statement of CBL: met.
- Other eighth-review deliverables:
  - Submission of draft procurement plans by ministries and agencies (M&As) to the Public Procurement and Concessions Commission (PPCC) was completed in September.
  - Publication of quarterly SOE reports is expected to be completed by November.

### Capacity to repay and debt-related figures
- Total outstanding Fund credit currently amounts to 55.49 percent of quota.
- The risk of debt distress has increased from low to moderate, though the debt level remains manageable.
- Grants under the Catastrophe Containment and Relief (CCR) Trust have allowed prepayment of Liberia’s debt service obligations to the Fund until late 2018.

### Macroeconomic environment, program performance, and shocks
- The impact of exogenous shocks has increased Liberia’s fragility, including:
  - Lingering effects of the Ebola epidemic.
  - Impact of the commodity price decline.
  - Ongoing withdrawal of UNMIL.
- Consequences cited:
  - Delay in economic recovery.
  - Sharp decline in net foreign exchange inflows putting pressure on the exchange rate and inflation.
  - Decrease in international reserves and fiscal space.
- Program performance:
  - All program performance criteria (PCs) for end-December 2016 were met, except:
    - The PC ceiling on gross external borrowing by the public sector was missed due to a technical error.
    - The PC floor on government revenue was missed narrowly (0.1 percent of GDP).
  - Three end-June 2017 PCs were not met, mostly due to the sharper than anticipated deterioration in the macroeconomic environment.
  - The ceiling on the CBL’s net domestic assets (indicative target) was also missed for the same reason.
  - Three of six SBs for the seventh review and two of four SBs for the eighth review were met; the rest except one were met with delay.

### Fiscal and monetary policy assessment and recommendations
- Authorities’ macroeconomic policy response:
  - Authorities are allowing the bulk of the external adjustment to take place through the exchange rate while maintaining relatively tight monetary and fiscal stances to prevent exchange rate overshooting or second round inflationary impacts.
- Fiscal policy:
  - The fiscal policy stance embodied in the agreed fiscal program is appropriate to the current economic situation.
  - Important measures and recommendations:
    - Strictly adhere to the rules governing the release of contingent expenditure (MEFP¶18) to avoid unintended financing gaps and accumulation of arrears, while securing social priority spending.
    - The MFDP is addressing the gap between U.S. dollar denominated fiscal revenue and expenditure by switching to the use of a weekly, rather than a monthly, exchange rate for tax collection purposes to remove a disincentive to remitting tax payments in U.S. dollars.
    - Cooperation between the CBL, MFDP, and LRA will be important in implementing this measure.
- Monetary policy:
  - The tight monetary policy stance—revealed in the slow growth of base money—is appropriate given pressure on the exchange rate and inflation.
  - Given limited monetary policy tools, maintaining adequate reserve cover will require that the CBL remain within the spending limits dictated by its three-year financial plan.
    - While this limit will be breached in the later part of 2017 as funds are expended to replace badly worn out domestic currency, the CBL should seek offsetting savings elsewhere in its operational budget to limit the impact.
  - The surrender requirement on inflows of remittances, a CFM, is appropriate only as a temporary measure to address extraordinary pressure on inflation and reserves and should be lifted as this pressure is relieved in response to the planned adjustment policies, in line with the Fund’s Institutional View on capital flows.

### Debt management and external financing guidance
- Recourse to external borrowing needs to be restrained despite a very large infrastructure deficit and other investment needs.
- Recommendations:
  - Strong fiscal discipline to contain spending at programmed levels in the short term.
  - Hold borrowing to within program limits given the relatively elevated level of risk of debt distress.
  - New borrowing should be on concessional terms and, to the extent possible, replaced with enhanced utilization of already signed and ratified loans.
  - Consider canceling previously ratified debt if the underlying projects no longer fit with government priorities.
  - The Debt Management Unit (DMU) of the MFDP should continue to enhance debt management capacity and improve information flows between the Legislature, the Presidential Office, and DMU regarding ratification of new debts.

### Structural reform momentum and CBL governance
- Maintaining reforms:
  - Keeping the momentum of structural reforms beyond the expiration of the program is important.
  - Advances were made in PFM, governance, business environment, and access to finance, and momentum should be maintained as a precondition for sustainable and inclusive long-term growth.
- CBL governance and safeguards:
  - Authorities’ commitment to improve supervisory capacity and governance within the CBL is commendable, though sustained efforts are needed to implement the Action Plan.
  - The forensic audit report covering events leading up to the closure of FIBLL raised serious concerns about the CBL’s governance and supervisory procedures and policies.
  - Publication of the executive summary of the report and the CBL’s Action Plan demonstrates commitment to transparency and policy rigor.
  - Staff recommends pursuing efforts to enhance the AML/CFT regime.
  - The Action Plan should assist in advancing outstanding safeguards recommendations, including:
    - Legal amendments to align the CBL Act with best practices.
    - Strengthening the internal audit function.
    - Enhancing audit and control oversight.
  - The commitment of the CBL Board and the Audit Committee will be critical in improving the institutional framework at the CBL and sustaining progress with reforms.

*cr17348 - 34. Structural Benchmarks: Three out of six structural benchmarks (SBs) for the seventh review*

### 45. Based on the strength of the authorities’ policy commitments and corrective measures

### 45. Based on the strength of the authorities’ policy commitments and corrective measures taken, staff supports the authorities’ request for waivers for nonobservance of performance criteria, and supports completion of the seventh and eighth program reviews. Staff recommends a return to the 12-month cycle for Article IV Consultations.

### Staff recommendation and program decisions
- Staff supports the authorities’ request for waivers for nonobservance of performance criteria.
- Staff supports completion of the seventh and eighth program reviews.
- Staff recommends a return to the 12-month cycle for Article IV Consultations.

### Real sector and growth outlook (selected lines as presented)
- Real GDP: 0.0-0.5-1.63.22.53.95.06.06.36.9
- Agriculture & fisheries: 0.76.46.44.11.82.63.84.34.65.2
- Forestry: 2.0-7.00.03.0-8.0-4.06.06.06.06.0
- Mining & panning: -15.9-23.8-33.05.528.829.714.016.711.015.7
- Manufacturing: -1.5-4.9-5.20.01.41.64.65.16.26.2
- Services: 4.33.92.12.91.01.23.04.05.85.1
- Real GDP excluding mining sector: 2.62.62.53.00.21.13.74.45.55.3
- Nominal non-mining per capita GDP (U.S. dollars): 452463460477441429443468487583
- Nominal GDP (millions of U.S. dollars): 2038211221012224211521252246243825992884

### Inflation and population
- Consumer prices (annual average): 7.78.78.89.711.911.410.59.58.57.5
- Consumer prices (end of period): 8.011.312.58.212.411.010.09.08.07.0
- Population (millions): 4.34.44.44.54.54.64.74.84.95.1

### Fiscal position (central government, selected indicators)
- Total revenue and grants (percent of GDP): 32.431.431.829.329.527.427.327.027.1
- Total revenue (percent of GDP): 22.421.821.822.822.322.824.325.325.625.8
- Grants, including Ebola-related support (percent of GDP): 10.09.69.69.07.06.73.12.11.51.2
- Total expenditure and net lending (percent of GDP): 42.235.635.639.436.835.432.431.230.229.8
- Current expenditure (percent of GDP): 32.427.827.828.927.426.925.323.322.021.5
- Capital expenditure (percent of GDP): 9.87.87.810.59.38.47.17.98.38.4
- Overall fiscal balance, including grants (percent of GDP): -9.8-4.2-4.2-7.6-7.4-5.9-5.0-3.9-3.2-2.8
- Overall fiscal balance, excluding grants (percent of GDP): -19.8-13.8-13.8-16.6-14.4-12.6-8.1-6.0-4.7-4.0
- Public external debt (percent of GDP): 22.828.028.033.635.340.144.445.645.745.3
- Central government domestic debt (percent of GDP): 15.112.913.016.815.415.412.410.79.48.3

### External sector (selected indicators)
- Current account balance including grants (percent of GDP): -35.4-30.9-24.6-27.8-26.1-30.1-25.7-24.3-23.5-21.9
- Current account balance excluding grants (percent of GDP): -85.5-78.6-71.9-54.9-66.9-62.1-53.5-50.3-45.5-42.1
- Trade balance (percent of GDP): -45.1-41.6-31.2-34.5-28.6-26.1-23.5-20.8-17.4-15.5
- Exports (percent of GDP): 12.511.611.310.612.715.416.417.118.519.0
- Imports (percent of GDP): -57.6-53.2-42.5-45.1-41.3-41.6-40.0-37.9-35.9-34.5
- Grants (donor transfers, net, percent of GDP): 50.147.747.327.040.832.027.826.022.120.2
- Gross official reserves (millions of U.S. dollars): 446469452501426476488509548616
- Months of imports of goods and services: 3.02.92.93.22.73.23.23.33.43.6
- CBL's net foreign exchange position (millions of U.S. dollars): 164181167192149180196246295345

### Balance of payments (selected lines)
- Trade balance (millions of U.S. dollars): -918-878-655-767-605-555-528
- Exports, f.o.b. (millions): 255245238236268328370
  - of which: Iron ore: 104614855557579
  - of which: Gold: 42777693130160188
- Imports, f.o.b. (millions): -1,174-1,123-893-1,003-872-883-898
- Services (net, millions): -878-884-846-545-750-690-579
- Income (net, millions): -285-250-248-276-271-303-334
  - Compensation of employees: -58-19-14-19-14-21-24
  - Public interest payments due: -4-4-5-5-8-9-7
- Current transfers (millions): 1,3601,3601,2329691,074910864
- Current account balance (millions): -721-652-516-619-552-639-577
- Current account balance, excluding grants (millions): -1,742-1,660-1,510-1,221-1,416-1,319-1,201
- Capital and financial account (net, millions): 663636484630506692604
- Foreign direct investment (net, millions): 257250230259239297354
- Gross official reserves (millions): 446469452501426476488
- Gross official reserves (months of imports): 3.02.92.93.22.73.23.2

### Fiscal operations (central government, selected nominal lines)
- FY2019: Total revenue and grants (millions of U.S. dollars): 646652695611642635598
- Revenue (millions): 447453499466538491531
- Tax revenue (millions): 369402402382441392424
  - Taxes on income, profits, and capital gains: 147163145144165147162
  - Taxes on goods and services: 50476049695359
  - Taxes on international trade: 168185192185199185195
- Non-tax (millions): 785196839798107
- Grants (millions): 19919919714510414467
  - of which: Budget support: 60 68   7067   314725
- Expenditure and net lending (millions): 842739860766781762708
  - Off-budget expenditure (millions): 241195284218227238162
  - Current expenditure (millions): 646576631572614580552
  - Wages and salaries (millions): 255277258291263291281
  - Goods and services (millions): 267214244204186207161
  - Interest (millions): 109139371447
  - Capital expenditure (millions): 195162227194168182156
    - of which: Mount Coffee: 4756846320350
- Overall balance, including grants (millions): -195-87-165-155-140-127-110
- Excluding grants (millions): -394-286-362-300-244-271-177
- Identified financing (millions): 19587165155140127110
  - External financing (net, millions): 142112113117118114117
  - Domestic financing (net, millions): 53-2552382213-7

### Monetary and financial indicators (selected lines)
- CBL's gross foreign reserves (millions of U.S. dollars): 532567539602498548
- CBL's gross official foreign reserves (millions): 446469452501426476
- CBL's net foreign exchange position: 164181167192149180
- Net domestic assets (central bank survey): -28-24-3-355639
- Monetary base (M0): 161157165159145181
- Broad money (M2, millions): 709709677742655664
  - L$ component: 206205222211195219
  - US$ component (deposits only): 502504455531437445
- Broad money (annual change): 1.70.1-4.54.6-3.11.3
- Credit to private sector (annual change): 8.19.04.57.610.710.2

### Financial soundness indicators (selected lines)
- Regulatory capital to risk-weighted assets (percent): 20.315.516.220.020.621.517.417.9
- Non-performing loans to total loans (percent): 18.715.715.714.812.814.815.814.0
- Provisions to non-performing loans net of interest in suspense (percent): 61.173.578.680.488.188.363.061.6
- Return on assets (percent): 0.1-1.0-2.40.60.90.20.30.2
- Return on equity (percent): 1.0-9.0-18.04.56.30.81.60.9
- Liquid assets to deposits and designated liabilities (percent): 32.425.324.726.626.433.731.127.0
- Net loans to deposits (percent): 50.456.842.158.660.672.976.284.5

