## cr18172

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### Context: political transition, living conditions, and infrastructure needs
- January 2018 election: Liberia’s first democratic transition of power between different political parties since 1944.
- Authorities’ medium-term development strategy expected by end-June 2018; PAPD-2019-2023 to be unveiled July 2018.
- National accounts revision: preliminary nominal GDP estimate approximately 1.5 to 1.6 times higher than previous estimate.
- Living conditions and infrastructure:
  - 2016 HIES: 50 percent of the population living below the national poverty line.
  - Electrification: less than 20 percent of houses electrified in 2016; electricity production at 16.8 KWh per capita; estimated 81 percent of households have no access to electricity.
  - Roads: only 5 percent (noted elsewhere as 6 percent) of roads paved.
- Infrastructure investment need:
  - One five-year program estimated at approximately US$1 billion (Liberia Multimodal Transport Master Plan, 2017).

### Recent economic developments and macro pressures
- Growth:
  - Real GDP growth: -1.6 percent (2016), rose to 2.5 percent in 2017.
  - Mining & panning sector grew by 28.8 percent in 2017.
- Exchange rate, inflation, and external pressures:
  - Exchange rate depreciation year-on-year by 22½ percent in 2017 (other excerpts: LBD depreciated by around 16 percent in 2017; NEER depreciated by around 10 percent in 2017).
  - Inflation: 14 percent by end-2017; series shows Consumer prices (annual average): 8.8 (2016), 8.8 (2017), 12.4 (2018), 11.7 (2019), 10.5, 9.5, 8.5, 7.5, 6.3 in later series.
  - Net foreign exchange inflows declined after elevated inflows during 2014–16, putting pressure on exchange rate and fiscal resources.
- External position and reserves:
  - Current account deficit: widened from -18.5 percent of GDP (2016) to -22.7 percent of GDP (2017).
  - Gross international reserves: US$450 million at end-2016 to US$432 million (3 months of import cover) by end-2017; expected to decrease to US$405 million by end-2018.
  - Reserve drawdowns largely due to returning unused Ebola-related grants parked at the CBL and delays in disbursement of external budget support.

### Outlook, scenarios, and key projections
- Near-term projections:
  - Real GDP growth projected at 3.2 percent in 2018, driven largely by mining (gold).
  - Inflation projected to reach 11 percent year-on-year by end-2018.
  - Current account deficit projected at -22.4 percent of GDP in 2018.
  - Gross international reserves expected: US$405 million by end-2018.
- Medium-term baseline scenario (staff interpretation of authorities’ stated policies as of March 2018):
  - Real GDP annual percent change: 2018 3.2; 2019 4.7; 2020 4.8; 2021 5.3; 2022 5.2; 2023 5.3.
  - Revenue (percent of GDP): 12.9 (2018); 13.6; 14.2; 14.5; 14.7; 14.8.
  - Expenditure (percent of GDP): 33.3 (2018); 33.4; 32.3; 31.3; 30.5; 29.0.
  - Overall balance (percent of GDP): -5.2 (2018); -5.1; -4.7; -4.8; -4.9; -4.4.
  - Primary balance: -4.7 (2018); -4.3; -4.2; -4.4; -4.5; -4.0.
  - Fiscal financing gap: -0.4 (2018); -1.5; -0.8; -0.6; -0.5; -0.4.
  - Public external debt (percent of GDP): 26.3 (2018); 29.9; 32.4; 34.4; 36.1; 37.3.
- Medium-term reform scenario (supplementary measures to promote macroeconomic and debt stability):
  - Real GDP annual percent change: 2018 3.2; 2019 4.6; 2020 4.7; 2021 5.3; 2022 5.6; 2023 5.8.
  - Revenue: 13.1 (2018); 14.8; 15.5; 15.7; 16.0; 16.2.
  - Expenditure: 33.2 (2018); 32.9; 31.7; 30.5; 29.9; 28.0.
  - Overall balance: -4.8 (2018); -3.4; -2.8; -2.9; -3.0; -2.1.
  - Primary balance: -4.4 (2018); -2.5; -2.2; -2.4; -2.6; -1.7.
  - Fiscal financing gap: 0.0 for 2018–23 (all years).
  - Public external debt: 26.3 (2018); 29.7; 31.0; 31.8; 32.2; 31.6.
- External borrowing assumptions:
  - Baseline: annual external loan disbursements assumed to increase from about $60 million (FY2014–17) to US$120 million (FY2018–23).
  - Reform scenario: annual external loan disbursements assumed at about US$85 million per year, with increased domestic resource mobilization filling the gap (Text Table 1).
- Financing gap and debt dynamics:
  - Grants projected to decline by 5.5 percentage points of GDP over the medium term.
  - Average annual financing gap of about 0.7 percent of GDP projected for the medium term under baseline.
  - Public external debt as of end-FY2017: US$736 million (22.7 percent of GDP).
  - Under baseline, public external debt would increase by about $1 billion in the medium term; if financing gap filled with additional external borrowing (~$26 million per year), public external debt to GDP ratio would increase to 40 percent of GDP by 2023, placing Liberia at high risk of debt distress.
  - Reform scenario eases risk of debt distress while achieving roughly the same level of spending on roads over the medium term.
- Medium-term growth (assuming sound policies): average 5.1 percent (2019–23).

### Risks, spillovers, and financial sector vulnerabilities
- Upside risks:
  - Increase in commodity prices.
  - Quick recovery of iron ore production.
  - Increase in donor grants following strong reform efforts.
- Downside risks:
  - Another collapse in commodity prices.
  - Delay in formulating the national development strategy.
  - Failure to mobilize resources to fill financing gap.
  - Slow structural and institutional reforms.
- Financial sector and FX shortages:
  - Dollar denominated deposits in banking sector: US$431 million.
  - Net foreign liquid assets of financial system: US$107 million.
  - CBL gross official foreign reserves: US$432 million.
  - Banking sector exposure: mining accounts for almost 70 percent of exports while about 8 percent of GDP; remittances constitute 17 percent of GDP; 25 percent of remittances are required to be sold to the CBL.
  - High NPLs: indications of systematic underreporting and forbearance; NPLs reduce banks’ ability to extend new credit.
  - Shortage of U.S. dollar liquidity despite a positive net open position in FX.

### Executive Board assessment and Directors’ priorities
- General:
  - Liberia appears poised for recovery but significant fragilities remain.
  - Directors welcomed the authorities’ pro‑poor agenda and noted macroeconomic stability is essential to advance it.
- Directors’ emphasized actions:
  - Mobilize resources and ensure debt sustainability.
  - Pursue structural and institutional reforms for higher growth and poverty reduction.
  - Anchor fiscal policy to ensure debt sustainability over the medium term.
  - Increase domestic resource mobilization, including enhancing the IT system of the LRA to improve tax compliance and efficiency.
  - Improve governance, fiscal transparency, and accountability to increase spending efficiency.
  - Contain public wage bill and redirect expenditures to capital spending, especially infrastructure.
  - Limit new debt to concessional terms, ensure transparency of future debt obligations, and ensure effective implementation of infrastructure projects.
  - Strengthen monetary policy effectiveness: recapitalize the CBL, safeguard international reserves, preserve governance principles and central bank independence.
  - Strengthen external position: allow greater exchange rate flexibility while maintaining price stability; pursue structural reforms to improve productivity and competitiveness; reduce public saving-investment gap.
  - Reduce banking sector risk: reduce NPLs (including clearing government obligations to banks); complete implementation of the CBL Action Plan.
  - Lift the remittance surrender requirement when foreign exchange market conditions allow.
  - Address data shortcomings, especially in national accounts and external data; continue capacity development and technical assistance.

### Key policy recommendations (summarized)
- Fiscal:
  - Ensure medium-term debt sustainability while mobilizing domestic resources to complement limited borrowing space.
  - Anchor fiscal policy by using caps on public debt accumulation; consider the primary balance as an operational target.
  - Mobilize domestic resources of about 3 percentage points of GDP in medium term (e.g., enhance LRA IT system).
  - Review tax exemptions and concession agreements; consider introduction of a VAT with careful design.
  - Strengthen fiscal transparency, expand IFMIS coverage, establish TSA, and consider a comprehensive program to clear domestic arrears.
- Monetary and central bank:
  - Recapitalize the CBL and assure ongoing recapitalization to statutory levels to restore monetary policy effectiveness.
  - Review CBL budget and operational costs; reduce reliance on reserves to fund deficits; plan to run a balanced CBL budget.
  - Preserve CBL governance and independence; replace temporary Board quorum with permanent non-executive appointments; resist CBL bridge loans to the GOL.
  - Introduce and deepen operational instruments (e.g., deposit facility) and develop interbank markets in LBD and FX.
- External and competitiveness:
  - Allow greater exchange rate flexibility to absorb external shocks while maintaining price stability.
  - Further REER adjustments needed (at a minimum to pre-2014 level); reduce current account deficit by about 6.5–7.5 percent of GDP, achievable via further real depreciation around 23–32 percent and fiscal consolidation.
  - Implement structural reforms: pass a Land Rights Act; improve business conditions; increase and make reliable power supply; enhance access to credit and contract enforcement.
- Financial sector stability:
  - Tighten macroprudential policies given U.S. dollar liquidity shortage (consider gradual increase in reserves on U.S. dollar deposits).
  - Complete CBL Action Plan: strengthen supervision; require proper provisioning and end forbearance; develop a resolution framework; enhance AML/CFT compliance.
  - Promptly address arrears to reduce NPLs; develop robust bank resolution framework.
- Remittances and capital flows:
  - Treat the 25 percent remittance surrender requirement as a temporary CFM; lift when inflation and reserve pressures ease in line with Fund Institutional View.
- Data and capacity:
  - Urgent improvements needed in national accounts, GFS, and BOP statistics; recruit staff and continue TA (AFRITAC West, World Bank support).

### Debt sustainability and DSA findings
- Baseline DSA:
  - Risk of external debt distress: Moderate under baseline if infrastructure program implemented with care.
  - Public external debt stock: US$736 million (25 percent of GDP) at end-FY2017.
  - Ratified but undisbursed loans: US$422 million.
  - Baseline external loan disbursements assumed: near US$120 million annually in medium term; combination with ratified loans would add about $1 billion to public external debt over next five years.
  - If financing gap filled by additional external borrowing (~$26 million per year), public external debt to GDP ratio would rise to over 40.7 percent by 2023 (high risk of debt distress).
- Reform scenario for DSA:
  - New loans: about US$85 million per year; higher concessionality (close to 60 percent grant element); mobilize additional domestic resources equal to 3 percentage points of GDP by FY2023.
  - Outcome: similar development spending while easing debt distress risk.
- Sensitivities:
  - PV of external debt can surpass thresholds under a one-time 30 percent depreciation or a one-standard-deviation terms-of-trade shock.
  - Debt service and PV ratios remain sensitive to timing, concessionality, and pace of disbursements.

### Program design, lessons, and capacity development
- Past program performance:
  - ECF1: generally strong; real GDP growth averaged 6.7 percent (2008–12); inflation contained.
  - ECF2 (2012–17): weaker performance; 71 structural benchmarks, only slightly above 50 percent met or met with delay; revenue floors often missed.
- Lessons:
  - Program objectives should be ambitious but parsimonious; structural benchmarks should account for authorities’ absorptive capacity.
  - Causes of QPC underperformance (overly optimistic revenue forecasts; disconnect between budget prep and outturns) should be addressed a priori.
- Capacity development:
  - Liberia among ten countries receiving highest quantity of Fund TA; pilot for the Capacity Building Framework (CBF).
  - Current CD exceeds 5 FTEs; majority in fiscal area; traction of past TA limited.
  - Recommendation: better align TA with absorptive capacity and program objectives; more flexible TA modalities.

### Statistical issues and data adequacy
- Serious shortcomings hamper surveillance, particularly national accounts, government finance, and balance of payments.
- Progress and actions:
  - Full 12-month HIES for 2016 completed February 2017; CPI re-weighted using 2014 HIES; NAAS and National Establishment Census undertaken with fieldwork planned.
  - BOP compiled quarterly since August 2016 on BPM6 basis; preliminary IIP submitted.
  - Monetary data: CBL has not fully adopted SRFs; latest available data had long delays.
  - National accounts staff capacity: reported as 40 percent understaffed; urgent recruitment needed.

### Development partner support (World Bank, IFC, AfDB highlights)
- World Bank:
  - Active projects: 21 active projects with net commitment ~US$938.8 million; undisbursed ~US$426 million.
  - Selected project commitments: Liberia Road Asset Management Project US$266.6 million; West Africa Power Pool US$189.8 million; Ebola Emergency Response Project US$167.0 million; multiple social and infrastructure projects listed.
- IFC:
  - Expected average investment: US$25 million per year over CPS period.
  - Current portfolio: US$5.4 million equity; US$19 million credit and trade lines; US$13 million seed investment in West Africa Venture Fund; US$33.5 million debt financing approved/committed to rubber and cocoa.
- AfDB:
  - IPFMRP-II: USD 8.89 million funding; project co-funded; components include IFMIS upgrade, PFM capacity, debt management, macro forecasting.

### Authorities’ views and commitments
- Authorities broadly agree on near-term challenges and need for reforms, but are more optimistic on growth, borrowing space, and returns on infrastructure.
- Fiscal measures taken/planned:
  - Cabinet members’ salaries cut by 10 percent; haircuts for upper echelon public servants; caps on heads of public corporations; Civil Service Management module coverage expanded to five ministries/agencies.
  - LRA preparing for VAT introduction in 2019 and modernizing IT; MTRS being developed.
- Monetary and de-dollarization:
  - CBL engaged with MFDP on recapitalization; introducing a deposit facility; committed to gradual de-dollarization anchored in market fundamentals.
  - Surrender requirement viewed as temporary; to be phased out when conditions permit.
- Structural reforms:
  - PAPD aims to strengthen public institutions, accelerate infrastructure (roads), improve productivity and diversification, increase human capital investment, and safeguard macroeconomic and debt sustainability.
- Request for continued partner support and TA; authorities to work closely with Fund and other partners.

*Italic: IMF staff report for the 2018 Article IV consultation on Liberia (excerpts from cr18172).*

### 2.5 percent in 2017. However, Liberia remains fragile with poor living conditions for the

### cr18172 - 2.5 percent in 2017. However, Liberia remains fragile with poor living conditions for the

### Context: A new beginning and development challenges
- The January 2018 election marked Liberia’s first democratic transition of power between different political parties since 1944.
- New government focus: poverty reduction, growth, and fighting corruption; medium-term development strategy expected by end-June 2018.
- Revisions to national accounts: preliminary estimate of nominal GDP is approximately 1.5 to 1.6 times higher than the previous one.
- Living conditions and infrastructure:
  - The 2016 Household Income and Expenditure Survey (HIES) shows half of the population is living below the national poverty line.
  - Less than 20 percent of houses were electrified in 2016.
  - Only 5 percent of roads are paved.
- Infrastructure investment needs:
  - One investment program for the next five years is estimated to amount to approximately US$1 billion (Liberia Multimodal Transport Master Plan, 2017).

### Recent economic developments and macroeconomic pressures
- Growth and recovery:
  - Real GDP growth: bottomed out at -1.6 percent in 2016 and rose to 2.5 percent in 2017.
- External and price pressures:
  - Reduction in net foreign exchange inflows (after elevated inflows during 2014–16) put pressure on the exchange rate and fiscal resources.
  - Exchange rate depreciation year-on-year by 22½ percent in 2017.
  - Inflation reached 14 percent by end-2017.
- External position and reserves:
  - Current account deficit widened from -18.5 percent of GDP in 2016 to -22.7 percent of GDP in 2017.
  - Gross international reserves decreased from US$450 million at end-2016 to US$432 million (3 months of import cover) by end-2017.
  - Reserve drawdowns were largely due to returning unused Ebola-related grants parked at the CBL and delays in disbursement of external budget support.

### Outlook, risks, and scenarios
- Baseline and reform scenario:
  - The baseline scenario is staff’s interpretation of authorities’ stated policies as of the March 2018 mission.
  - A reform scenario was discussed to accomplish the same development goals with additional measures to foster macroeconomic and debt stability.
- Medium-term outlook:
  - Assuming implementation of sound policies, the medium-term outlook appears favorable.
- Key risks:
  - Main upside risk: an increase in commodity prices and output.
  - Main downside risks: difficulties in mobilizing resources to fill the financing gap and in pursuing structural and institutional reforms.
  - Additional fragilities: pressure on exchange rate and fiscal resources from declining aid inflows; large infrastructure gap; high poverty incidence.

### Executive Board Assessment and Directors’ priorities
- General assessment:
  - Liberia’s economy appears poised for recovery, but significant fragilities remain.
  - Directors welcomed the authorities’ pro-poor agenda and noted that macroeconomic stability is essential for advancing this agenda.
- Directors’ emphasized actions:
  - Mobilize resources and ensure debt sustainability.
  - Pursue structural and institutional reforms to achieve higher growth and reduce poverty.
  - Anchor fiscal policy to ensure debt sustainability over the medium term.
  - Increase efforts to mobilize additional domestic resources, including enhancing the IT system of the revenue authority to improve tax compliance and efficiency.
  - Improve governance, fiscal transparency, and accountability to increase spending efficiency.
  - Contain the public wage bill and redirect budgetary expenditures to capital spending, especially for rebuilding infrastructure.
  - Limit new debt to concessional terms, ensure transparency of future debt obligations, and ensure effective implementation of infrastructure projects.
  - Strengthen monetary policy effectiveness: recapitalize the Central Bank of Liberia (CBL), safeguard international reserves, preserve governance principles and central bank independence.
  - Strengthen the external position: allow greater exchange rate flexibility while maintaining price stability, pursue structural reforms to improve productivity and competitiveness, and reduce the public saving-investment gap.
  - Reduce risk in the banking sector: reduce nonperforming loans (including clearing government obligations to banks) and complete implementation of the CBL’s Action Plan of reform.
  - Lift the remittance surrender requirement when foreign exchange market conditions allow.
  - Address serious data shortcomings, especially in national accounts and external data, and continue capacity development and technical assistance.

### Key policy recommendations (summarized)
- Ensure medium-term debt sustainability while mobilizing domestic resources to complement limited borrowing space.
- Strengthen the monetary policy framework by safeguarding gross international reserves, recapitalizing the CBL, and increasing central bank independence.
- Improve the external position by allowing greater flexibility of the exchange rate, pursuing structural reforms, and maintaining price stability.
- Promptly address arrears to the banking sector and enhance the CBL’s bank resolution framework.