### Indicators of capacity to repay the Fund and Fund exposure
- Prospective drawings based on existing and prospective credit (percent): 27.7      14.8 -   -   -   -   -   -   -   -   -   -
- Total obligations based on existing and prospective credit (percent): 0.00.02.110.520.023.026.327.324.413.28.53.0
- Repayments and repurchases (percent): 0.00.02.110.520.023.026.327.324.413.28.53.0
- Outstanding Fund credit (SDR terms, as presented): 143.4   158.2   156.1   145.6   125.6   102.676.349.024.611.43.00.0
- Outstanding Fund credit (percent of GDP): 9.210.410.29.07.25.53.72.21.00.40.10.0
- Quota (percent): 55.561.260.456.448.639.729.519.09.54.41.10.0

### Schedule of disbursements under the ECF and RCF arrangements (selected lines)
- Amount (Total: SDR 143.964 million)
- SDR 7.382 million November 19, 2012 — Executive Board approval of the three-year ECF arrangement
- SDR 7.382 million July 3, 2013 — Executive Board completion of the first review under the three-year ECF arrangement
- SDR 7.382 million December 11, 2013 — Executive Board completion of the second review under the three-year ECF arrangement
- SDR 7.382 million July 3, 2014 — Executive Board completion of the third review under the three-year ECF arrangement
- SDR 32.300 million September 26, 2014 — Executive Board approval of augmentation of access of 25 percent of quota under an ad hoc review
- SDR 32.300 million February 23, 2015 — Executive Board approval of access of 25 percent of quota under a Rapid Credit Facility
- SDR 7.382 million December 21, 2015 — Executive Board completion of the fourth review under the three-year ECF arrangement
- SDR 13.842 million December 16, 2016 — Executive Board completion of the fifth review under the three-year ECF arrangement with 2.5 percent access augmentation
- SDR 13.848 million December 16, 2016 — Executive Board completion of the sixth review under the three-year ECF arrangement with 2.5 percent access augmentation
- SDR 7.382 million March 30, 2017 — Executive Board completion of the seventh review under the four-year ECF arrangement
- SDR 7.382 million September 30, 2017 — Executive Board completion of the eighth review under the four-year ECF arrangement

*Source: IMF staff report (selected tables and text as provided).*

### Annex I. Summary of the Achievements of the Current Program

### Annex I. Summary of the Achievements of the Current Program

### Arrangement details
- ECF arrangement completed its maximum possible length of five years and is set to conclude on November 18, 2017.
- Original access: 40 percent of quota (SDR 51.68 million).
- Augmentations:
  - During the Ebola epidemic: 25 percent of quota (SDR 32.3 million).
  - December 2016: additional augmentation of 10.7 percent quota (SDR 27.68 million), of which SDR 12.92 was disbursed immediately and the remaining SDR 14.76 million was equally allocated to the seventh and eighth reviews.

### Macro environment and program performance
- Pre-Ebola growth (2009–13): average growth of 7.1 percent.
- Post-Ebola recovery and outlook:
  - Real GDP growth estimated at 2.5 percent for 2017.
  - Multiple downward revisions to GDP growth projections since mid-2014.
- Major shocks affecting the economy:
  - Decline in commodity prices.
  - UNMIL withdrawal.
  - Winding down of aid flows in 2014–15.
- Aggregate assessment:
  - ECF-supported program performance remained broadly positive and helped maintain the macroeconomic situation under control despite multiple adverse shocks.
  - Mixed results on quantitative targets and structural benchmarks.
  - Program contributed to steady progress on infrastructure, increased access to credit, and structural reforms.
  - Despite efforts, creation of fiscal space was insufficient to keep the risk of debt distress low.

### Fiscal policy, fiscal space, and public investment
- Fiscal stance remained accommodative to absorb external shocks.
- Capital expenditure:
  - Rose from average 3.9 percent of GDP between FY2009–FY2012 to 9.3 (percent of GDP) in FY2016-FY2017.
  - Shares of total expenditure: 14.7 (FY2009–FY2012) and 24.7 (FY2016-FY2017).
- General government capital stock increased by average of 4.4 percent since 2012.
- Revenue mobilization and PFM reforms undertaken addressing:
  - Legal framework, cash management, expenditure control, public investment management, budget formulation, SOE oversight, tax compliance, and fiscal governance.
- PFM institutional developments:
  - Renewed PFM reform strategy and action plan for 2017-20.
  - Amendments to the 2009 PFM Act submitted to the Legislature.
- Fiscal pressures and budget execution:
  - Total resource envelope for FY2016/17 was US$45 million (2.1 percentage points of GDP) lower than anticipated under the approved budget.
  - Fiscal year finished with a budget deficit of US$15 million, about 0.6 percentage points of GDP, slightly lower than the approved budget.
  - FY2017/18: anticipated shortfall in revenue and grants of US$24 million relative to the budget enacted in July 2017; to be offset by corresponding spending cuts and prioritized spending for infrastructure, elections, security, health, and education.

### Financial sector and Central Bank of Liberia (CBL) actions
- Monetary stance: tight monetary policy to balance maintaining buffers and avoiding excessive depreciation.
- Reserves: remain below-but-close to 3-months of imports.
- CBL reforms and commitments:
  - Implementation of the CBL’s three-year financial plan is on track.
  - Commitment to improving AML/CFT compliance.
  - Progress on adoption of an ELA framework and groundwork for establishing a SRR.
  - Studied introduction of deposit insurance and implemented additional interim safeguards.
  - Indicated commitment to implement the CBL’s Action Plan beyond completion of the ECF arrangement.
- FIBLL forensic audit and follow-up:
  - External forensic audit commissioned to examine closure of First International Bank Liberia Limited (FIBLL) and resulting CBL losses.
  - Forensic report transmitted to the Executive and the Fund Staff; Executive transmitted the report to the Ministry of Justice.
  - Executive summary of the report published with names and identifiers redacted.
  - Time-bound action plan of reform published in consultation with Fund staff.
  - Executive has agreed to publish the full forensic audit once doing so will not interfere with judicial procedures.

### Structural reforms and capacity building
- Structural reform implementation largely on track but slower than desirable due to limited absorption capacity of Liberian institutions.
- Extensive technical assistance received on fiscal and monetary policy, data compilation, and economic statistics.
- Progress made on PFM, governance, competitive markets, and WTO accession achieved in 2016.

### Program reviews, performance criteria, and waivers requested
- Performance through end-June 2017:
  - Met all end-December indicative targets (IT) and all but two quantitative performance criteria (PCs).
  - Missed the PC floor on government revenue narrowly by 0.1 percent of GDP.
  - Missed the PC ceiling on external borrowing because of a project loan ratified by the legislature in October 2016 but not included in the total amount of ratified loans.
  - End-June 2017: missed PCs on revenue collection, external reserves, and CBL gross credit to government.
- Corrective actions and requests:
  - Enhanced reporting and tracking requirements put in place to prevent recurrence of unreported ratified loans.
  - Requesting waivers for non-attainment of the specified PCs and for completion of the seventh and eighth reviews.
  - Request that disbursements in the cumulative amount of SDR 14.764 million be effected.
- Commitment:
  - Despite program expiration on November 18, 2017 precluding establishment of new program conditionality, the government remains fully committed to implementing the policies and undertakings in the MEFP and Liberia Rising 2030.
  - Government will consult with the IMF on any additional measures and provide IMF staff with relevant information to monitor program performance in a timely manner.
  - Consent to publication on the IMF website of the letter, MEFP, and the related staff report for the seventh and eighth reviews.

*Source: Annex I. Summary of the Achievements of the Current Program; Letter of Intent and Supplementary Memorandum of Economic and Financial Policies (as provided).*

### 4. Despite the current difficulties, we believe the macroeconomic outlook may be finally

### 4. Despite the current difficulties, we believe the macroeconomic outlook may be finally

### Outlook and Projections
- Iron ore sector appears to have bottomed out; production expected to expand in 2017 and beyond as the one remaining active company continues exploitation of a new, rich ore bed.
- Expansion in iron ore production, coupled with significantly increased gold production, should offset weaker activities in forestry and services and the effects of fiscal consolidation.
- Growth projections:
  - Rebound to around 2.5 percent in 2017.
  - Medium term growth conservatively projected to rise to about 6 percent.
  - Pre-Ebola level was 8 percent.
- Sector drivers for medium term growth: mining, agriculture, and manufacturing.
- Inflation projection: decline to 7 percent over the medium term, as depreciation slows and international food and oil prices stabilize.

### Recent Developments
- Shocks since Ebola: commodity price shock and United Nations peacekeeping withdrawal further worsened the macroeconomic situation.
- Commodity price impacts:
  - Decline in prices of iron ore and rubber caused delays in additional foreign investment and job creation in the natural resource sector.
- UNMIL drawdown effects:
  - Significantly weakened domestic demand.
  - Reduced foreign investment and net inflow of foreign currency.
  - Generated significant fiscal pressure through increased spending in security sector and civil administration in various counties.
- Real GDP:
  - Estimated to have contracted by 1.6 percent in 2016 due to lower production in mining, forestry, and manufacturing and higher than estimated impact of UNMIL drawdown, despite some recovery in agriculture.
  - Recovery in 2017, originally expected to reach 3¼ percent, may be lower by three quarters of a percentage point.

### Fiscal Developments and FY2016/17 Outcomes
- FY2016/17 budget execution was cut in response to weak domestic activity, low commodity prices, and political uncertainty.
- Budget resources (tax, non-tax, and budget support grants and loans) turned out at US$556 million, US$45 million (2.1 percent of GDP) lower than the approved budget.
- Suspension of the implementing airtime surcharge contributed to revenue loss.
- Revenue shortfall filled by equivalent spending cuts through strong allotment control and spending prioritization, resulting in:
  - Budget deficit at US$15 million (0.6 percent of GDP).
  - Overall fiscal deficit including off-budget activities: US$155 million (7.4 percent of GDP), better than programmed by US$10 million due to lower off-budget spending and delays in domestically financed projects.

### Trade, Current Account, and External Sector
- 2016: both trade and current account balances improved as a 24 percent UNMIL-induced decline in imports more than offset a 7 percent fall in exports from the commodity price shock.
- 2017 outlook:
  - Trade balance expected to improve due to near doubling of gold exports, opening of a new iron ore mine site, and further declines in imports as UNMIL withdrawal continues and Liberian dollar depreciation is felt.
  - Current account expected to weaken somewhat as declines in current transfers and income payments exceed gains in trade and services balance.
- Foreign exchange inflows:
  - Total inflows declined by around 28 percent between FY2015/16 and FY2016/17 due to UNMIL withdrawal and declines in net remittance inflows and aid disbursements.
- Exchange rate and inflation:
  - Liberian dollar depreciated by about 20 percent since the last review in December 2016.
  - Inflation expected to close 2017 at about 12½ percent.

### Central Bank and Foreign Exchange Management
- December 2016: Central Bank of Liberia (CBL) introduced a 25 percent surrender requirement on inward remittances through money transfer companies to secure additional foreign currency for intervention and augment reserves.
- Use of surrendered U.S. dollars: major portion used to intervene in the foreign exchange market; remainder to augment reserves.
- Net foreign exchange position of the CBL (computed at program exchange rates):
  - Declined from US$178 million in June 2016 to US$146 million in June 2017.
  - Decline mainly due to a swap arrangement of US$30 million with the government in June 2017; swap reversed in July and net position recovered to US$162 million in end July 2017.
  - Decline also attributed to inability of the GOL to effect foreign currency sales to CBL since February 2017 due to lower than expected FX revenue collection.
- Intervention policy: interventions aimed at smoothing volatility, not actively resisting exchange rate adjustment; goal to slow adjustment and combine with fiscal restraint to avoid overshooting and second-round inflationary impact.

### Banking Sector
- Private sector credit contracted by 2 percent in 2016.
- Credit growth recovered strongly in first half of 2017 and stood at 15 percent at end June 2017 year-on-year.
- Recent months show signs of substantial deceleration in credit growth.
- Non-performing loans (NPLs):
  - Declined during 2016 largely because of the write-off of NPLs of FIBLL and restructuring of some loans.
  - Stood at around 14.8 percent at end December 2016.
  - Likely to rise by end of year due to difficulties in the domestic environment.