### Selected economic indicators, 2016–19 (as presented)
- Real GDP growth (%) : -1.6 (2016 est. with previous GDP), -1.6 (2017 est. with previous GDP), 2.5 (2018 est. with revised GDP), 3.2 (2019), 4.7 (2019 column shows continuation)
- Inflation – average (%) : 8.8 (2016), 8.8 (2017), 12.4 (2018), 11.7 (2019), 10.5 (2019 continuation)
- Central Government
  - Revenue and grants (% of GDP) : 51.9 (2016), 33.3 (2017), 31.0 (2018), 28.2 (2019), 28.3 (2019 continuation)
  - Expenditure (% of GDP) : 56.1 (2016), 36.0 (2017), 35.8 (2018), 33.3 (2019), 33.4 (2019 continuation)
  - Fiscal balance (% of GDP) : -4.2 (2016), -2.7 (2017), -4.8 (2018), -5.2 (2019), -5.1 (2019 continuation)
  - Public Debt (% of GDP) : 28.6 (2016), 18.3 (2017), 24.6 (2018), 28.6 (2019), 30.8 (2019 continuation)
- Money and Credit
  - Broad money (% change) : -5.2 (2016), -5.2 (2017), -2.5 (2018), 1.7 (2019), 6.0 (2019 continuation)
  - Credit to private sector (% change) : 2.3 (2016), 2.3 (2017), 14.7 (2018), 10.0 (2019), 10.0 (2019 continuation)
- Balance of Payments
  - Current account (% of GDP) : -28.9 (2016), -18.5 (2017), -22.7 (2018), -22.4 (2019), -22.3 (2019 continuation)
  - Reserve (in months of imports) : 3.2 (2016), 3.2 (2017), 3.0 (2018), 3.0 (2019), 3.1 (2019 continuation)
  - External public debt (% of GDP) : 28.0 (2016), 17.9 (2017), 22.7 (2018), 26.3 (2019), 29.9 (2019 continuation)
- Exchange rate
  - NEER (% change) : -7.3 (2016), -7.3 (2017), -16.7 (2018), ... , ...
  - REER (% change) : 0.1 (2016), 0.1 (2017), -9.6 (2018), ... , ...

*International Monetary Fund. Staff report for the 2018 Article IV consultation on Liberia.*

### 9.      The near-term outlook remains challenging, as the authorities continue to make

### 9.      The near-term outlook remains challenging, as the authorities continue to make

### Near-term outlook and short-term projections
- GDP growth in 2018 is projected to reach 3.2 percent, mostly driven by a further expansion of mining (gold in particular).
- Inflation is projected to taper off somewhat, reaching 11 percent year-on-year by end-2018, as demand pressures are expected to remain low.
- The trade balance is projected to improve due to a further contraction in imports.
- Current account and reserves:
  - Current account deficit projected at 22.4 percent of GDP.
  - Gross international reserves expected to decrease to US$405 million by end-2018.

### Medium-Term Outlook — scenarios and assumptions
- Two policy scenarios were examined:
  - Baseline scenario: staff’s interpretation of the authorities’ stated policies as of the Article IV mission in March 2018.
  - Reform scenario: designed to accomplish the same development goals but with supplementary measures to promote greater macroeconomic and debt stability.
- External borrowing assumptions:
  - Baseline: annual external loan disbursements double from about $60 million in the recent past to US$120 million in the medium term.
  - Reform scenario: annual external loan disbursements assumed at about US$85 million per year, with higher domestic resource mobilization making up for reduced borrowing (Text Table 1).
- Financing gap under baseline:
  - Grants projected to decline by 5.5 percentage points of GDP over the medium term.
  - Average annual financing gap of about 0.7 percent of GDP projected for the medium term.
- Debt dynamics:
  - As of end-FY2017, public external debt amounts to US$736 million (22.7 percent of GDP).
  - Under the baseline, public external debt would increase by about $1 billion in the medium term.
  - If the financing gap were filled with additional external borrowing (about $26 million per year), the public external debt to GDP ratio would increase to 40 percent of GDP by 2023, placing Liberia at high risk of debt distress.
  - Reform scenario would ease the risk of debt distress while achieving roughly the same level of spending on roads over the medium term.
- Medium-term growth projection (assuming sound policies):
  - 5.1 percent on average, based on anticipated recovery of key exports (iron ore and gold), investors’ confidence, and scaling-up of infrastructure.
  - Key channels:
    - Significant positive effect of road rehabilitation on aggregate supply.
    - Limited effect on aggregate demand from road rehabilitation due to constrained capital expenditure and limited local sourcing of capital-intensive roads.
    - Effect of domestic revenue mobilization on aggregate demand depends on unspecified revenue measures; adverse impact assumed partially offset by positive supply effects.

### Selected economic indicators, 2018–23 (Text Table 2 excerpts)
- Baseline Scenario (Real GDP annual percent change; Revenue; Expenditure; Overall balance; Primary balance; Fiscal financing gap; Public external debt)
  - Real GDP annual percent change: 2018 3.2; 2019 4.7; 2020 4.8; 2021 5.3; 2022 5.2; 2023 5.3
  - Revenue: 12.9 (2018); 13.6; 14.2; 14.5; 14.7; 14.8
  - Expenditure: 33.3 (2018); 33.4; 32.3; 31.3; 30.5; 29.0
  - Overall balance: -5.2 (2018); -5.1; -4.7; -4.8; -4.9; -4.4
  - Primary balance: -4.7 (2018); -4.3; -4.2; -4.4; -4.5; -4.0
  - Fiscal financing gap: -0.4 (2018); -1.5; -0.8; -0.6; -0.5; -0.4
  - Public external debt: 26.3 (2018); 29.9; 32.4; 34.4; 36.1; 37.3
- Reform Scenario (Real GDP annual percent change; Revenue; Expenditure; Overall balance; Primary balance; Fiscal financing gap; Public external debt)
  - Real GDP annual percent change: 2018 3.2; 2019 4.6; 2020 4.7; 2021 5.3; 2022 5.6; 2023 5.8
  - Revenue: 13.1 (2018); 14.8; 15.5; 15.7; 16.0; 16.2
  - Expenditure: 33.2 (2018); 32.9; 31.7; 30.5; 29.9; 28.0
  - Overall balance: -4.8 (2018); -3.4; -2.8; -2.9; -3.0; -2.1
  - Primary balance: -4.4 (2018); -2.5; -2.2; -2.4; -2.6; -1.7
  - Fiscal financing gap: 0.0 for 2018–23 (all years)
  - Public external debt: 26.3 (2018); 29.7; 31.0; 31.8; 32.2; 31.6

- Text Table 1 summary (FY2014-17 vs FY2018-23):
  - New loans (annual average): FY2014-17 60; Baseline (FY2018-23) 120; Reform (FY2018-23) 85
  - Primary balance improves by (percentage point of GDP): Baseline 0.7; Reform 2.7

### Risks and spillovers
- Upside risks:
  - Increase in commodity prices.
  - Quick recovery of iron ore production.
  - Increase in donor grants following strong reform efforts.
- Downside risks:
  - Another collapse in commodity prices.
  - Delay in formulating the national development strategy.
  - Authorities’ inability to mobilize resources to fill the financing gap.
  - Slow structural and institutional reforms.
- Financial sector and FX shortages:
  - Shortage of foreign exchange adversely affecting the highly dollarized banking sector.
  - Banks have direct and indirect exposure to the GOL, which faces U.S. dollar payment difficulties.
  - Delays in GOL repayments to banks and the construction sector are affecting banks’ ability to extend U.S. dollar credit.
  - Mining sector accounts for almost 70 percent of exports while making up only about 8 percent of GDP.
  - Remittances constitute 17 percent of GDP and are a key source of foreign exchange; 25 percent of remittances are required to be sold to the CBL.

### Authorities’ views
- Near-term:
  - Authorities broadly agree with staff on near-term challenges but expect faster recovery than staff projects due to completion of political transition and announcement of development strategy boosting investor confidence.
  - They expect roads usable throughout the rainy season would quickly boost domestic economic activity.
- Risks:
  - Authorities broadly agreed with staff on identification of risks but consider likelihood of downside risks materializing relatively small.
  - Committed to timely publication of national development plan and continuation of structural reforms to strengthen private sector development, revenue mobilization, and public financial management.
  - Consider domestic revenue mobilization in reform scenario—an increase in the revenue to GDP ratio by 3 percentage points in the medium term—to be feasible.

### Lessons from past IMF engagements
- EPRA findings:
  - Program objectives substantially changed over the course of long-term engagement since 2006, leading to an increasing number of structural conditions and a declining share ultimately fulfilled.
  - Low traction of key recommendations of the 2016 Article IV consultation highlights importance of accounting for capacity constraints in surveillance.
- Causes of underperformance:
  - Revenue floor often missed due to overly optimistic revenue forecasts and disconnect between revenue/expenditure outturns and budget preparations.
- Capacity development:
  - Liberia is among the ten countries receiving the highest quantity of Fund technical assistance and is a pilot country for the Capacity Building Framework (CBF).
  - Traction on capacity development has not been high; aligning TA and training with surveillance and program work has faced challenges.
  - Recommendation for more flexibility in TA modality and areas to improve efficiency of capacity development resources.