### Performance Under the Program
- Up to end-2016, program performance broadly satisfactory.
  - All end-December quantitative performance criteria (PCs) met except:
    - Floor on government revenue missed narrowly by about US$2 million (0.1 percent of GDP).
    - Ceiling on external borrowing missed by about US$7.8 million in present value terms due to a project loan ratified but not included in totals — weakness in information flows.
  - Indicative targets (ITs) for end-December were met.
- End-June 2017: program conditionality flagged due to unanticipated deterioration in economic circumstances (UNMIL drawdown, commodity price shock, elections), making original targets inappropriate.
  - Specific breaches and explanations:
    - Meeting original floor on CBL’s net foreign exchange position would have entailed rapid depreciation with severe hardship; authorities chose to avoid rapid depreciation.
    - Missed revenue collection PCs for end-December 2016 and end-June 2017 due to lower economic activity; revenue measures and external support partially offset shock; remaining gap closed by expenditure cuts.
    - Missed end-June PC ceiling on CBL gross direct credit to central government due to accounting conventions recording a US$30 million swap as gross credit; swap was unwound in July and breach reversed.
    - End-June IT on net domestic assets (NDA) of the CBL missed due to shortage of US dollars, stepped up exchange rate smoothing operations (depressing NFA), unanticipated drawdown of off-budget donor funds (decreasing NFA and raising NDA), resulting in reserve money growth underperforming and lower than programmed broad money growth — interpreted as relative monetary tightening complementing fiscal restraint and exchange rate depreciation.
- Structural reforms:
  - Of ten SBs for the seventh and eighth reviews, five completed within deadline.
  - Three measures completed with delay: quarterly SOE financial performance report (published May 15, 2017 instead of March 31, 2017); final forensic audit report of FIBLL shared June 7, 2017 instead of May 31, 2017; submission of spending and procurement plans of at least half of Ministries and Agencies achieved by September.
  - One SB to formalize agreements with four largest concession companies rendered mute after three of the four concession companies ceased Liberia-based operations.

### Objectives of Economic and Financial Policies for 2017–18
- Anchored in government’s long term development program—Liberia Rising 2030.
- Priorities for 2017–18:
  - Ensure smooth and efficient democratic transition.
  - Maintain security and macroeconomic stability.
  - Develop more resilient health and education systems.
  - Create an enabling environment for private sector development.
- Continued focus on diversification emphasizing agricultural and manufacturing outputs to reduce dependence on the extractive sector.

### FY2017/18 Budget (enacted July 27, 2017)
- Total resource envelope budgeted at US$564 million, about US$8 million more than FY2016/17 budget outturn.
- External budget support expected to decline; economic recovery and revenue collection measures expected to raise domestic revenue.
- Specific measures:
  - Strengthen collection performance of the Road Fund Levy (originally Import Surcharge Levy): unify discretionary surcharge rates and introduce direct transfers to budget resource accounts.
  - Postpone extension of wage structure reform beyond MFDP, Ministry of Gender and Social Protection and Civil Service Agency.
  - Maintain freeze of nominal wages and most fiscal rules introduced in FY2016/17 (hiring freeze, except education, health and security; travel restrictions).
  - Allocate resources to priority areas including health, education, security, election, and key development projects.
- Identified fiscal risks and adjustments:
  - Identified risks to resources of US$24 million with explicit offsetting cuts in expenditure:
    - Potential delay in donor support amounting to US$13 million.
    - Projected US$11 million domestic revenue shortfall from weaker-than-programmed economic growth and international trade.
  - Further downside risks of about US$23 million to be addressed through contingencies; contingent revenue paired with contingent expenditure with release rules:
    - One-off contingent revenue: contingent expenditure released once revenue received.
    - Overperformance contingent revenue: contingent expenditure released based on cumulative performance observed by end-April, 2018.
    - If by end-April 2018 at least 80 percent of contingent revenue of a paired group has been received into the Consolidated Fund, corresponding contingent expenditure will be released; if receipts are less than 80 percent, corresponding expenditure will be cancelled.

### Election Costs and Security Handover
- Total cost of the elections, including security, estimated at US$53 million (2.5 percent of GDP).
  - About US$18 million spent in FY2016/17 under the budget (with significant savings compared to budgeted US$22 million).
  - US$25 million budgeted for FY2017/18.
  - Remaining costs to be funded by donor community including EU, UNDP, USA, and International Foundation of Electoral System (IFES).

*Source: Liberian authorities (excerpt).*

### 20. The government established a Road Fund to secure financing sources for the

### 20. The government established a Road Fund to secure financing sources for the maintenance, rehabilitation, and extension of existing roads.

### Road Fund design and financing
- Road Fund Act passed by the Legislature in October 2016 and activated in FY2017/18.
- Fund controlled by the MFDP.
- Financing sources:
  - a portion of the fuel storage fee; and
  - matching co-financing from the Millennium Challenge Corporation (MCC), which will provide up to US$15 million over 3 years.
- FY2017/18 financing plan:
  - US$16 million from Road Fund Levy; and
  - US$10 million from the MCC.
- For transparency, the fiscal table in the published budget book has specific lines to the Road Fund for both revenue and expenditure.
- Projection revision (paragraph 17) leads the government to now expect only US$5 million from the MCC for FY2017/18.

### NASSCORP legacy obligations and pension arrangements
- Unsettled payments to National Social Security and Welfare Corporation (NASSCORP) under the National Pension Scheme and the Employment Injury Scheme accumulated since January 1984, reaching US$52.08 million.
- New agreement:
  - Clear these obligations over a period of 15 years (involving payments of about US$3 million a year).
  - Pay current contributions on a timely basis, beginning in FY2017/18.
- Planned follow-up: seek technical assistance to perform a full evaluation of the existing system to improve long-term viability.

### Fiscal deficit outlook and social safety nets
- Projected overall deficit for FY2017/18, including off-budget operations, is US$127 million (5.9 percent of GDP) through further reduction of expenditure by loan financing.
- Medium-term government aim: reduce the deficit to around 3 percent of GDP.
- Strengthening social safety nets in FY2017/18 with off-budget donor support:
  - Key components: (i) a social registry; (ii) data collection and household registration; (iii) eligibility screening; and (iv) an integrated Management Information System for monitoring.
  - Implementation by National Social Safety Net (NSSN) secretariat under the Ministry of Gender, Children, and Social Protection.
  - Financing support: World Bank US$10 million and USAID US$6 million.

### Monetary policy framework and dollarization
- Monetary framework constrained by underdeveloped financial markets and high dollarization:
  - Deposit dollarization about 80 percent.
  - Credit dollarization about 91 percent.
- Under-utilized interbank market and fragmented foreign exchange market reduce monetary policy transmission.
- Exchange rate depreciation drivers: slump in commodity prices, UNMIL drawdown, deferred investment and capital flight associated with election uncertainty.
- Estimated reduction in foreign exchange inflows: perhaps as much as US$167 million in FY2016/17.
- Share of government tax remittances in US dollars fell from normally about 80 percent to 45 percent in the first two months of FY2017/18.

### Policy measures taken on foreign exchange and payments (CBL and MFDP actions)
- December 2016: CBL introduced a 25 percent surrender requirement on remittances.
- Since February 2017: government suspended sales of foreign currency to the CBL due to low US dollar revenues.
- August 2017: government began paying an increased share of its expenditure in Liberian dollars.
- September 2017:
  - government issued an administrative regulation for at least 50 percent of payment of trade tax to be made in US dollars; and
  - government mandated the use of the daily weighted average exchange rate of the previous week (instead of the previous month) for tax valuation — recommended in August 2017 by the Liquidity Working Group (LWG).

### Exchange rate and inflation objectives
- Monetary policy focus: contain inflationary pressure by smoothing and slowing depreciation of the exchange rate.
- CBL reserves and net foreign exchange position expected to decline in 2017 absent government foreign currency sales and given expenditure to replace remaining legacy notes as mandated by the Legislature.
- Policy objective: smooth depreciation to attain a soft landing for the exchange rate and inflation, avoiding damaging exchange rate overshooting and second-round inflationary pressure.
- Medium-term reserve goal: maintain reserve cover at about three months of imports.

### Liquidity management and coordination
- Joint MFDP-CBL Liquidity Working Group (LWG) strengthened; participation elevated to Deputy Governor for Economic Policy (CBL) and Deputy Minister for Economic Management (MFDP).
- Liquidity operations:
  - July and September 2016: CBL issued on behalf of MFDP a total of L$6 billion of government bonds to mop up excess domestic currency liquidity.
  - July and September 2017: additional liquidity operations withdrew L$1 billion.
- Going forward:
  - CBL and MFDP to share technical work on liquidity monitoring;
  - Government to harmonize issuances and maturities of securities to avoid sharp swings in liquidity;
  - CBL examining possibility of issuing CBL securities to manage Liberia-dollar liquidity.

### CBL three-year financial plan and operational adjustments
- Implementation of CBL’s three-year financial plan led to sizeable reduction in operational deficits.
- From Q1 2016, CBL provided quarterly financial statements with comments on implementation to the Fund.
- 2016 US dollar spending cut by US$10 million compared to 2015.
- Unplanned domestic currency printing cost US$5.2 million (last printing took place in 2012); CBL substituted about 60 percent of the printing costs by reallocating Liberian dollar equivalents in other line items.
- 2017 Legislative instruction to replace remaining legacy notes will likely raise 2017 expenses by US$7–10 million.
- Plan to review remaining 2017 expenses to identify savings.

### External sector, borrowing, and debt management
- FY2016/17 ratified external loans about US$218 million or US$117 million in PV terms, meeting end-June 2017 PC ceiling on external borrowing.
- Debt stock increased in recent years due to investment needs (electrification and road projects); risk of debt distress moved from low to moderate since HIPC completion in 2010.
- Debt-to-export ratio slightly improved due to recent improvement in gold production and exploitation of a new iron ore mine site, but remains close to high-risk threshold in baseline scenario.
- Measures to strengthen debt management and control new borrowing:
  - Debt Management Unit (DMU) to be appropriately staffed to monitor debt stock and improve timely information flows, including verified printed copies of all loan ratifications before entering them in the database.
  - Development of a medium-term debt strategy (MTDS) for 2017–20 with IMF and World Bank advice; a zero draft shared with the Fund and expected to be finished within 2–4 months.
  - MTDS proposes prioritizing concessional loans and mitigating currency risk by focusing on US dollar–denominated loans.
  - Government commitment to restrain ratification of new external borrowing and emphasize raising implementation rate of existing loans; continued need to keep borrowing highly concessional.

### Public Financial Management (PFM) and structural reforms
- PFM reform strategy and Action Plan (2017–20) finalized on July 25, 2017 after donor consultation and a joint donor-government validation workshop; PEFA assessment (July 2016) informed priorities.
- Strategy highlights:
  - strengthen legal and regulatory framework;
  - improve budget credibility;
  - mobilize domestic revenue;
  - establish robust and linked ICT system and processes;
  - enhance comprehensiveness and transparency of fiscal reporting;
  - strengthen external scrutiny.
- PFM Act amendments:
  - Draft amendments submitted to the National Legislature on July 13th to strengthen fiscal responsibilities, budget execution, SOE governance, internal controls, cash management, accountability and reporting; proposed amendments include sanctions for breaches.

### Procurement, public investment, and project monitoring
- Public procurement improvements:
  - PPCC introduced Advanced Procurement Framework Agreement to accelerate procurement prior to budget passage.
  - Prior to FY2016/17 budget passage, PPCC approved and published 86 procurement plans on its website (fell short of the 50 percent of Ministries and Agencies specified in the SB for the eighth review).
  - PPCC developed a procurement professionalization strategy with four elements: (i) vertical education in procurement; (ii) procurement certification; (iii) professionals licensing regime; and (iv) continuing professional development.
  - Strategic partnerships with Internal Audit Agency, Accounting Services Unit (CAG’s office at MFDP), and Department of Economic Affairs at the Ministry of Justice to mitigate human resource shortages.
- Action plan addressing GAC Audit on Special Procurement (Ministry of Public Works):
  - Contracts identified amounted to US$23 million at end FY2014/15.
  - US$11 million paid in the FY2016/17 budget; remaining amount to be cleared during FY2017/18.
  - Project monitoring and evaluation unit established and staffed in MFDP, but effectiveness impeded by capacity and logistical challenges.
- Public Investment Management Assessment (PIMA) and reforms:
  - July 2016 IMF PIMA identified weaknesses: low investment efficiency, weak project monitoring and capacity, limited linkage between externally-financed projects and central government budget.
  - Action plan to implement PIMA recommendations to be finalized in 2017, with implementation commencing in FY2017/18.
  - Public investment database established; projects categorized by financing source (external or domestic) and monitored by the Aid Management Unit and the Public Investment Unit.
  - MFDP intends to improve the database for timely updates and to introduce regulation/guidelines requiring Ministries and Agencies to submit detailed project information to receive financing.

### IFMIS implementation
- IFMIS installed in about 50 Ministries & Agencies (M&As); transactions for M&As without IFMIS are entered into the system by the MFDP.
- Work ongoing to extend IFMIS coverage and introduce the budget module.
- 30 donor-financed projects migrated from Sun Accounting System to Government National System (IFMIS) for accounting and reporting.
  - Beginning FY2017/18, live IFMIS processing of these projects will commence where possible; new donor-financed projects to be executed through IFMIS.
- Government requested GAC to carry out a system audit of IFMIS; results are being analyzed and follow-up actions will be initiated as necessary.

*Source: Liberian authorities, extracted from the IMF staff report text.*

### 38. The implementation of the Treasury Single Account (TSA) remains a priority. Indeed, it

### 38. The implementation of the Treasury Single Account (TSA) remains a priority. Indeed, it

### Treasury Single Account (TSA)
- The TSA is one of the key priority areas outlined in the new PFM Strategy and Action Plan.
- The MFDP has established a new unit, the Treasury Single Account Section (TSAS), charged with the installment of the TSA.
- TSAS is designing a TSA structure based on the Liberian treasury system, with the support of the IMF, and is expected to finalize it in December 2017.
- Outreach to M&As on the importance of the TSA has started; the Office of the Comptroller and Accountant General has made several presentations and workshops to M&As and distributed a cash management template to M&As for capacity building.
- Implementation of the TSA is anticipated by July 1, 2018.

### Concession companies' social contribution deferral
- Foreign concession companies in the resource sector requested deferral of social contribution payments totaling about US$10–US$13.5 million per year due to the commodity price shock.
- The government accepted partial deferral (50 percent of their payment) up to FY2018/19.
- Memorandums of Understanding (MOU) negotiated indicating the length of the deferral (four years starting FY2015/16) and the repayment schedule.
- An MOU was signed with one concession company in May 2017; MOUs were not finalized with other mining companies as they had ceased operating in Liberia.

### State-Owned Enterprises (SOEs) control and fiscal risk
- Publication of the quarterly SOE report will continue, including the financial statements of covered SOEs (structural benchmark for the eighth review).
- Publication of the Q2 and Q4 reports was delayed due to delay in data submission to the MFDP and administrative procedure of publication; MFDP now intends to publish the report on a quarterly basis.
- The September 2016 report included analysis of SOEs liabilities and investments and their sources of financing; identified substantial amount of liabilities for 15 out of 37 SOEs, including deferred income and on-lending of external loans contracted by the government.
- Reports in FY2017/18 are intended to widen coverage to at least 18 SOEs.
- MFDP is preparing an inventory of the debt of SOEs as of end-June 2017 including creditor, terms, and currency denomination to help track the evolution of debt in the sector; this will be completed by end-2017.
- MFDP finalized by end-October 2017 a stock-taking compliance report of how well the SOEs comply with the PFM Act and regulations, and mandated reporting obligations.

### Expenditure control and arrears avoidance
- MFDP/Comptroller and Accountant General’s office circulated letters to Ministries and agencies and vendors to ensure compliance with expenditure procedures so that public spending commitments are backed by cash availability.
- The CAG’s Office plans to conduct training for Comptrollers of line Ministries and Agencies in the second half of the FY2017/2018 in adhering to expenditure control protocols as outlined in the PFM Regulations.

### Mitigating reform slowdown from political transition
- Upcoming political transition could delay ongoing reforms through changes in priority and/or human and resource allocation.
- The PFM Reform Coordination Unit at the MFDP has a core team of competent staff who are mostly civil servants to provide orientation and training in key PFM areas for newly appointed officials.
- A mid-year review of the PFM strategy and action plan will be carried out to incorporate changing and new priorities of the newly elected government.

### Revenue administration — LRA progress and needs
- The Liberian Revenue Authority (LRA) became operational in July 2014.
- LRA corporate five-year strategic plan (finalized in 2016) envisages four strategic goals:
  - (i) administer revenue legislation in an effective, fair, and transparent manner;
  - (ii) maximize voluntary compliance;
  - (iii) build an effective institution at all levels through excellence in leadership, accountability, technical and real infrastructural capacities;
  - (iv) transform revenue administration by utilizing effective Information and Communication Technology (ICT).
- Key achievements to date include:
  - (i) setup of the institution;
  - (ii) completion of the strategic plan;
  - (iii) introduction of first phase of strategic management system;
  - (iv) introduction of desk audit system for large taxpayers on withholding taxes;
  - (v) completion of sectorial audit manuals;
  - (vi) provision of taxpayer education through workshops;
  - (vii) implementation of goods and services tax return for some industries and online filing system;
  - (viii) introduction of the auditing of loss making companies in an attempt to defer filing of losses;
  - (ix) signing of MoU with other government agencies, such as Liberia Anti-Corruption Commission (LACC).
- Additional efforts needed:
  - Capacity development in natural resource revenue management;
  - Innovation and expansion of automation of the tax administration system;
  - A comprehensive staff integrity management program.
- Implementation will require significant contributions from external partners, especially in tax and customs modernization, IT, and capacity development complemented by hard and soft infrastructure support.

### LRA compliance management program
- LRA is establishing a robust and integrated compliance management program.
- A compliance management framework (CMF) was developed to define strategies for the large taxpayer segment, which account for over 80 percent of total collection, in the first half of 2017.
- Strategy includes development of risk analysis to support mitigation strategies (audit and enforcement, education and service options).
- Compliance focuses on core risks: registration, filing, payment and accuracy of declarations; sectors dominant in the large taxpayer office (LTO).
- The large taxpayer framework will be adapted to medium and small taxpayer segments where economic sectors overlap.
- Effective control of large taxpayer compliance will be critical to enable LRA to introduce and administer the value-added tax when initiated in 2019.

### Tax policy reforms and VAT
- Government plans to introduce a VAT but implementation will not take place until 2019 due to logistical constraints.
- Introduction of the VAT will provide additional scope to improve revenue generation, efficiency, and performance, and is required as part of a regional ECOWAS agreement.
- The VAT Steering Committee has been reconstituted with the Minister of Finance and Development Planning as Chair; Terms of References for the VAT Steering Committee (VSC) and the VAT Project Team (VPT) have been finalized.
- MFDP is collaborating with the LRA in preparation of a VAT White Policy Paper, roadmap for implementation, and a draft VAT Act.
- An IMF technical assistance mission recommended delaying implementation of the VAT until 2019 to allow necessary preparations.
- Government will commence stakeholder engagements scheduled to commence by December 2017 and submit the VAT bill for ratification by 2019, while developing LRA capacity to implement the VAT.

### Liberia Revenue Code (LRC) review
- Government is reviewing the LRC to address shortcomings that hinder revenue raising and administration.
- Problematic tax policy issues identified include:
  - (i) design of presumptive tax;
  - (ii) limitation of interest deduction;
  - (iii) taxation of indirect transfer interest in immoveable property;
  - (iv) excise taxation of beverages with reference to WTO and ECOWAS compliance requirements;
  - (v) taxation of telecommunication services;
  - (vi) fuel tax exemptions;
  - (vii) special investment tax incentives, covering both direct and indirect taxes.
- Government committed to streamlining tax incentive regime by eliminating differentiation based on region, local content and additional jobs.
- Government will apply one uniform accelerated depreciation scheme for companies.
- Review is necessary to make tax policies WTO compliant and to simplify the LRC to facilitate tax administration and compliance.
- Amendments relating to presumptive tax, excise taxation of beverages and telecommunication, and investment incentives, complemented by an additional increase in goods and services tax and tobacco excise, were submitted to the Legislature in a bill attached to the FY2016/17 budget and approved in September.
- To collect currency composition of tax receipts, LRA will move from the end of previous month rate to the previous day’s rate.

### Monetary and financial sector — non-performing loans and CBL actions
- CBL committed to promptly addressing the high level of non-performing loans (NPLs) in the banking system; NPLs remain a major challenge.
- CBL requested Fund TA (AFRITAC West 2) for an assessment of main drivers of NPLs, evaluation of ongoing measures, and recommendations to address the high NPL ratio.
- Central bank will intensify supervision of credit risk management by monitoring asset quality on a bank-by-bank basis and ensure commercial banks have adequate systems and controls and comply with CBL Prudential Regulation concerning Asset Classification, Loan Loss Provisions and Suspension of Interest on Non-Performing Loans and Advances.

### CBL IT upgrade and payment systems
- CBL is upgrading its IT system of the national payment system as part of creation of a common system for West African Monetary Zone (WAMZ) members.
- New Temenos T24 system replaces Bankmaster and covers CBL’s domestic and foreign exchange operations through front, middle, and back office processing, as well as payments.
- System interfaces with Automated Clearing House (ACH), Automated Checking Processing System (ACP), Real-Time Gross Settlement System (RTGS), and the Scriptless Securities Settlement System (SSSS).
- CBL reconciling back valued entries from Bankmaster to ensure all transactions are posted in T24.
- Once teething problems are resolved, CBL will focus on producing a daily analytical balance sheet to inform the work of the LWG.

### GN Bank monitoring
- Enhanced monitoring of GN Bank continues.
- Recent assessment indicates GN Bank remains adequately capitalized with sufficient liquidity.
- Bank strengthened financial position by renegotiating deposit rates and containing operational expenses.
- Provisions will be taken in line with prudential regulations as grace period for remaining non-performing legacy loans from FIBLL ends at the end of September 2017.
- CBL is carrying out a detailed on-site assessment of GN Bank.

### Forensic audit of FIBLL and CBL response
- Forensic audit by KPMG covered transactions of FIBLL from 2006 through closure on June 4, 2016; CBL exposure to FIBLL was about US$17.5 million as of June 4, 2016.
- Report indicated shortcomings within FIBLL and CBL’s governance and supervision capacities, as well as likely cases of fraud within FIBLL; report made available to Ministry of Justice by the Executive.
- Executive published the executive summary of the report with names and identifiers redacted; full forensic audit to be published once it will not interfere with judicial procedures.
- A time bound Action Plan of reform was published, adopted in consultation with Fund staff.

### Interim safeguards for CBL resources
- Fast-acting interim measures included in the Action Plan:
  - (i) compilation of monthly reports on foreign exchange withdrawals from the CBL within two weeks of month end (beginning with completion of a report by November 15, 2017 for the month of October 2017) and timely submission of these reports to the CBL Board of Governors (BOG) at every Board meeting;
  - (ii) semi-annual external audits on the foreign exchange reserves of the CBL to be submitted to the CBL Board of Governors, with the first report to include the period July 1-December 31, 2017 and to be completed within six weeks of the period end, and to be shared with Fund staff no later than eight weeks of the period end.
- An external auditor will be engaged as a prior action to conduct this audit in accordance with terms of reference prepared in consultation with Fund staff.
- The monthly and semi-annual reports will be made available to Fund staff without delay.

### Crisis preparedness, bank resolution and SRR
- CBL is reviewing gaps in the safety net system with emphasis on powers and tools for emergency liquidity, and bank resolution and drafting related regulations.
- With IMF MCM technical assistance, operational procedures specifying terms and conditions for provision of emergency liquidity assistance were developed in May 2017 (structural benchmark seventh review); framework finalized in May 2017.
- CBL revised the standing credit facility and reserve requirement regulation; new reserve requirement framework allows banks access to additional liquidity by drawing down some of their reserves during the maintenance period.
- CBL drafted a preliminary crisis management and bank resolution framework; further work contingent on amendment of the Financial Institutions Act (FIA) to enable adoption of legislation underpinning a special resolution regime (SRR).
- Additional TA will be needed in crisis management and bank resolution; CBL has requested the IMF.
- Government will continue to avoid undertaking quasi-fiscal activities to preserve financial position and ability to act as lender of last resort.

### Correspondent banking relationships (CBR) and AML/CFT
- Every Liberian bank has lost at least one correspondent banking relationship to date.
- CBL is aggregating metrics, engaging parent jurisdictions of respondent banks, advocating for global banks’ action internationally, and working closely with commercial banks.
- Efforts underway to improve AML/CFT environment.
- Anti-Terrorism Act criminalizing financing of individual terrorists for any purpose was passed by the legislature.
- CBL established a dedicated AML/CFT supervision unit and is working with stakeholders including the Financial Intelligence Unit (FIU).
- AML/CFT Unit concluded risk-based examination of all nine commercial banks and first follow up inspections of five banks were completed in March 2017.
- US Treasury, World Bank and IMF continue to provide technical support to strengthen Liberia’s AML/CFT system.
- FIU has been active in addressing gaps in AML/CFT laws and instrumental in Legislature’s passage of three anti-terrorism Acts in early 2017.
- FIU increased work with Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA); completed a Mutual Evaluation Report in May 2011, seven follow-up reports, and regular participation in GIABA plenaries including hosting the 2017 plenary.