### Policies to ensure sustainable development — A. Fiscal Policies
- Context and recent trends:
  - Debt levels rising; risk of debt distress remains moderate but borrowing space falling.
  - Domestic revenue generation relatively low by regional standards.
  - FY2018 saw a substantial revenue shortfall due to slower recovery and unsettled legal issues hindering collection of imported fuel surcharges for the Road Fund.
  - Aid flows substantial but declining: total grants declined from 19.3 percent of GDP in FY2016 to 16.7 percent in FY2017.
  - Expenditure remained about 36 percent of GDP while overall fiscal deficit widened from 2.7 percent of GDP in FY2016 to 4.8 percent of GDP in FY2017.
  - Fiscal deficit projected at 5.2 percent of GDP for FY2018 (recast budget approved in late March 2018), with a significant revenue shortfall assumed to be offset by additional budget support grants and CBL bridge financing until disbursements.
- Policy advice — anchor and instruments:
  - Fiscal policy should be anchored by the goal of ensuring debt sustainability over the medium term.
  - Government should continue to use caps on public debt accumulation as main fiscal anchor.
  - Consider adopting the primary balance as an operational target to achieve medium-term debt objectives.
- Revenue mobilization measures:
  - Tax administration: address structural challenges of the Liberia Revenue Authority (LRA), including a more robust IT system.
  - Tax policy reforms: consider introduction of a Value-Added Tax (VAT) with careful design (e.g., VAT registration threshold) to protect small family businesses and ensure higher revenue is used to raise pro-poor spending.
  - Tax expenditure reforms: review existing tax exemption schemes and concession agreements as potential fiscal savings.
  - Comprehensive reform plan guided by a Medium-Term Revenue Strategy (MTRS).
- Governance and spending efficiency:
  - Strengthen fiscal transparency and accountability.
  - Contain growth of the wage bill and monitor both domestically and foreign-funded public investment.
  - Review IFMIS, establish a centralized payment function for core budget institutions, install a Treasury Single Account (TSA), strengthen cash management, and enhance monitoring of SOEs.
  - Expand IFMIS coverage to improve fiscal reporting and address overly optimistic revenue forecasts and budget-outturn disconnects.
  - Consider adopting a comprehensive program to clear domestic arrears and prevent new arrears from arising.
- Authorities’ fiscal views:
  - Authorities disagree with staff that caps on public debt accumulation are the appropriate fiscal anchor now; they view debt thresholds as country- and context-specific and consider borrowing space larger than staff estimates.
  - Authorities optimistic about medium-term growth and returns on infrastructure investment.
  - Agreed on the need to accelerate domestic revenue mobilization; LRA committed to improving revenue collection and strengthening its IT system, with most increases expected from FY2020 onward.
  - Expressed commitment to improving governance and fiscal transparency of on-budget and off-budget public expenditure.

### Policies to ensure sustainable development — B. Monetary Policy
- Operational constraints:
  - Monetary policy largely passive; CBL lacks effective operational instruments.
  - Liberian dollar and foreign exchange interbank markets underdeveloped, making liquidity operations difficult.
  - CBL undercapitalized and currently incurring losses on normal operations; cannot afford interest cost of meaningful liquidity absorption.
  - Volumes of excess liquidity in banking sector limit effectiveness of changes to Liberian dollar reserve requirement.
- Transmission and structure:
  - Monetary policy transmission mechanism remains weak.
  - Banking sector small with limited financial intermediation; high dollarization, excess Liberian dollar liquidity, and lack of instruments limit policy impact on credit and real outcomes.
- Exchange rate and interventions:
  - CBL has abandoned the exchange rate as a policy anchor; exchange rate is a de facto “other managed” float.
  - GOL has not sold the CBL foreign currency since February 2017; intervention in FX markets has declined.
  - Proceeds from the 25 percent surrender requirement on remittance inflows are regularly auctioned by the CBL and considered by staff to be a capital flow management measure (CFM).
- Recent CBL actions and governance:
  - In the last six months, the CBL extended two loans to allow the GOL to meet its U.S. dollar payment obligations; the first was repaid at end-March, and the second was extended soon after.
  - Two non-executive members of the Board of Governors stepped down; a quorum was formed temporarily to legally approve the second loan.

*Source: IMF staff projections and Article IV consultation text (extracted content).*

### 34.      The monetary policy framework needs to be strengthened (Annex VII). Recapitalization

### 34.      The monetary policy framework needs to be strengthened (Annex VII). Recapitalization

### Strengthening the monetary policy framework and recapitalization
- Recapitalization of the CBL and assurance of ongoing recapitalization to statutory levels would provide the monetary authorities with the means to conduct monetary policy effectively and consistently.
- Over time, recapitalization would:
  - Significantly improve the policy credibility of the CBL.
  - Strengthen the monetary policy transmission mechanism.
- Necessary support:
  - Planned amendments to the Central Bank Act.
  - Efforts to create fully functioning interbank markets in the Liberian dollar and foreign exchange.
- A robust monetary policy framework is necessary to promote an eventual voluntary reduction of the rate of dollarization (Annex VIII).

### Safeguarding international reserves and CBL budgetary stance
- The large budget deficit of the CBL for 2017 and the expected deficit in 2018 have put pressure on international reserves levels.
- Recommendations:
  - Review the CBL’s budget and operational costs, including the currency composition of its expenses.
  - Reduce reliance on reserves to fund budget deficits.
  - Plan to run a balanced budget to make CBL operations sustainable.
  - Minimize foreign exchange market intervention (to the degree possible while maintaining price stability) to help safeguard reserves.

### Governance and central bank independence
- Preserve governance principles and the independence of the central bank as specified in the CBL Act.
- Replace the temporary quorum by permanent appointments of non-executive members of the BOG in a timely manner.
- Resist the use of CBL bridge loans to the GOL, as this compromises central bank independence and adversely affects CBL reserve levels.

### Authorities’ views (monetary and reserves)
- The CBL:
  - Agrees that modernizing the monetary policy framework is a priority and is in talks with the MFDP on recapitalization.
  - Is introducing a deposit facility at the CBL to improve ability to mop up liquidity.
- On reserves and operational losses:
  - Authorities share concerns about international reserves pressure from CBL operational losses, but consider a large part of those losses to be one-off items.
- On governance and bridge loans:
  - Authorities agree vacant BOG seats should be filled soon and note bridge loans anticipate external resources being secured by mid-2018.

### External sector assessment and policy implications
- Staff assessment:
  - Liberia’s external position is substantially weaker than implied by fundamentals and desirable policies (Annex IX).
  - The current account deficit is larger than the level consistent with Liberia’s economic fundamentals.
  - Current fiscal policy stance is looser than the optimal level, resulting in a larger public saving-investment gap.
  - The current account deficit is larger than the debt-stabilizing non-interest current account balance.
  - The real effective exchange rate has depreciated less than the nominal effective exchange rate (Figure 4 in Annex IX), partly due to large inflation differentials with trading partners.
- Competitiveness:
  - Liberia’s competitiveness as an investment destination seems to have weakened.
  - Pace of structural reform has been slow; average number of days goods remain at the port prior to clearing customs has increased.

### External sector policy advice
- Allow greater flexibility in the exchange rate to absorb the bulk of external shocks, while maintaining price stability.
- Further adjustments in the real exchange rate are needed (at a minimum to the pre-2014 level) to promote economic diversification and strengthen domestic industries in the medium to long term.
- Implement timely structural reforms to improve productivity and competitiveness, including:
  - Passage of a Land Rights Act in an acceptable form to increase access to land.
  - Improvements in business conditions conducive to investment.
  - Greater and more reliable supply of power and other basic public services.
  - Enhanced access to credit—including collateral enforcement.
  - Improvements in the judicial system, particularly contract enforcement.
  - Measures and legislation to level the playing field among all domestically based businesses.

### Authorities’ views (exchange rate and reforms)
- The authorities:
  - Believe the managed float regime is best suited to Liberia’s current situation.
  - Maintain interventions in the foreign exchange market are meant to smooth, not to resist, depreciation pressures, given the need to preserve reserve cover.
  - Highlight the serious impact of depreciation on vulnerable groups and prefer gradual depreciation.
  - Agree on the need to accelerate business-friendly structural reforms and stress infrastructure and legal reforms, including support for constitutional amendments to permit outright foreign ownership of land and allow long-time non-Liberian residents to obtain citizenship.

### Financial sector conditions and risks
- Dollar liquidity and reserves:
  - Dollar denominated deposits in the banking sector: US$431 million.
  - Net foreign liquid assets of the financial system: US$107 million.
  - CBL’s gross official foreign reserves: US$432 million.
- Banking sector risks:
  - The banking system faces a shortage of U.S. dollars despite a positive net open position in foreign exchange.
  - High amount of non-performing loans (NPLs); indications NPLs are systematically underreported and may be substantially higher due to forbearance.
  - NPLs reduce banks’ ability to extend new credit to the private sector.
- De-risking:
  - After loss of correspondent banking relationships between 2014 and 2016, affected banks replaced major international banks with Middle Eastern and African banks; situation stabilized for the past two years.