### CBL safeguards and governance improvements
- CBL implementing recommendations of recent safeguards assessment alongside a three-year financial plan (¶30).
- CBL established an asset and liability committee (ALCO) in April 2017 to oversee risk management, balance sheet, and financial performance (structural benchmark for the eighth review); ALCO had its first meeting in August 2017 and requested TA on ALCO Pack from the IMF.
- Reforms completed include:
  - (i) published version of the CBL Act kept up to date to reflect most recent amendments;
  - (ii) completion of an external quality assurance review of the internal audit function;
  - (iii) regular review of commercial banks’ external audit reports against prudential returns with results reported to Board of Governors;
  - (iv) documentation of deviations noted during Regulation and Supervision Department (RSD) reviews with actions taken against banks involved;
  - (v) enhanced governance structure via review of a Board Charter with more detailed operational rules and guidance for Board and its committees.

*IMF staff report (selected excerpts).*

### 56. Several reforms are underway to strengthen financial infrastructure and improve

### cr17348 - 56. Several reforms are underway to strengthen financial infrastructure and improve

### Financial infrastructure and access to finance
- The CBL established the collateral registry in June 2014 to perfect security interest in movable assets, and to establish priority of secured parties based on the date and time of registration.
- During the fourth quarter of 2016, the Liberian Bankers Association (LBA) with support from the CBL resumed publication of names of non-compliant delinquent borrowers.
- The CBL has established 12 rural community finance institutions (RCFIs) across eight counties for community banks and issued a new regulation for credit unions to facilitate access to finance for the unbanked, including rural areas.
- Funding from IFAD will allow an increase in the number of RCFIs to 19 in the course of five years.
- The CBL has enacted regulation on agent banking to create an enabling environment for offering financial services and enhance financial inclusion.

### Mobile money and non-bank financial institutions
- An amendment to the 2014 mobile money regulations allows financial institutions (banks, non-bank financial institutions and non-bank financial service institutions) to apply for licenses.
- The CBL has issued two licenses to the non-bank financial institutions created by the two mobile networks to provide mobile money services and provide a conduit for access to finance.

### Consumer protection and market conduct
- The CBL has substantially strengthened the consumer protection framework.
- Regulation concerning interest determination and display of interest rates and charges and computation of lending rates aims to bring transparency to the loan market and protect customers from fraud.
- Regulation concerning consumer protection and market sets minimum standards for financial institutions in dealing with customers and requires establishment of efficient and effective mechanisms for handling consumer complaints.

### Financial sector implementation plan (FSDIP)
- The CBL, in collaboration with the government, has adopted a financial sector implementation plan (FSDIP).
- The FSDIP focuses on promoting access to finance, improving the legal and regulatory environment of the financial system, and enhancing the national payment system.
- The plan is being implemented in partnership with the World Bank and intends to build an inclusive financial system and strengthen the role of the financial system in supporting economic growth and development.

### External sector and trade integration
- The government is implementing the country’s WTO post accession plan. Liberia became the 163rd WTO member on July 14, 2016.
- The benefits of WTO membership (including lower cost of imports and wider export market access) are expected to materialize only in the medium term.
- Key elements of the post accession plan include reforms in trade facilitation, removing barriers to trade, trade integration, economic diversification, and agricultural value chains.
- The government has commenced implementation of the ECOWAS Common External Tariff (CET). Implementation by ECOWAS member states started in January 2014; introduction in Liberia was delayed by the Ebola epidemic.
- The CET was approved by the legislature in September, 2016 and some products have already been migrated to the CET.
- Liberia remains the only ECOWAS country yet to implement the ECOWAS Trade Liberalization Scheme (ETLS); implementation of the CET will follow a four-year phasing-in timeline.

### Business climate and infrastructure
- A Land Rights Act that will help secure land rights and define mechanisms for acquiring land has been submitted to the Legislature.
- The Mount Coffee hydropower project is now operational producing about 66 MW of power, bringing the country’s total installed capacity to about 104 MW.
- The government has reduced electricity tariffs from US$0.49 to US$0.39 per kilowatt hour, enabled by savings from hydropower.
- The binding constraint is low level of connectivity to the grid, preventing the majority of installed capacity from being sold; work to increase number of connections is underway.
- Through the Cote d’Ivoire, Liberia, Sierra Leone, and Guinea (CLSG) connection project, electricity has been provided to remote counties at cheaper rates compared to the Monrovia area tariff.
- The West Africa Power Pool CLSG project will begin building new transmission and distribution lines before the end of 2017 to catalyze regional energy trade and further reduce the tariff.

### Capacity development
- Capacity development is a priority of the government and continued Fund support will be needed.
- Capacity building is central to the medium-term strategy, Agenda for Transformation, and the revised PFM reform strategy.
- Key areas for capacity development: public financial management, public investment management, reform administration, natural resource taxation, monetary policy framework, financial regulation and supervision, and statistics.
- In January 2017, the government formalized a Memorandum of Understanding on Capacity Building Framework with the IMF aligned with the country’s TA priorities; this has been shared with other donors.
- A comprehensive training curriculum focused on macroeconomic and fiscal policy is being developed and will be administered in September 2017.

### Statistics and data improvements
- The government is making good progress in improving the quality of statistics.
- National Establishment Census (NEC): The Liberia Institute for Statistical and Geo-Information Services (LISGIS) completed NEC on July 3, 2017; it contains turnover data of over 80,000 establishments. The summary report is expected to be published in November 2017.
- Household Income and Expenditure Survey (HIES): Originally conducted in 2014 but stalled by the Ebola crisis after 6 months of data collection. The statistical abstract of the 2014 HIES was published in March 2016. The update was completed in January 2017, and the statistical abstract will be published soon.
- National Accounts: LISGIS is revising national account estimates with technical assistance from the IMF and the World Bank, and has made important progress towards preliminary estimates for 2008–13. Additional data collection is needed to revise the national account estimates, but funding has not been secured yet.
- Consumer Price Index (CPI): LISGIS has used the first half of 2014 HIES data to update the CPI basket and weights, with support from the World Bank and IMF’s Statistics Department.
- Trade data: The CBL has produced a preliminary version of a new customs-based trade dataset using ASYCUDA. The new data cover all businesses whose goods go through customs, unlike the old trade data from BIVAC. The CBL has extended the ASYCUDA-based dataset back to January 2010 with some ongoing minor corrections.

*IMF staff report content.*

### 66. We are requesting waivers for missed program performance criteria as specified above

### cr17348 - 66. We are requesting waivers for missed program performance criteria as specified above

### Request for waivers
- The authorities are requesting waivers for missed program performance criteria as specified in their Letter of Intent.

### Quantitative performance criteria and indicative targets (Table 1)
- Reporting period: June 2016–June 2017. Units: Millions of US dollars, unless otherwise indicated.
- Floor on total revenue collection of the central government:
  - Program Jun. 16: 473.7; Actual Jun. 16: 452.9; Status: Not Met
  - Program Dec. 16: 196.6; Actual Dec. 16: 196.6; Status: 194.5 Not met
  - Program Jun. 17: 493.5; Actual Jun. 17: 465.5; Status: Not Met
- Ceiling on new external arrears of the central government (continuous basis):
  - Program Jun. 16: 0.0; Actual Jun. 16: 0.0; Status: Met
  - Program Dec. 16: 0.0; Actual Dec. 16: 0.0; Status: Met
  - Program Jun. 17: 0.0; Actual Jun. 17: 0.0; Status: Met
- Ceiling on new domestic borrowing of the central government:
  - Program Jun. 16: 144.5; Actual Jun. 16: 75.0; Status: Met
  - Program Dec. 16: 186.4; Actual Dec. 16: 186.4; Status: 150.5 Met
  - Program Jun. 17: 186.4; Actual Jun. 17: 173.3; Status: Met
- Floor on CBL’s net foreign exchange position:
  - Program Jun. 16: 192.3; Actual Jun. 16: 178.0; Status: Not Met
  - Program Dec. 16: 181.0; Actual Dec. 16: 160.5; Status: 166.9 Met
  - Program Jun. 17: 188.5; Actual Jun. 17: 146.2; Status: Not Met
- Ceiling on CBL's gross direct credit to central government:
  - Program Jun. 16: 352.9; Actual Jun. 16: 353.4; Status: Not Met
  - Program Dec. 16: 353.9; Actual Dec. 16: 371.2; Status: 368.9 Met
  - Program Jun. 17: 372.0; Actual Jun. 17: 398.1; Status: Not Met
- Ceiling on the present value of gross external borrowing by the public sector:
  - Program Jun. 16: 97.0; Actual Jun. 16: 0.0; Status: Met
  - Program Dec. 16: 101.2; Actual Dec. 16: 101.2; Status: 109.0 Not Met
  - Program Jun. 17: 140.7; Actual Jun. 17: 117.0; Status: Met
- Indicative targets:
  - Ceiling on net domestic assets of the CBL:
    - Program Jun. 16: 25.2; Actual Jun. 16: 45.9; Status: Not Met
    - Program Dec. 16: 30.0; Actual Dec. 16: 50.5; Status: 33.8 Met
    - Program Jun. 17: 39.0; Actual Jun. 17: 163.6; Status: Not Met
  - Ceiling on new domestic arrears/payables of the central government (continuous basis):
    - Program Jun. 16: 0.0; Actual Jun. 16: 0.0; Status: Met
    - Program Dec. 16: 0.0; Actual Dec. 16: 0.0; Status: Met
    - Program Jun. 17: 0.0; Actual Jun. 17: 0.0; Status: Met
  - Floor on social and other priority spending (percent of total actual expenditure, excluding contingencies):
    - Program Jun. 16: 32.5; Actual Jun. 16: 37.9; Status: Met
    - Program Dec. 16: 32.5; Actual Dec. 16: 32.5; Status: 38.6 Met
    - Program Jun. 17: 32.5; Actual Jun. 17: 36.5; Status: Met
- Memorandum items:
  - Total spending on education, health, social development services (percent of total actual expenditure, excluding contingencies):
    - Program Jun. 16: 25.0; Actual Jun. 16: 23.6
    - Program Dec. 16: 25.0; Actual Dec. 16: 25.0
    - Program Jun. 17: 25.0; Actual Jun. 17: 13.7; Program second line shows 25.0 and Actual 16.2
  - Programmed receipt of external budget support grants and committed external loans:
    - Program Jun. 16: 140.0; Actual Jun. 16: 96.1; Jun. 16 status: 66.2
    - Program Dec. 16: 66.2; Actual Dec. 16: 62.0; Dec. 16 status: 88.4
    - Program Jun. 17: 90.1; Actual Jun. 17: Jun. 17

- Notes and clarifications from Table 1:
  - The authorities represent that they dispute the validity of the claims vis-à-vis Taiwan Province of China; ongoing litigation in New York. Arrears on such claims are not treated as arrears for the continuous performance criteria on arrears and the Fund’s arrears policy.
  - Domestic borrowing includes issuance of treasury bills, domestic loans, advances, and any government debt instrument issued in the domestic market. December 2014 actual borrowing included the disbursement under the ECF augmentation of SDR32.3 million. Targets after December 2014 include disbursement under the ECF augmentation of SDR32.3 million and the RCF of SDR32.3 million.
  - CBL net foreign exchange position includes SDR holdings net of ECF liabilities. SDR holdings converted at program exchange rate of 1 SDR=1.5844 US dollar.
  - An adjustor of up to 5 percent applies in case deviations from the ceiling are prompted by a change in the financing terms.
  - Social and other priority spending includes spending on education, health care, social development services, and energy.
  - Fiscal targets are cumulative within each fiscal year (July 1–June 30).
  - Total central government revenue collection includes all tax and non-tax receipt but excludes all contingent revenues and budget support grants.
  - The PC excludes the grants for Mount Coffee executed by the Liberian Electricity Company.
  - Effective from June 30, 2015, the nominal indicative target is replaced by the new PC on PV of gross external borrowings by public sectors.
  - Sources: Liberian authorities and IMF staff estimates and projections.

### Structural benchmarks and prior actions (Tables 2–4)
- Structural benchmarks for the Seventh ECF Review (End-December 2016 to End-May 2017):
  - Enhance budget programming, control and monitoring:
    - Expand database of externally-financed projects to cover cost overrun, project implantation delay, and payment arrears. Target: End-December 2016. Justification: Strengthen monitoring of multi-year investment projects. Status: Met. The database was merged with the one of the domestically financed public investment projects.
    - Formalize agreement with the four largest foreign concession companies, including length of deferment (no more than four years from FY2015/16) and payment schedule. Target: End-February 2017. Justification: Improve natural resource revenue management. Status: Not met. Only one company signed the Memorandum of Understanding. The remaining three companies stopped operations in Liberia.
    - Publish quarterly reports on the financial performance of State Owned Enterprises (SOEs) for FY2016/17 Q1 and Q2. Target: End-March 2017. Justification: Improve transparency and monitoring of public sector contingent liabilities and total public sector borrowing. Status: Not met. Q2 report was published on May 16, 2017.
  - Enhancing monetary operations and developing the financial sector:
    - Submit final report of the forensic audit of First International Bank of Liberia to Fund staff and make results available to judicial authorities. Target: End-May 2017. Justification: Safeguard against vulnerabilities in the banking sector and the CBL’s financial position. Status: Not met. The report was shared with the IMF on June 7.
    - Develop a framework for Emergency Liquidity Assistance and bank crisis management. Target: End-May 2017. Justification: Ensure emerging liquidity problems are tackled early. Status: Met.
    - For Q1 2017, provide quarterly financial statements with comments on implementation of the CBL financial strategy. Target: End-May 2017. Justification: Ensure efforts to facilitate a gradual return to financial viability. Status: Met.
- Structural benchmarks for the Eighth ECF Review (End-December 2016 to End-September 2017):
  - Enhancing budget programming, control and monitoring:
    - At least 50 percent of M&As with budget allocation lines to submit to the PPCC the spending and procurement plans for recurrent and PSIP expenditure based on the draft FY2017/18 budget. Target: End-June 2017. Status: Not met. The budget process was delayed.
    - Publish quarterly reports on the financial performance of SOEs for FY2016/17 Q3 and Q4; Q4 report should include summary financial statements. Target: End-September 2017. Status: Not met. Publication of the Q4 report planned end-November.
  - Enhancing monetary operations and developing the financial sector:
    - Set up an asset liability committee (ALCO). Target: End-April 2017. Justification: Strengthen CBL’s management of assets and liabilities and its financial position. Status: Met.
    - For Q2 2017, provide quarterly financial statements with comments on implementation of the CBL financial strategy. Target: End-September 2017. Status: Met.
- Prior action for the Seventh and Eighth ECF Reviews:
  - Engage with an external auditor to conduct semi-annual audits on the CBL’s foreign exchange reserve based on terms of reference agreed with Fund staff. Staff should receive an audit engagement letter as confirmation. Justification: Strengthen safeguards of public resources. (Status not explicitly listed in supplied excerpt.)

### Relations with the Fund, financial arrangements, and HIPC/CCR
- Membership status: Joined March 28, 1962.
- Quota: 258.40 (SDR Million) = 100.00 percent of quota.
- Fund holdings of currency: 226.08 (SDR Million) = 87.49 percent.
- Reserve Tranche Position: 32.33 (SDR Million) = 12.51 percent.
- SDR Department:
  - Net cumulative allocation: 123.98 (SDR Million) = 100.00 percent.
  - Holdings: 153.82 (SDR Million) = 124.07 percent.
- Outstanding Purchases and Loans:
  - RCF Loans: 32.30 (SDR Million) = 12.50 percent of quota.
  - ECF Arrangements: 111.10 (SDR Million) = 42.99 percent of quota.
- Latest financial arrangements:
  - ECF Nov. 19, 2012 – Nov. 18, 2017: Amount Approved 111.66 (SDR Million); Amount Drawn 96.90 (SDR Million).
  - Earlier ECF (Mar. 14, 2008 – May 17, 2012): 247.90 (SDR Million) drawn 247.90.
  - EFF (Mar. 14, 2008 – Sep. 25, 2008): 342.77 (SDR Million) drawn 342.77.
- Projected payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):
  - Forthcoming Principal: 2017: 2.10; 2018: 10.46; 2019: 20.04; 2020: 22.97.
  - Charges/Interest: 2017–2020: 0.00 each year.
  - Total: 2017: 2.10; 2018: 10.46; 2019: 20.04; 2020: 22.97.
- HIPC Initiative — Enhanced Framework:
  - Commitment of HIPC assistance decision point date: March 2008.
  - Assistance committed by all creditors (US$ Million): 2,739.20.
  - Of which IMF assistance (US$ Million): 721.10 (SDR equivalent in millions) 440.90.
  - Completion point date: June 2010.
  - Disbursement of IMF assistance (SDR Million):
    - Assistance disbursed to the member: 440.90.
    - Interim assistance: 30.14.
    - Completion point balance: 410.76.
    - Additional disbursement of interest income: 10.99.
    - Total disbursements: 451.89.
  - Delivery of Debt Relief at the Completion Point:
    - Debt relief (SDR Million): 548.53.
    - Financed by: Liberia Administered Account 116.20; Remaining HIPC resources 432.33.
    - Debt relief by facility (SDR Million), Eligible Debt Delivery Date June 2010: GRA 342.77; PRGT 205.76; Total 548.53.
- Implementation of Catastrophe Containment and Relief (CCR):
  - Board Decision Date: Feb 23, 2015. Amount Committed (SDR million): 25.84. Amount Disbursed (SDR million): 25.84. Date of Catastrophe: N/A.

### Safeguards assessment and exchange rate arrangement
- Safeguards assessment (November 2015 update):
  - Confirmed a weak governance and control environment at the Central Bank of Liberia (CBL).
  - Program measures have addressed some key concerns: strengthening the CBL’s investment policies, approval of its financial plan (prior actions for the 4th review), establishment of an emergency liquidity assistance (ELA) framework (structural benchmark for the seventh review).
  - Forensic audit of the FIBLL confirmed supervisory and governance failures within the CBL; authorities developed an action plan published with an executive summary of the forensic audit report with names redacted.
  - Remaining recommendations include legal amendments to align the CBL Act with best practices, strengthening the internal audit function, and enhancing audit and control oversight.
- Exchange rate arrangement:
  - Currency: Liberian dollar; U.S. dollar is also legal tender.
  - De jure exchange rate regime classification: ‘managed floating’.
  - De facto exchange rate regime classification: ‘other managed arrangement’ since November, 2011.
  - CBL intervenes in the foreign exchange market to smooth volatility.
  - Exchange rate at April 30, 2017: L$106.5=US$1 (mid-point between buying and selling rates).
  - Liberia maintains an exchange rate system free of restrictions on payments for current and capital transfers.

### Program reviews, missions, and technical assistance (selected items)
- Recent program reviews and consultations:
  - Ad-hoc review under the ECF arrangement for augmentation of access and modification of performance criteria discussed by the Board on September 26, 2014.
  - Request for disbursement under the RCF and debt relief under the CCRT discussed by the Board on February 23, 2015.
  - Fifth and sixth reviews of the ECF arrangement (request for waivers, augmentation of access, extension) discussed by the Board on December 16, 2016.
  - 2016 Article IV consultation discussions: Monrovia April 20–May 4, 2016; staff report discussed by Executive Board on July 8, 2016.
- Technical assistance 2014–17 (selected topics and dates):
  - Revenue Administration: February–March and April–May 2014; November 2014–April 2015 (Remote); multiple missions through 2016 and 2017; long-term residential advisor deployed in the LRA since January 2016.
  - Public Financial Management Reform: January, February, November 2016; May–June, July–August, September, October 2017.
  - Natural Resource Revenue: January and March 2016; April 2017.
  - Central Bank Accounting: August 2016; March 2017.
  - Crisis Preparedness and Management Framework: October–November 2015; January 2017; March 2017.
  - AML/CFT framework: June 2017.
  - Resident representative posted in Monrovia since April 2, 2006; Mr. Amo-Yartey assumed post May 1, 2014; succeeded by Mr. Oestreicher on August 1, 2017.

*Source: Liberia — Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement, and Request for Waiver of Nonobservance of Performance Criteria — Informational Annex (November 1, 2017).*

### 5. Bank

### 5. Bank

### A. Bank Group Strategy
- Current Country Partnership Strategy (CPS) for Liberia discussed by the World Bank Group Board on July 30, 2013; CPS period 2013–17.
- Overarching objective: support the Government’s Agenda for Transformation (AfT) to contribute to sustained growth, poverty reduction and shared prosperity while exiting fragility and building resilience.
- CPS pillars aligned with AfT pillars:
  - (i) Economic Transformation;
  - (ii) Human Development;
  - (iii) Governance and Public Sector Institutions.
- Cross-cutting themes: capacity development and gender equity.
- World Bank program under CPS: combination of development policy financing, investment financing and analytical work.
- IDA allocation for CPS period: approximately US$308 million, including IDA 16 (up to June 2014) and the full IDA 17 allocation.
- IFC expected investment over CPS period: average US$25 million per year.
  - Current IFC portfolio comprises: US$5.4 million in equity; US$19 million credit and trade lines; US$13 million seed investment in the West Africa Venture Fund (US$6.8 million allocated for Liberia and balance for Sierra Leone); and US$33.5 million debt financing approved and committed to the rubber and cocoa sectors.
- In response to the Ebola Virus Disease (EVD) outbreak, World Bank committed some US$177 million equivalent from the IDA Crisis Response Window (CRW).
- World Bank support to mitigate shocks (commodity price slump and UNMIL withdrawal) included:
  - Increase in financing for PRSDPO-III from US$10 million grant equivalent to US$20 million equivalent;
  - Augmentation of PRSDPO-III by US$19.1 million equivalent of grants, including from the IDA Crisis Response Window;
  - Supplemental financing to PRSDPO-III of US$12 million equivalent in IDA credits and grants, and US$4,366,500 in grants from Liberia Forest Landscape Single Donor Trust Fund (Norway).
- Systematic Country Diagnostic (SCD) preparation started October 2016; expected to be finalized by end-October 2017 and to inform the Country Partnership Framework in FY18.

### B. Active Projects
- Sixteen active IDA projects in Liberia, including four regional projects, with a total commitment of approximately US$646.2 million equivalent, of which approximately US$364.3 million is undisbursed.
- Eight new projects approved in 2016–17 for a total of US$78.53 million of IDA resources.
- Selected newly approved projects and objectives:
  - Regional Disease Surveillance Systems Enhancement (REDISSE) Phase II — approved March 1, 2017 for US$15 million: strengthen disease surveillance and epidemic preparedness and provide immediate response in an Eligible Emergency.
  - West Africa Regional Fisheries Program—Additional Financing — approved September 30, 2016 for US$4.2 million: improve unloading facilities, support Mesurado-Robertsport Cluster integration, upgrade equipment including cold storage and electrical power capacity in Robertsport.
  - MSME and Rural Finance Post-Ebola Project — approved May 2016 for US$4.8 million: enhance capacity of local private sector financial institutions to lend profitably to MSMEs; components include line of credit, partial credit guaranty scheme (default risk shared 50/50 with participating banks), and technical assistance to participating financial institutions.
  - Girls Ebola Livelihood Support (GERLS) — approved October 17, 2016 for US$530,000: support vulnerable girls in Montserrado, Margibi and Grand Bassa counties affected by EVD.
  - Liberia Urban Water Supply Project — approved March 24, 2016 for US$10 million: increase access to piped water in Monrovia and improve operational efficiency of Liberia Water and Sewer Corporation (LWSC).
  - Liberia Social Safety Net Project — approved April 28, 2016 for US$10 million: establish a basic national safety net delivery system and provide income support to about 10,000 extremely poor and food insecure households.
  - Liberia Renewable Energy Access Project — approved January 11, 2016 for US$27 million (including US$25 million from the Strategic Climate Fund): increase access to electricity for about 9,000 new users and support decentralized electrification and national solar market development (more than 100,000 people).
  - Liberia Land Administration Project — approved September 28, 2017 for US$7 million: strengthen Liberia Land Authority (LLA) capacity and establish land administration system.