### Financial sector policy advice and CBL Action Plan
- Tighten macroprudential policies to increase banking system resilience:
  - Given U.S. dollar liquidity shortage, consider a gradual increase in reserves required on U.S. dollar deposits, with consideration of impacts on banks and the system.
- Complete implementation of the CBL Action Plan, prioritizing:
  - Establishing a national task force comprising law-enforcement and integrity institutions.
  - Strengthening banking supervision, including the framework for recognition of NPLs; eschew forbearance and require proper provisioning and full compliance by undercapitalized banks.
  - Resolving direct and indirect exposure of the banking sector to the GOL to reduce outstanding NPLs.
  - Developing a robust resolution framework to enhance the credibility of banking supervision and financial stability.
  - Enhancing AML/CFT compliance by supervisors and the financial sector and improving the quality of financial intelligence disseminations by the Financial Intelligence Unit.
- Authorities’ perspective:
  - Agree liquid foreign currency assets are sub-optimally low and are reviewing measures such as increasing reserve requirements on U.S. dollar deposits.
  - Agree NPLs are high and a robust resolution framework is key, but favor gradual improvement and do not believe strong action on NPLs is needed at this time.
  - Remain committed to full implementation of the Action Plan.

### Data, statistics, and capacity building
- MFDP foreign aid flow data:
  - An online reporting system allows donors to input disbursement records, enabling capture of nearly all foreign aid disbursements, both on budget and off budget.
  - Based on this information, fiscal data coverage in the staff report was substantially expanded (Table 3a and 3b).
- Need for continued technical assistance:
  - Improve institutional framework for raw data collection, compilation methodology, and compilers’ capacity.
  - Continue efforts to enhance national accounts and BOP data.

### Staff appraisal summary and medium-term outlook
- Recent performance and outlook:
  - Growth bottomed out in 2016 and edged to 2.5 percent in 2017.
  - Assuming sound policies, the medium-term outlook appears favorable.
  - Average medium-term growth rate (2019–23) is projected at 5.1 percent, with upside risks (increase in commodity prices and recovery in iron ore production) and downside risks (slowdown or discontinuation of ongoing structural and institutional reforms).
- Fiscal and debt considerations:
  - Debt levels have been rising; risk of debt distress remains moderate but borrowing space reduced.
  - Domestic revenue generation is low relative to peers.
  - Aid remains substantial but is on a declining trend.
  - Fiscal policy should ensure medium-term debt sustainability; future debt obligations should be undertaken with caution and favorable terms.
  - Authorities should aim to mobilize domestic resources of about 3 percentage points of GDP in the medium term, for example by enhancing the IT system of the LRA to improve tax compliance and efficiency.
- Governance and public financial management:
  - Improve fiscal transparency and accountability to enhance spending efficiency.
  - Contain growth of the wage bill and monitor domestically- and externally-financed public investment.
  - Expand IFMIS coverage, install the TSA, and enhance monitoring of SOEs.
  - Consider a comprehensive program to clear domestic arrears and prevent new ones by reducing disconnect between outturns and budget preparations identified in the EPRA.
- Monetary policy and central bank recommendations reiterated:
  - CBL recapitalization and assurance of ongoing recapitalization to statutory levels are necessary.
  - CBL should safeguard reserves more tightly by complying with its investment plan and reviewing operational costs and deficit sources.
  - Preserve CBL governance and independence; replace temporary BOG quorum with permanent non-executive appointments and resist CBL bridge loans to the GOL.
- External position improvement — three-pronged approach:
  1. Allow greater flexibility in the exchange rate while maintaining price stability.
  2. Implement structural reforms to improve productivity and competitiveness (greater access to land, level playing field, reliable supply of power and public services).
  3. Reduce the public saving-investment gap by mobilizing additional domestic resources over the medium term.
- Financial stability recommendations reiterated:
  - Enhance bank supervision to make banks less vulnerable to shocks.
  - Promptly address arrears to minimize adverse impact of NPLs.
  - Enhance CBL’s bank resolution framework and complete implementation of the CBL Action Plan.
- Surrender requirement on remittance inflows:
  - The surrender requirement, a CFM, is appropriate only as a temporary measure to address extraordinary pressure on inflation and reserves and should be lifted as pressure is relieved in response to recommended adjustment policies, in line with the Fund’s Institutional View on capital flows.
- Data shortcomings:
  - Data provided to the Fund have serious shortcomings that hamper surveillance; continued efforts required to improve quality and availability, particularly national accounts and BOP data.

*IMF staff report excerpt*

### 61.      It is recommended that the next Article IV consultation take place on the standard

### 61.      It is recommended that the next Article IV consultation take place on the standard 12-month cycle.

### Recent economic developments and outlook
- Contraction in 2016 was deeper and weaker than expected; the economy should slowly recover (2014–18 timeline).
- Inflation dynamics:
  - Consumer prices (annual average): 8.8, 8.8, 12.4, 11.7, 10.5, 9.5, 8.5, 7.5, 6.3 (series in Table 1).
  - Consumer prices (end of period): 12.5, 12.5, 13.9, 11.0, 10.0, 9.0, 8.0, 7.0, 5.5 (series in Table 1).
- External sector and reserves:
  - Gross official reserves: 450, 450, 432, 405, 429, 443, 463, 482, 503 (millions of U.S. dollars).
  - Months of imports of goods and services: 3.2, 3.2, 3.0, 3.0, 3.1, 3.0, 3.1, 3.1, 3.1.
  - CBL's net foreign exchange position (millions of U.S. dollars): 162, 162, 153, 124, 164, 202, 247, 296, 347 (series).
- Current account:
  - Current account balance including grants (percent of GDP): -28.9, -18.5, -22.7, -22.4, -22.3, -22.4, -22.1, -20.7, -19.9.
  - Current account balance excluding grants (percent of GDP): -73.5, -47.1, -44.2, -39.0, -36.4, -35.0, -33.6, -31.0, -29.0.
- Public debt and fiscal space:
  - Public external debt (percent of GDP): 28.0, 17.9, 22.7, 26.3, 29.9, 32.4, 34.4, 36.1, 37.3.
  - Overall fiscal balance, including grants (percent of GDP): -4.2, -2.7, -4.8, -5.2, -5.1, -4.7, -4.8, -4.9, -4.4.
  - Overall fiscal balance, excluding grants (percent of GDP): -34.3, -22.0, -21.5, -20.4, -19.8, -18.2, -16.8, -15.8, -14.1.
- Growth and sectoral performance (real GDP series, percent): -1.6, -1.6, 2.5, 3.2, 4.7, 4.8, 5.3, 5.2, 5.3.
  - Mining & panning (percent): -33.0, -33.0, 28.8, 22.3, 13.1, 9.2, 8.7, 6.7, 5.0.

### Balance of payments and financing projections
- Trade and current account (Table 2, millions of U.S. dollars):
  - Trade balance: -922, -663, -608, -619, -641, -632, -663, -668 (series across years).
  - Exports, f.o.b.: 380, 427, 432, 440, 484, 542, 587, 626.
  - Imports, c.i.f.: -1,302, -1,089, -1,040, -1,059, -1,125, -1,175, -1,250, -1,295.
  - Current account balance (millions): -607, -746, -749, -788, -854, -895, -916, -952.
- Capital and financial account (net): 573, 707, 704, 788, 865, 915, 934, 979 (series).
  - Foreign direct investment (net): 233, 242, 300, 376, 428, 476, 530, 548.
- Overall balance and reserves changes:
  - Overall balance: -34, -39, -4, 60, 112, 0, 18, 27 (series).
  - Change in gross official reserves (increase -): -5, 18, 28, -24, -14, -20, -19, -20 (series).
  - Net use of IMF credit and loans: 38, 21, -3, -15, -25, -22, -19, -16.

### Fiscal operations and public debt (central government)
- Central government fiscal aggregates (Table 3a, millions of U.S. dollars):
  - Total revenue and grants (percent of GDP series in Table 1): 51.9, 33.3, 31.0, 28.2, 28.3, 27.6, 26.4, 25.6, 24.6.
  - Total revenue: 21.8, 14.0, 14.3, 12.9, 13.6, 14.2, 14.5, 14.7, 14.8 (percent of GDP series).
  - Grants (millions): 624, 542, 513, 507, 494, 469, 462, 449 (series in Table 3a).
  - Total expenditure and net lending: 56.1, 36.0, 35.8, 33.3, 33.4, 32.3, 31.3, 30.5, 29.0 (percent of GDP series).
  - Overall balance = Net lending/borrowing (millions): -87, -155, -174, -176, -174, -190, -209, -203 (series).
  - Financing gap (millions): 0, 0, 0, -12, -50, -30, -25, -21, -20 (series).
- Memorandum: Total public debts (millions): 591, 799, 962, 1,060, 1,213, 1,373, 1,556, 1,740 (series).

### Monetary and financial indicators
- Monetary aggregates (Table 4, millions of U.S. dollars):
  - CBL's gross official foreign reserves: 450, 432, 405, 429 (series).
  - Monetary base (M0): 165, 175, 183, 189 (annual levels).
  - Broad money (M2): 672, 655, 666, 706 (levels).
  - Broad money (annual change): -5.2, -2.5, 1.7, 6.0.
  - Credit to private sector (annual percent change): 2.3, 14.7, 10.0, 10.0 (series).

### Living conditions and social indicators (Annex I)
- Poverty and income:
  - Poverty rate decreased from 63.8 percent in 2007 to 50.9 percent in 2016.
  - Income per capita estimated around US$724 (noted as 60 percent higher than previous estimate).
- Household spending patterns:
  - Poor spend on average more than 60 percent of income on food; non-poor just over 50 percent.
  - Spending per capita on education and health among the entire population is less than 10 percent of total spending.
- Social services and access:
  - Only 6 percent of the population use private hospitals.
  - Only 3 percent have health insurance.
  - About 45 percent of the population is younger than 15 years old.
  - Electricity production at 16.8 KWh per capita; an estimated 81 percent of households have no access to electricity.
  - Only 6 percent of roads are paved.
- Improvements and vulnerabilities:
  - 15 percent of the population reported improvement in financial situation in the last 3 years; 26 percent in the last 10 years.
  - 53 percent of the population still face food insecurity.