### C. Advisory Services and Analytics
- BOOST implementation re-engaged: objectives include linking expenditure data in the current Chart of Accounts (CoA) to earlier CoAs, guiding budget analysts and planners, and subject to GoL approval, uploading a version of the tool to an accessible website. Three MFDP staff nominated as BOOST contact persons.
- World Bank analytical work on forest sector to inform:
  - Forest Action Plan (FAP) FY16–20 (approved by the Board in 2016);
  - Climate Change Action Plan (presented April 4, 2017);
  - Climate Change Action Africa Climate Business Plan (announced at UNFCCC COP21).
- Financial Sector Development Implementation Plan (FSDIP) objectives (FIRST-funded):
  - (1a) develop agent banking regulatory framework;
  - (1b) enhance mobile money strategy and regulatory framework;
  - (1c) foster payment systems’ development, regulations, and oversight;
  - (2) enhance consumer protection framework;
  - (3) bolster consumers’ financial capability via financial education strategy, program, and media campaign;
  - (4) strengthen regulatory, supervisory, and governance framework for MFIs;
  - (5) support capacity building and implementation support for operationalization of FSDIP, including for Financial Inclusion and Financial Infrastructure working groups.
- Technical assistance to LISGIS under a Multi-Donor Trust Fund (MDTF) for National Statistics Strengthening Project to support implementation of Household Income and Expenditure Survey (HIES), compile benchmark estimates for Poverty indicators, CPI, National Accounts, and capacity building.
  - 2014 HIES interrupted by EVD after 6 months; based on 6-month data, incidence of poverty estimated at 54 percent.
  - 12-month HIES launched in 2016.
  - LISGIS finalized compilation of National Accounts statistics for 2008 to 2013 and updated CPI weights using 2014 HIES data.
- Public Expenditure Financial Accountability (PEFA) assessment completed May 2016:
  - Despite IT-based modernization (TSA, IFMIS, SIGTAS, ASYCUDA, CSMS) and technical assistance, PFM performance has strengthened slowly and weakened in some areas.
  - Constraining factors: human resource capacity constraints, power and connectivity problems, financial resource shortfalls, EVD impact, frequent in-year budget adjustments, insufficient compliance with expenditure commitment and other non-salary internal controls.

### D. Financial Relations (Active and Disbursing Projects as at October 3, 2017)
- Selected project commitments, disbursements, and undisbursed balances (values as presented):
  - LR-Smallholder Tree Crop Project — 06/05/2012 11/30/2018 — 15.0 comm — IDA Disb to Date 12.0 — Undisb Bal 2.7
  - LR-Road Asset Management — 06/07/2011 06/30/2024 — 157.7 comm — IDA Disb to Date 75.8 — Undisb Bal 75.7
  - LR-Health Systems Strengthening — 05/30/2013 05/30/2018 — 10.0 comm — IDA Disb to Date 7.2 — Undisb Bal 2.8
  - LR-Accelerated Electricity Exp. — 05/30/2013 04/30/2020 — 95.0 comm — IDA Disb to Date 32.2 — Undisb Bal 64.9
  - LR-Public Sector Modernization — 02/10/2014 09/30/2019 — 2.0 comm — IDA Disb to Date 1.9 — Undisb Bal 0.0
  - LR-Youth Opportunities Project — 11/06/2015 12/31/2020 — 10.0 comm — IDA Disb to Date 2.8 — Undisb Bal 9.3
  - Liberia Renewable Energy Access Project — 01/11/2016 06/30/2021 — 2.0 comm — IDA Disb to Date 2.1
  - Social Safety Nets Project — 04/28/2016 12/31/2021 — 10.0 comm — IDA Disb to Date 10.3
  - Urban Water Supply — 03/24/2016 06/30/2021 — 10.0 comm — IDA Disb to Date 1.0 — Undisb Bal 9.3
  - Liberia Land Administration Project — 09/28/2017 10/31/2022 — 7.0 comm
  - Liberia Forest Sector Project — 04/19/2016 06/30/2020 — 36.7 comm — IDA Disb to Date 32.7
  - Cheesemanburg Landfill & Urb Sanitation — 06/28/2017 06/30/2020 — 10.5 comm — IDA Disb to Date 10.5
  - Liberia MSME & Rural Finance post Ebola Reconstruction — 04/04/2016 03/30/2019 — 4.8 comm — IDA Disb to Date 3.7
  - Ebola Emergency Response Project — 09/16/2014 03/31/2021 — 115.0 comm — IDA Disb to Date 35.0
  - WAPP APL4 (Phase 1) — 05/31/2012 10/31/2019 — 144.5 comm — IDA Disb to Date 42.9 — Undisb Bal 88.6
  - Regional Disease Surveillance Systems Enhancement (REDISSE) Phase II — 03/01/2017 08/31/2023 — 15.0 comm — IDA Disb to Date 0.0 — Undisb Bal 15.8
  - West Africa Region Fisheries Program AF — 02/08/2017 03/01/2018 — 1.0 comm — IDA Disb to Date 0.0 — Undisb Bal 0.8
- Overall Result: 646.2 175.8 364.3
- Note: Amounts may not add up to original principal due to changes in the SDR/US exchange rate since signing.

- IDA Disbursements and Debt Service (Since HIPC Completion Point) — US$ Million:
  - Jul 2010–Jun 2011: Total disbursements 61.83; Repayments 0.33; Net disbursements 61.49; Interest and fees 0.05
  - Jul 2011–Jun 2012: Total disbursements 55.27; Repayments 0.00; Net disbursements 55.27; Interest and fees 0.12
  - Jul 2012–Jun 2013: Total disbursements 40.18; Repayments 0.00; Net disbursements 40.18; Interest and fees 0.25
  - Jul 2014–Jun 2015: Total disbursements 183.6; Repayments 0.00; Net disbursements 183.6; Interest and fees 0.79
  - Jul 2015–Jun 2016: Total disbursements 131.0; Repayments 0.00; Net disbursements 131.0; Interest and fees 0.96
  - Jul 2016–Jun 2017: Total disbursements 85.35; Repayments 0.00; Net disbursements 85.35; Interest and fees 1.84

### E. Relations with the African Development Bank (AfDB)
- As of October 2, 2017: 18 active AfDB projects in Liberia (plus trust fund projects) with total commitment approximately UA 275.91 million, equivalent to US$374.37 million, of which about 22 percent is disbursed.
- Selected AfDB-supported projects and features:
  - Integrated Public Financial Management Reform Project Phase 2 (IPFMRP-II): UA 6.26 million; approved January 30, 2017; three-year project supporting PFM reforms; builds on Phase I; total project US$29.67 million with World Bank and USAID support.
  - Liberia–Urban Water Supply and Sanitation Project (UWSSP): UA 26.1 million grant to improve water and sanitation in Monrovia, Buchanan, Kakata, and Zwedru; enhance LWSC capacity.
  - Agriculture Sector Rehabilitation Project (ASRP): UA 18.4 million (UA 12.5 million ADB grant, UA 3.4 million IFAD grant, balance in kind from GoL); covers eight counties; closed disbursements end of June 2017.
  - Smallholder Agricultural Productivity Enhancement and Commercialization (SAPEC) Project: UA 34.08 million (UA 29.08 million GAFSP grant, UA 4.0 million ADF loan, UA 1.0 million government in-kind); implemented 2014–2018 in 12 counties.
  - Equity investment: US$1.2 million in Access Bank (ABL) share capital.
  - Fostering Innovative Sanitation and Hygiene in Monrovia: Euro 1.2 million grant from African Water Facility; currently undertaking closure activities.
  - Paving Fish Town–Harper Road Project (Phase I): estimated cost UA 43.04 million including UA 1.0 million GoL counterpart funding; upgrade Harper–Karloken section (50 km).
  - Mano River Union (MRU) Road Development and Transport Facilitation Program: net total cost UA 221.97 million; Liberia’s portion UA 76.88 million loan (Karloken-Fish Town 80 km and Harper-Cavalla junction 16 km).
  - Regional Electricity Interconnection Project (CLSG): overall cost UA 331.51 million; Bank Group contribution UA 128.15 million (38.7 percent); will construct a 1,357-km double circuit high voltage (225 kV) line; raise average electricity access rate in the four countries from 28 percent in 2012 to 33 percent by 2017; benefit some 24 million residents.
  - CLSG-RE Rural Electrification: finance 151 km of 33kv distribution networks, electrify 130 small towns, extend connections to 8086 households and install 748 street lights; project amount UA 18 million.
  - Liberia Energy Efficiency Access Project (LEEAP): UA 31.38 million to expand transmission and distribution, improve accessibility (Pleebo to Fish Town, RIA corridor), promote energy efficiency, and build human and technical capacity.
  - Technical Assistance (TCB-LISGIS): UA 500,000 grant to strengthen LISGIS institutional capacity and disseminate HIES results.
  - Youth Entrepreneurship and Employment Project (YEEP): US$2.3 million funded by TSF Pillar III and FAPA to improve youth entrepreneurial skills.
  - Program of Assistance to Trade Support Institutions in Liberia (PATSIL): UA 658,735 to build capacity in trade support institutions.

### F. Statistical Issues
- Assessment of Data Adequacy for Surveillance:
  - General: Data provision has serious shortcomings that significantly hamper surveillance. Most affected areas are national accounts, government finance, and balance of payments statistics.
  - National Accounts: Comprehensive national accounts data are not available. Fund staff estimate GDP by activity using the production approach and primary source data from LISGIS. Estimates for GDP by expenditure are not available.
  - During May–September 2012, LISGIS, assisted by a World Bank consultant, conducted a second round National Accounts Annual Survey (NAAS 2012) collecting information for the years 2010 and [content truncated in source].

*Source: cr17348 - 5. Bank*

### 2011. The processing of the NAAS 2012 was completed in June 2014, but several issues were identified

### 2011. The processing of the NAAS 2012 was completed in June 2014, but several issues were identified

### GDP estimates, rebasing, and related surveys
- Processing of the NAAS 2012 was completed in June 2014; STA experts identified several issues within the data when reviewed.
- The set of GDP estimates for 2008–13 presented serious inconsistencies; AFRITAC West 2 and STA experts made final adjustments to GDP figures for the period 2008–13.
- AFRITAC West 2 experts are providing assistance to LISGIS in compiling estimates for 2014 and 2015.
- These estimates will not be published until the next rebase.
- Shortcomings remain with the underlying NAAS 2012 data; a strong recommendation has been made that an Economic Census be conducted with respect to 2016.
  - The Economic Census undertaking will be strongly supported by both AFRITAC West 2 and the World Bank.
  - There is a lack of funds to undertake the survey required, which is being addressed currently.
- A full 12-month Household Income and Expenditure Survey (HIES) was started in January 2016.
  - The data collected to date have been processed and will be used in developing preliminary estimates of household final consumption expenditure (HFCE).

### Price statistics (CPI and PPI)
- Assisted by the EDDI 2 project, the LISGIS introduced from February 2017 an updated CPI, using expenditure weights and an updated market basket based on the Household Income and Expenditure Survey conducted during 2014.
- Currently prices are collected only in Monrovia.
- By 2019 it is expected that the weights will be further updated based on the results of the full 12-month HIES undertaken in 2016 and national price collection will be introduced.
- The LISGIS does not currently compile a PPI for Liberia because this requires that an Economic Census be conducted.
  - It is expected that work on the development of the PPI will commence during 2018.

### Government Finance Statistics (GFS)
- Liberia has only reported annual GFS data up to 2013 for budgetary central government, excluding social security.
- Further improvements are expected once expenditure data on donor-financed projects becomes available and a detailed analysis of extra budgetary funds has been completed.
- Challenges remain in capturing cash expenditure data in IFMIS; a non-cash reporting basis, based on either commitment or adjusted cash, is deemed necessary for the time being.
- A September 2016 TA mission assessed the Chart of Accounts structure and produced a bridge table to GFSM 2014 classifications and a number of further improvements.
- Despite that mission, the Liberia authorities have submitted no further data to the GFS team; a proposed follow up mission will encourage authorities to update their data and look for further improvements.

### Monetary and Financial Statistics (MFS) and financial sector surveillance
- Liberia does not submit monetary data to STA using Standardized Report Forms (SRFs); it still uses old reporting forms 10R (central bank sectoral balance sheet) and 20R (for banks).
- Data are generally submitted with long delays; latest available data is for April 2017.
- STA provided technical assistance to the Central Bank of Liberia (CBL) in April 2013 to help compile MFS data using SRFs, but reporting of data based on SRFs has yet to materialize.
  - CBL committed to start reporting data using SRFs by October 2017.
- Under the Japan Sub-Account (JSA) project, the CBL developed FSIs for deposit takers; these have so far not been sent to STA or released for publication.
- The CBL submits some supervisory ratios to AFR for surveillance purposes.

### External sector statistics (ESS)
- Under the UK DFID Project, the CBL has been receiving sustained TA missions; the quality of ESS has been improving gradually but for surveillance purposes is still not yet adequate.
- Balance of payments statistics are compiled quarterly since August 2016 on a BPM6 basis and have been submitted to STA since start of 2017.
- The CBL has recently compiled preliminary annual International Investment Position (IIP) and has submitted same to STA.
- A July 2017 TA mission designed new reporting forms to collect administratively sourced cross-border flows and positions and assisted the CBL to take steps to implement an International Transactions Reporting System (ITRS).
- The July 2017 mission also helped compilers prepare tables with longer time series data for publication in a user-friendly format.