### Impact of UNMIL withdrawal (Annex II)
- UNMIL context:
  - UNMIL established on September 11, 2003.
  - Average annual budget of UNMIL to GDP ratio during FY2007–18 was 23 percent.
  - UNMIL annual budget shrank from more than 55 percent of GDP to 3 percent of GDP by FY2018 as the mission downsized.
  - Largest nominal budget cut occurred in FY2017: decrease of about US$160 million.
- Economic effects:
  - UNMIL downsizing contributed to declines in imports and foreign exchange inflows; imports and exchange rate movements were largely synchronized with UNMIL operations.
  - The Ebola crisis halted growth and recovery was further hampered by commodity price shocks, political uncertainty, and the UNMIL withdrawal.

### Risks, likelihoods, potential impacts, and policy recommendations (Annex III: Risk Assessment Matrix, January 2018)
- External risks and recommended policies:
  - Significant slowdown in China and other large EMs / Significant U.S. slowdown and spillovers / Structurally weak growth in key advanced economies.
    - Likelihood: Low/Medium/High; Potential impact: High.
    - Policies: Accumulate international reserve buffers; diversify the structure of the economy and export markets; seek additional financing resources and prioritize expenditure.
  - Retreat from cross-border integration.
    - Likelihood: Medium; Potential impact: Low.
    - Policies: Prioritize public projects; develop contingent spending plans for a sudden stop of aid flows; accumulate fiscal and external buffers; diversify economy and export markets.
  - Sharp decrease in aid flow.
    - Likelihood: Medium; Potential impact: High.
    - Policies: Identify linkages between foreign aid and the domestic economy; develop accurate estimates of the impact of aid shortfall on fiscal and balance of payments sectors.
- Liberia-specific risks and recommended policies:
  - Delay in developing a medium- and long-term development strategy by the new government.
    - Likelihood: Low; Potential impact: High.
    - Policies: Develop a concrete development strategy and formulate action plans for priority areas.
  - Slowdown or discontinuation of ongoing structural reforms.
    - Likelihood: Medium; Potential impact: Medium.
    - Policies: Continue and accelerate existing structural reforms; strengthen PFM institutions and the judiciary; pass the Lands Rights Act; ensure knowledge transfer from the previous government.
  - Inability to mobilize resources to fill the financing gap.
    - Likelihood: Medium; Potential impact: High.
    - Policies: Increase domestic revenue mobilization by addressing structural challenges of the LRA and formulating a MTRS; reduce spending waste; prioritize public projects; limit borrowing even if concessional.
  - Increasing risk of debt distress.
    - Likelihood: Medium; Potential impact: High.
    - Policies: Prioritize public projects financed by external loans; seek grant financing instead of loan financing.
  - Deterioration of security conditions after UNMIL withdrawal.
    - Likelihood: Low; Potential impact: High.
    - Policies: Ensure smooth transition from UNMIL to national security system.
  - Large-scale public health incidence.
    - Likelihood: Low; Potential impact: High.
    - Policies: Strengthen health and social protection systems and communication channels between central government and rural communities.
  - Reduced financial services by correspondent banks ("de-risking").
    - Likelihood: Low; Potential impact: High.
    - Policies: Strengthen the AML/CFT supervisory framework; address gaps in AML/CFT legislation, including terrorist financing; improve tax system transparency.

*Sources: Liberian authorities; and IMF staff estimates and projections.*

### Annex IV. Status of Key Recommendations for the

### cr18172 - Annex IV. Status of Key Recommendations for the

### Fiscal Sector — Status of Key 2016 Article IV Recommendations
- Deepen domestic revenue mobilization efforts: In progress.
  - Various revenue measures were introduced, including an increase in the goods and services tax rate.
  - Administration reforms with donor support are ongoing.
- Shift resources from current to capital spending: In progress.
  - Infrastructure provision remains the top priority.
  - FY2018 capital spending is expected to be somewhat under budget because of election spending and tight revenue.
- Advance the Treasury Single Account: Delayed.
  - The Office of Comptroller and Accountant General established a new section to accelerate the installment. However, that is the only visible progress.
- Improving investment management: Delayed.
  - The MFDP developed an excel-based public project database. However, due to limited capacity and weak institutional framework, implementation of the PIMA recommendations has been delayed.
- Tighten the grip on financial situation of SOEs: Delayed.
  - Due to limited resources of the SOE unit and limited capacity in both the government and SOEs themselves, reform of SOE monitoring has been delayed.
- Introduce a fiscal anchor (the long term)/Debt policy should be supported by a new medium-term strategy: Delayed.
  - The government is developing a medium-term debt strategy, but finalization has been delayed because of the political transition.
- Adhere to debt limits under the ECF: Done.
  - The government successfully contained their borrowing.
- Establish formal debt limits beyond the current ECF: Delayed.
  - The political transition has delayed the development of long-term commitments.

### Monetary and Exchange Rate Sector
- Limit foreign exchange interventions and allow more exchange rate flexibility: In progress.
  - The Central Bank of Liberia reduced its foreign exchange market intervention despite continuation of depreciation pressure.

### Financial Sector — Status of Key Recommendations
- Implement the three-year CBL budget: In progress.
  - CBL has followed their three-year budget with an adjustment for the unexpected currency issuance ordered by the Legislature.
- Report regularly on the implementation of the three-year financial plan: In progress.
  - CBL has shared their budget execution report with the Fund.
- Phase out support to the financial sector: Done.
  - CBL stopped their support to the financial sector.
- Improve coordination among CBL, MFDP, and LRA towards liquidity management: Done.
  - Meeting for liquidity management was regularized.
- Reform the reserve maintenance system: Delayed.
- Remove the statutory requirement for the CBL to obtain approval by the Legislature to issue currency: Delayed.
  - CBL Act needs to be amended to remove this requirement.
- De-dollarization: In progress.
  - Discussion to develop a de-dollarization road map is ongoing.
- Strengthen bank supervision: In progress.
- Create an emergency liquidity assistance (ELA) framework: In progress.
  - CBL Act needs to be amended to offer a legal underpinning to an ELA operational framework developed in consultation with the Fund.
- Build a comprehensive strategy to tackle rising non-performing loans (NPLs) (including mandatory write-off of fully provisioned NPLs): Delayed.
- Set up bank safety net package, including ELA, bank resolution, and deposit insurance: In progress.
- Step up efforts to address AML/CFT legislative gaps, strengthen the institutional capacity of the FIU: In progress.

### Structural Reform and Financial Inclusion
- Improve the business environment: Delayed.
- Financial Inclusion — Promote the usage of financial services: In progress.
- Promote lending to SMEs: Delayed.

### Annex V — Capacity Development (CBF and TA)
- Liberia part of pilot phase of the Capacity Building Framework (CBF) alongside Central African Republic, Mali, and Sierra Leone.
- Current level of technical assistance (TA) provided to Liberia exceeds 5 full-time equivalents (FTE, person years).
  - Majority of TA is in the fiscal area; most is sponsored by external donors and are part of multi-year CD projects.
- Observations:
  - The level of CD provided may be appropriate on need basis, but not necessarily on absorptive capacity grounds.
  - Traction of past recommendations is low; this could adversely affect eligibility for future TAs as the Fund moves towards result-based management (RBM) of TA resources.
  - Allocation of CD delivery aligned within sectors per CBF Strategies, but allocation across sectors could be improved (e.g., TA in statistics has declined during 2014–15 and has not recovered to pre-Ebola levels).
  - TA on fiscal issues remains above 3.6 FTEs.
  - CD output is hard to measure; if measured by number of structural benchmarks met, CD delivery and program performance are consistent: high in fiscal area and low in other areas.
  - More flexibility in TA modalities (long- vs. short-term experts, training vs. TA, fiscal vs. statistics) could improve efficiency of CD resources.

### Annex VI — Liberia’s Monetary Policy Framework: Seven Principles (Key Findings and Recommendations)
- Key findings on current framework:
  - Liberia’s monetary policy framework lacks clear mandate and operational tools; CBL is undercapitalized and has a weak balance sheet limiting monetary policy scope.
  - The framework is missing most elements of the Seven Principles:
    - Price stability is not clearly the primary objective despite CBL Act language that the “principal objectives of the Central Bank shall be to achieve and maintain price stability...”; periods of fiscal dominance are evident.
    - There is no clear and effective operational framework; limited choice of operating target.
    - No transparent and forward looking monetary policy strategy; monetary transmission mechanism is poorly understood; lack of clear analytical toolbox to assess effects on inflation and expectations.
    - Effective communication strategy is not possible without internally consistent goals, methods, and strategy.
- Recommended steps:
  - Price stability should be adopted as the overriding objective of the CBL and mandated in law.
    - (Authorities are drafting amendments to the Central Bank Act, with IMF technical assistance, to articulate price stability as the primary mandate.)
  - Develop financial markets, especially well-functioning interbank markets in LBD and foreign currency, to provide operational tools and influence liquidity conditions and market interest rates.
  - Recapitalize the CBL, and provide credible provisions for future recapitalization when necessary to prevent solvency concerns from constraining policy actions.
  - Develop greater technical capacities in economic modeling to better understand monetary policy transmission, factors affecting money demand, and relationships between monetary aggregates, the price level, and exchange rates.

### Annex VII — The Role of Aid Flows (FY2014–17)
- Total disbursements during FY2014–17:
  - Total loan disbursements: US$431 million.
  - Total grant disbursements: US$2 billion.
  - Combined project and budget support grants broadly equivalent to tax and nontax revenue.
- Grants and sectoral allocation:
  - Grants disbursed increased to US$624 million in FY2016, which were 1.4 times larger than the GOL’s revenue.
  - A third of grants in FY2015–16 were allocated to the health sector.
- Loans and sectoral allocation:
  - Two thirds of the total debt outstanding, $431 million, were disbursed during this period, with a focus on energy (29 percent), roads (22 percent), other infrastructure (15 percent), and budget support (21 percent).
- Implication:
  - Decline in external funding over time implies public goods and services will need to be increasingly financed and provided by the GOL.

### Annex VIII — Cross-Country Experiences with De-Dollarization (Findings and Policy Lessons)
- Key facts about Liberia’s dollarization:
  - The U.S. Dollar is used frequently as a medium of exchange; wages in public and private sectors often denominated in dollars (Real Dollarization).
  - Banking system highly dollarized: around 80 percent of deposits and 90 percent of credit is denominated in dollars.
- Main lessons from cross-country experience:
  - Full de-dollarization is not necessarily optimal nor desirable; even strong-performing countries retain some dollarization, especially with high trade and financial openness.
  - De-dollarization only achieved when all market participants prefer domestic currency; real return on Liberian dollar deposits (LBD) should be higher than on U.S. dollar deposits and positive in real terms after adjusting for risk differential.
  - Changes must come through market forces from policies utilizing market mechanisms and appropriate regulation—no interest rates should be imposed by fiat.
  - De-dollarization is achieved after an extended period of macroeconomic stability, especially price stability.
  - De-dollarization takes a long time; examples like Israel and Poland show processes took decades.
  - Monetary policy can be effective in achieving price stability even with high dollarization (examples: Cambodia and Laos).
  - Forced de-dollarization is costly, seldom effective, and often backfires (examples: Mexico and Bolivia).
  - Regulatory policies that incentivize voluntary use of local currency can speed de-dollarization (e.g., higher reserve requirements on dollar deposits relative to domestic currency deposits; higher fees on clearing dollar payments), but require a strong regulatory framework.
  - Public sector can help de-dollarize by:
    - Accepting the local currency as the sole legal tender for tax purposes;
    - Using the local currency to pay contractors and employees;
    - Requiring by law that all goods and services prices be quoted in the domestic currency.
- Specific recommendations for Liberia (drawing on cross-country experiences):
  - Establish a well-defined monetary policy framework with price stability as main objective (see Annex IX).
  - Complement with policies to develop money markets, maintain real interest rates on LBD, and ensure consistency in monetary policy.
  - Strengthen the supervisory and regulatory framework of the CBL to enable policies that make voluntary use of local currency more attractive (e.g., higher reserve requirement on U.S. dollar deposits compared to domestic currency deposits), ensuring full enforcement capacity and agility to respond to market changes.

*Annex IV. Status of Key Recommendations for the — IMF staff summary as provided in the source document*

### 4.      The public sector can help with achieving de-dollarization. It should be emphasized that

### 4.      The public sector can help with achieving de-dollarization. It should be emphasized that

### De-dollarization policies (policy measures and prerequisites)
- Utilize the Liberian dollar (LBD) for expenditure and revenue to the extent possible:
  - The government could pay public workers (of all institutions including the CBL) in Liberian dollars.
  - This entails the government raising most of its revenues in Liberian dollars, and exchanging some aid receipts in US dollars for Liberian dollars either through the FX markets or by sales to the CBL.
  - Prerequisite: the CBL must be well capitalized and possess the necessary tools for sterilizing the liquidity consequences of these operations.
- Accept the Liberian dollar as the only legal tender for tax purposes:
  - This should be preceded by some degree of matching of revenues and expenditures of the government in Liberian dollars to avoid exchange rate risk for the government.
- Promote the use of local currency in local transactions:
  - Examples include ensuring that all goods and services prices are quoted in local currency.
  - The effectiveness of this policy depends on the degree of price stability and policy orientation towards maintaining the purchasing power of the LBD.
- Important caveat: these policies are effective only once macroeconomic and price stability are achieved.

### External sector: key findings
- External position in 2017:
  - The current account deficit remains large and the real exchange rate is overvalued.
  - Foreign reserves are at an adequate level (see Reserve Adequacy below).
  - Reversing competitiveness deterioration requires greater exchange rate flexibility, fiscal adjustment, and structural reforms.
- External shocks and recent developments:
  - Liberia faced shocks including the Ebola crisis, commodity price shock, and completion of the UNMIL withdrawal in March 2018.
  - In 2016 the current account improved slightly with lower imports; in 2017 exports picked up due to increased gold production and modest commodity price recovery, but the current account deficit increased as net current transfers declined.
- Export composition shift:
  - Since 2010 production shifted from rubber and iron ore toward gold due to declines in rubber and iron ore prices and production.

### Real exchange rate and foreign exchange intervention
- Exchange rate movements:
  - The Liberian dollar depreciated against the U.S. dollar by around 16 percent in 2017 and cumulatively by around 37 percent since 2010.
  - Nominal effective exchange rate (NEER) depreciated by around 10 percent in 2017.
  - Real effective exchange rate (REER) depreciated by around by 3 percent in 2017.
- CBL intervention and capital flow measures:
  - The CBL intervened to smooth the depreciation path of the LBD against the USD and temporarily imposed a surrender requirement on remittance inflows since late 2016 to provide funds for FX intervention.
  - The surrender requirement has not appeared to reduce remittance inflows; remittance outflows intensified during the Presidential election period, adding depreciation pressure.

### EBA-Lite (current account model) results and misalignment
- Modeling approach:
  - CA modeled as function of policy variables (fiscal balance, foreign exchange intervention, private credit, capital controls), cyclical factors, and fundamentals.
  - Desirable policy assumptions used: cyclically adjusted government deficit at 2.5 percent of GDP (relative to current level of 5.5 percent of GDP); private sector credit at 30 percent of GDP; reserve accumulation at US$100 million per year.
- Quantitative assessment (Table 1 / EBA-lite Current Account Regression):
  - Current account—actual -22.7
  - Current account norm 14.6
  - Current account gap 8.0
    - o/w Policy Gap 0.6
  - Real exchange rate gap 29.4
  - Interpretation: Liberia’s real exchange rate is assessed to be overvalued relative to fundamentals and desirable policy settings; the policy gap is relatively small with fiscal and private credit deviations partially offsetting.

### Reserve adequacy
- Gross foreign reserves:
  - Dropped from 3.3 months of imports at end-2016 to 3.0 months in 2017.
  - Reserve adequacy model for credit-constrained economies suggests about 3 months of imports is adequate to withstand Liberia’s external shocks (terms-of-trade and aid shocks).
  - Caveat: this metric does not fully account for the need to preserve financial stability of the highly dollarized banking sector.

### Competitiveness and structural issues
- Competitiveness indicators:
  - Doing Business ranking deteriorated since 2014; Liberia is ranked 172 out of 190 countries.
  - Deterioration particularly in starting a business, enforcing contracts, and getting electricity.
- Structural impediments noted:
  - Need for improvements in electricity distribution to utilize Mount Coffee hydro project capacity.
  - Medium- and long-term priorities: reduce corruption, improve governance, formalize land access, infrastructure investment (especially sealed roads), WTO-related reforms, invest in education to improve skills and encourage knowledge spillovers.

### Overall assessment and policy implications (recommended adjustment path)
- External adjustment target:
  - The current account deficit should be reduced by about 6.5–7.5 percent of GDP.
  - This could be accomplished through a further real depreciation of around 23–32 percent.
- Policy mix recommended:
  - Let the REER depreciate while accumulating foreign reserves and diversifying exports to build resilience to external shocks.
  - Retain exchange rate flexibility given declining aid and remittance inflows, completion of UNMIL withdrawal, and slow commodity price recovery.
  - Fiscal consolidation to support external adjustment and help contain inflationary effects of exchange rate depreciation.
  - Structural reforms to remediate competitiveness deficit to achieve meaningful private sector–led growth.

### Program and historical context (selected program outcomes)
- Program performance:
  - SMPs (2006–07) and ECF1 (2008–12) had generally strong performance; ECF2 (2012–17) performance substantially weaker due to dilution of program focus and major corruption cases.
- Macro outcomes during ECF1 (2008–12):
  - Real GDP growth averaged 6.7 percent during 2008–12.
  - Inflation was contained at or near single digits.
  - On June 29, 2010, Liberia reached the HIPC Completion Point and received US$4.6 billion in debt relief.
- IMF financial assistance since 2003:
  - IMF financial assistance through Fund-supported programs and one-off assistance totaled SDR 718 million, about US$1.1 billion.