### Data standards, metadata, and reporting to STA
- Participant in the enhanced General Data Dissemination System (e-GDDS). Metadata for most data categories were updated in January 2013.
- No Data ROSC mission has been conducted.
- The authorities report quarterly balance of payments data, annual IIP and government finance statistics for the IFS, GFSY, and BOPSY.
- Liberia does not submit FSIs to STA for publication on the IMF website.

### Key statistics and reporting frequencies (selected entries preserved exactly as presented)
- Exchange Rates: 9/2017  Sep/2017  D  M  D
- International Reserve Assets and Reserve Liabilities of the Monetary Authorities: 7/2017  Sep/2017  M  M  Q
- Reserve/Base Money: 7/2017  Sep/2017  M  M  Q
- Broad Money: 7/2017  Sep/2017  M  M  Q
- Central Bank Balance Sheet: 7/2017  Sep/2017  M  M  Q
- Consolidated Balance Sheet of the Banking System: 7/2017  Sep/2017  M  M  Q
- Interest Rates2: 7/2017  Sep/2017  M  M  Q
- Consumer Price Index: 7/2017  Sep/2017  M  M  Q
- Revenue, Expenditure, Balance and Composition of Financing3 – Central Government: 7/2015  Sep/2017  M  M  Q
- Stocks of Central Government and Central Government-Guaranteed Debt5: 7/2015  Sep/2017  M  M  Q
- External Current Account Balance: Q4/2016  Sep/2017  Q  Q  Q
- Exports and Imports of Goods and Services: 7/2017  9/14/2017  M  M  Q
- GDP/GNP: 2008  3/1/2011  Q  Q  I
- Gross External Debt: 8/2017  9/21/2017  M  M  Q
- International Investment Position6: 2015  March 2017  A  A  NA

### Debt Sustainability Analysis — background and underlying assumptions
- Risk of external debt distress: moderate.
- Augmented by significant risks stemming from domestic public and/or private external debt? No.
- External debt stock increased from US$597 million to US$736 million from September 2016 to June 2017.
- Currently, the external debt stock comprises mostly multilateral loans.
- In FY2017, around US$218 million of external loans have been ratified, and the debt accumulation is expected to continue.
- GDP projections deteriorated and export outlook improved in short- and medium-term.
  - FY2017 GDP growth is expected to contract by -2.2 percent.
  - FY2017 exports are expected to contract by -3.4 percent.
- Export growth projections have improved mainly due to improved gold production and opening of an iron ore mine site.
- Short-term downside risks include deterioration in security conditions or recurrence of Ebola; upside possibility includes a peaceful transition of power in January which may release pent-up investment demand and boost growth in 2018.

### External DSA findings
- Under the baseline scenario there are no breaches of indicative thresholds for any debt indicator.
- The PV of debt-to-GDP ratio is projected to increase from 23.1 percent in FY2017 to 27.5 percent in FY2019 and to decline gradually afterwards.
  - The peak of 27.5 percent in the PV of debt-to-GDP ratio is higher than previously projected (23.4 percent in the December 2016 DSA).
- The PV of debt-to-exports ratio is projected to increase from 76.5 percent in FY2017 to a peak of 89.2 percent in FY2019, lower than previously projected (99 percent in the December 2016 DSA).
- Under extreme shock scenarios (one-time depreciation shock or an export shock), both the PV of debt-to-GDP and the PV of debt-to-exports breach their thresholds as early as FY2018 and remain breached at least until FY2030.
- Under the historical scenario, the PV of debt-to-GDP and PV of debt-to-exports breach after FY2030 or later.
- Based on the probability approach, all indicators under baseline scenarios remain below thresholds; however, the PV of debt-to-GDP ratio is close to breach.

### Public DSA findings and implications
- The public DSA has not significantly changed compared to the December update.
- Under the baseline, most standard alternative scenarios, and the extreme stress test, the key debt indicator remains similar to December 2016 levels.
- The PV of public debt-to-GDP ratio is expected to rise from 26.5 percent in FY2017 to around 28.9 percent in FY2019 and decline slowly thereafter.
- Under a scenario with the primary balance fixed at its value in the first projection year, the ratio of total Public and Publicly Guaranteed (PPG) debt to GDP increases sharply above the benchmark in FY2026 and remains well above the benchmark for the remaining forecast period.
- The PV of debt-to-revenue and grants ratio is expected to rise from 90.3 percent in FY2017 to a peak of 105.6 percent in FY2019 and fall slowly afterwards.
- The debt-service to-revenue and grants ratio is expected to reach a peak of 7.5 percent in FY2021 and decline thereafter.
- All these ratios have deteriorated since the December 2016 DSA due to a worse GDP projection and faster debt accumulation.

### Policy implications and recommendations (as indicated in text)
- Authorities need to be vigilant of growing debt vulnerabilities.
- Enhance efforts to mobilize domestic revenue and achieve fiscal consolidation while protecting social spending.
- Conduct an Economic Census (recommended for 2016) to address underlying NAAS 2012 data shortcomings; secure funding to undertake the required survey.
- Continue revenue mobilization efforts; exercise prudent fiscal policy to support debt sustainability given declining grants and high pro-growth and pro-poor spending needs.

*Prepared by the International Monetary Fund and the World Bank. November 1, 2017*

### CONCLUSION

### CONCLUSION

### Debt vulnerabilities and DSA findings
- The DSA shows that Liberia’s risk of debt distress remains moderate.
- Authorities share staff’s concerns about debt vulnerabilities and emphasize strengthening infrastructure while respecting the debt limits under the ECF.
- To keep debt distress risk at moderate, authorities intend to:
  - continue prioritizing grants and concessional loans for pro-growth projects;
  - utilize already ratified but not yet disbursed resources and avoid new borrowings where possible;
  - seek new borrowing only at highly concessional terms when necessary;
  - assess all previously ratified loans to streamline them.
- Specific debt-management capacity enhancements needed:
  - information flows between the legislature, the President’s office, and the DMU of MFDP need to improve;
  - the DMU needs to build capacity to do their own debt sustainability analysis and to update a medium-term debt strategy (MTDS) as needed.

### Fiscal policy, revenue mobilization, and fiscal consolidation
- Creating fiscal space to meet social and development needs is a main pillar of the ECF-supported program; efforts on fiscal consolidation and revenue mobilization need to continue.
- The nature of fiscal adjustment should not jeopardize critical spending for poverty reduction and productivity.
- Recent fiscal numbers and projections:
  - $24 million (1.1 percent of GDP) in donor support is unlikely to be realized for FY 2017/18.
  - Overall fiscal deficit for FY 17/18, including off-budget activities, estimated at 5.9 percent of GDP.
  - Authorities committed to bringing the fiscal deficit down to 3 percent in the medium term.
- Fiscal consolidation measures and controls:
  - maintain hiring freeze outside the health and education sectors;
  - restrictions on travel;
  - postponement of wage reforms in the medium term;
  - contingency plan to ensure certain expenditures are only triggered when contingent revenues are realized;
  - strong allotment control measures to contain expenditures.
- Revenue mobilization measures:
  - unified discretionary surcharge rates on fuel imports and direct transfers of these funds to the central treasury starting FY 2017/18;
  - taxpayers’ education, desk audits for large taxpayers, and a new compliance management framework;
  - review of the Liberia Revenue Code to address shortcomings and current investment incentives;
  - plan to implement VAT in 2019, with a white paper and stakeholders’ engagement envisaged commencing in December 2017.

### Economic outlook and macro risks
- Recent growth and outlook:
  - Real GDP growth contracted by 1.6 percent in 2016.
  - Growth projected to rebound to 2.5 percent in 2017, largely driven by expansion in iron ore and gold production and improved manufacturing.
  - Growth projected to rise steadily to 7 percent (over the medium term) supported by all major sectors and sustained structural reforms.
- External and price developments:
  - The Liberian dollar depreciated by 20 percent in nominal terms since May 2017.
  - Inflation rose from 9.7 percent to 12.4 percent in September 2017.
  - Inflation is expected to subside, averaging 10 percent over the medium term on the back of a tight monetary policy stance and expected easing of exchange rate pressure in the post-election period.
- Vulnerabilities and recommended strategies:
  - Liberia remains vulnerable to external shocks (e.g., commodity price shocks) as a commodity exporter.
  - Authorities need a prudent borrowing strategy, prioritization of pro-growth projects, and diversification of the economy to increase resilience.

### Monetary, exchange rate, and financial sector policies
- The CBL has maintained a tight monetary policy stance, decelerating base money growth to dampen exchange rate pressures.
- Exchange rate policy: maintain flexibility with interventions aimed at smoothening volatility and protecting against speculative demand.
- Banking sector and financial stability:
  - Non-performing loans (NPLs) declined from 15.8 percent in March 2017 to 14 percent in June 2017, driven by write-offs and restructuring.
  - Authorities requested Fund assistance to assess key drivers of high NPLs and evaluate measures to address them.
- Supervisory and governance measures:
  - CBL prepared and published a time-bound action plan incorporating recommendations from the Fund safeguard assessment, forensic audit of FIBLL, and an independent review.
  - Interim measures: submission of monthly reports to the Board on foreign exchange withdrawals; preparation of semi-annual external audits of foreign exchange reserves.
  - Executive summary of the forensic audit published; full report submitted to the judicial authority.
  - Anti-money laundering measures: an anti-money laundering Act passed in February 2017; CBL established an AML/CFT Unit and completed risk-based examinations and follow-up inspections of over 50 percent of banks.
  - CBL established an Asset and Liability Committee (ALCO), an Emergency Liquidity Assistance (ELA) framework, and is working on a Special Bank Resolution Regime.

### Structural reforms and governance
- Continued commitment to structural reforms in PFM, governance, and business environment beyond the current program.
- PFM and procurement reforms:
  - Amendments to PFM legal and regulatory framework submitted to the National Legislature to strengthen fiscal responsibilities, budget execution, SoE governance, internal controls, and cash management (addressing weaknesses from the 2016 PEFA).
  - PPCC developed a strategy paper to professionalize the procurement career track and is working with spending entities to ensure timely procurement reporting.
  - Monitoring and evaluation unit established in the MFDP to strengthen implementation of public investment projects; implementing recommendations from a recent PIMA report.
- SoE transparency and contingent liabilities:
  - Reinforced publication of financial performance reports of SoEs, analyzing liabilities, investments, and financing sources.
  - Exercise to take stock of contingent liabilities of the central government relating to SoEs to be completed by end December 2017.
- Measures to attract investment and improve infrastructure:
  - Energy tariff reduced from $0.49 to $0.39 per kilowatt hour.
  - Expanded access to the national power grid, with additional connectivity earmarked through regional projects.
- Capacity building:
  - Authorities signed an MoU with the Fund regarding a Capacity Building Framework consistent with the country’s TA priorities; framework shared with other development partners.

### Program performance and remedial actions
- Performance under the ECF arrangement broadly satisfactory despite missed performance criteria (PCs) and structural benchmarks (SBs):
  - Two end-December 2016 PCs on government revenue and gross public external borrowing were missed.
  - Three end-June 2017 PCs on government revenue, net foreign exchange position of the CBL, and CBL’s gross direct credit to government were missed.
  - Causes and corrective actions:
    - Revenue PC missed due to subdued economic activity; corrective: unified fuel surcharge transfers to treasury.
    - Gross public external borrowing PC missed due to weaknesses in information flow; corrective: DMU to ensure all ratified loans are fully recorded and reported.
    - Net foreign exchange position PC missed due to a swap arrangement; resolved through swap reversal and CBL reviewing operational budget for foreign currency savings.
    - Gross direct credit missed due to accounting conventions around the swap; reversed in July to meet the target.
  - Structural benchmarks: delays in SoE quarterly reporting and forensic audit submission noted; remedial measures include improved data transmission, streamlined publication clearance, and processing of FY2016/17 Q4 reports for publication in November 2017.
- Authorities requested waivers for non-observance of end-2016 and end-June 2017 PCs and requested completion of the seventh and eighth reviews of the ECF program.

*Source: cr17348 - CONCLUSION*

### Conclusion

### Conclusion

### Commitment to macroeconomic policies
- Our authorities are committed to implementing sound macroeconomic policies aimed at achieving sustainable and inclusive growth.
- Though challenges persist, they remain confident that ongoing reforms to support the economic agenda, including the government’s diversification program, would lead to long term economic stability.

### Outlook and engagement with the Fund
- In this regard, they look forward to the conclusion of the 7th and 8th (final) reviews under the ECF and further engagement with the Fund.

*Source: cr17348 - Conclusion*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2017/cr17348.pdf_