*Source: IMF staff estimates.*

### 11.      Most of the ECF1 structural benchmarks were also achieved, though some with delay

### 11.      Most of the ECF1 structural benchmarks were also achieved, though some with delay

### ECF1 implementation and outcomes
- About 70 percent of 44 structural benchmarks in total were met over the course a little over four years (about 3.6 structural benchmarks per semi-annual review).
- Prudent fiscal policy and strengthened public financial management contributed to a near doubling of government revenue.
- A resumption of direct budget support facilitated the initiation of significant infrastructure development projects without the accumulation of expenditure arrears.
- Monetary policy focused on accumulating reserves, which sizably outperformed expectations during the program.
- Financial policies focused on strengthening the banking system and promoting intermediation.

### ECF2 (2012–17) quantitative performance conditions (QPCs)
- The track record for achieving QPCs for ECF2 was poor, starting with the second review and further deteriorating after the Ebola epidemic hit the country.
- The QPC on the fiscal balance (floor on revenue) was only met once—in the first review—mostly due to overly optimistic revenue forecasts and the disconnect between revenue/expenditure outturns and budget preparation.
- Underperformance of revenue typically led to central bank credit to the government, or drawdowns on gross/net international reserves below the floor set as a QPC.
- A sharp decline in economic activities, and thus revenue receipts, also contributed to underperformance after the onset of the Ebola epidemic and the commodity price collapse in 2014–15.
- When reviews were combined, missing targets of the earlier review became inevitable in a rapidly changing macroeconomic environment.

### Structural benchmarks and prior actions: ECF1 versus ECF2
- ECF2 had 71 structural benchmarks and prior actions during the course of five years (as opposed to 44 for ECF1).
- Only slightly above 50 percent of structural benchmarks in ECF2 were met or met with delay.
- There were twelve prior actions for ECF2, as opposed to only one for ECF1.
- If measured in terms of the number of structural benchmarks met per year, ECF2’s performance was slightly better than ECF1’s, indicating that the number of structural benchmarks might have been more than could be achieved given the authorities’ absorptive and implementation capacity.
- The number of structural benchmarks in other areas, particularly in statistics, declined sharply, partly to compensate for the increase in benchmarks in other areas.

### Implementation details and notable structural measures (selected)
- Public financial management and treasury reforms: Set up the Treasury Single Account approach at Ministry of Finance; introduce and activate Civil Service Management (CSM) module within IFMIS and related HRMIS; complete payroll clean‑ups and upload to IFMIS; launch pilot phases of IFMIS/TSA and expand IFMIS coverage to externally financed projects.
- Revenue administration: Implement ASYCUDA in Monrovia Free Port; extend ASYCUDA to the Monrovia oil terminal and international airport; create Resource Revenue Unit in the Large Tax Payers Unit.
- Debt management and fiscal transparency: Finalize debt management system; install debt management system software to support data storage, analysis, reporting and interface between the CBL and the Ministry of Finance; publish quarterly reports on the financial performance of SOEs.
- Central Bank reforms: Develop a three‑year financial plan for the CBL aimed at a gradual return to financial viability; engage an external auditor to conduct semi‑annual audits on the CBL's foreign exchange reserve; set up an asset liability committee (ALCO).
- Financial sector supervision: Publish a list of banks licensed to operate in Liberia; establish off‑site inspection systems and regular on‑site inspection reporting; develop collateral registry at CBL; adopt treasury bill auction regulation and convert 20 percent of non‑marketable CBL‑held central government debt into T‑bills.

*Source: cr18172*

### 7. Exchange systems and restrictions (current and capital)

### 7. Exchange systems and restrictions (current and capital)

### Foreign exchange operations and transparency
- Revise foreign exchange auction procedures including guidelines on purchase auctions and direct foreign exchange sales adopted by the CBL Board and make public.
- The Central Bank of Liberia (CBL) intervenes in the foreign exchange market to smooth volatility.
- The de jure exchange rate regime classification is ‘managed floating’.
- The de facto exchange rate regime is classified as ‘other managed arrangement’ since November 2011 when the exchange rate departed from the stabilized 2 percent band against the U.S. dollar.
- Liberia maintains an exchange rate system that is free of restrictions on payments for current transfers.
- The exchange rate between the Liberian dollar and United States dollar at April 16, 2018 was L$130.4=US$1 (mid-point between buying and selling rates).

### Safeguards and central bank governance
- Key outstanding safeguards recommendations are included in the CBL’s Action Plan and some progress in its implementation has been noted, but the lack of a fully constituted Board presents a new risk.
- The action plan incorporates recommendations on audit arrangements and legal amendments.
- An external audit of the CBL’s foreign reserves for the six months ending in December 2017 was conducted by an external audit firm without any major findings.
- The CBL is working with staff on a suitable template to provide the required level of transparency for the monthly reports on foreign exchange holdings.
- The central bank established a task force to revise the CBL Act in line with staff’s recommendations; submission of amendments to Legislature is expected by end-June 2018.
- Stronger audit committee oversight is needed to address findings of the external quality review of internal audit and to ensure implementation of the capacity development plan.
- Appointment of permanent non-executives to the Board to ensure a quorum should be expedited so regular oversight on controls and operations can be resumed.

### Economic statistics and data development (selected actions and status)
- Develop a comprehensive national statistical development strategy. (MD)
- Full balance of payments statistics for 2008 completed and published by the CBL and Liberia Institute for Statistics and Geo‐Information Services (LISGIS). (MD)
- National Accounts establishment survey completed. (MD / CAN)
- Publication of validated national accounts data for 2008 by the Statistical agency LISGIS. (MOD NM)
- Commence Household Income Expenditure Survey. (NM)
- Compile and Publish Results of Establishment Survey. (NM)
- Compile national accounts for 2008 using the results of the Establishment Survey. (NM)

### Anti‑corruption institutional reform
- Establish a functioning Liberia Anticorruption Commission, consistent with Liberia's anticorruption legislation. (W)

### Program design, conditionality, and lessons learned
- The choice of the three-year ECF was assessed as appropriate given significant structural reform needs and unsustainable debt.
- Access and phasing under the two ECFs, including augmentations, were deemed appropriate given balance of payments gaps at approval.
- Use of the RCF during the Ebola epidemic/commodity price decline and the use of CCRT to create fiscal space by reducing debt service burden were considered appropriate.
- Two augmentations to ECF2 were made:
  - One to fill the BoP need arising from the fiscal gap due to the ongoing commodity price decline and the withdrawal of UNMIL (the combined 5th and 6th reviews).
  - The other to fill the BoP need created by worsening export performance, with an extension to help support macroeconomic stability and the economic program during the pre-election period (the combined 7th and 8th reviews).
- Conditionality observations:
  - The number of conditions—and structural benchmarks in particular—increased substantially from the beginning of ECF2, mostly in auditing, accounting, and financial controls, following major corruption cases (e.g., Ministry of Public Works and First International Bank of Liberia Limited).
  - Many structural benchmarks involved collaborations beyond the Ministry of Finance and Development Planning (e.g., Treasury Single Account, Integrated Financial Management System, and state-owned enterprises), making implementation more difficult.
  - In the event of unforeseen major macroeconomic shocks, access to Fund resources was modified promptly, but the extent of conditionality was not.
- Macroeconomic projections were revised frequently; growth rates decreased from 8.7 percent in 2013 to -1.6 percent in 2016.
- The post-Ebola recovery has been slow, with economic growth averaging 2 percent a year under the ECF2-supported program period (2012–17).
- The lack of fiscal and external buffers contributed to missing multiple QPCs: underperformance of revenue typically triggered central bank credit to the government and/or drawdowns on gross/net international reserves below the floor set as a QPC.
- Lessons for future program design:
  - Program objectives should remain ambitious but parsimonious, with focused structural benchmarks and technical assistance supporting the objectives.
  - Causes of repeated underperformance of QPCs should be addressed a priori; for example, candid discussions of causes of optimistic revenue forecasts should take place before the next program engagement.

### Authorities’ perspective and capacity constraints
- The authorities agreed on the importance of ambitious but focused program objectives and noted the sharp contrast between performance in the two ECF-supported programs.
- Authorities emphasized the urgent need to pursue their development agenda amid declining external financing and that mobilizing additional domestic resources will take time despite measures already begun (e.g., identifying and removing ghost workers and introducing civil servant biometric identification cards).
- In this context, authorities feel they need more flexibility in setting the self-imposed fiscal anchor of a debt ceiling in the near term, while continuing aggressive domestic resource mobilization efforts.

### Relations with the Fund — selected financial and program figures
- Membership Status: Joined: March 28, 1962.
- Quota: 258.40 SDR Million (100.00 percent of quota).
- Fund holdings of currency: 226.08 (87.49 percent).
- Reserve Tranche Position: 32.33 (12.51 percent).
- Net cumulative allocation (SDR Department): 123.98 SDR Million (100.00 percent).
- Holdings (SDR Department): 154.00 (124.22 percent).
- Outstanding Purchases and Loans:
  - RCF Loans: 32.30 SDR Million (12.50 percent of quota).
  - ECF Arrangements: 125.86 SDR Million (48.71 percent of quota).
- Latest financial arrangements:
  - ECF Nov. 19, 2012 – Nov. 13, 2017: Amount Approved 111.66 SDR Million; Amount Drawn 111.66 SDR Million.
  - ECF Mar. 14, 2008 – May 17, 2012: Amount Approved 247.90 SDR Million; Amount Drawn 247.90 SDR Million.
  - EFF Mar. 14, 2008 – Sep. 25, 2008: Amount Approved 342.77 SDR Million; Amount Drawn 342.77 SDR Million.
- Projected payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):
  - Principal forthcoming: 2018: 2.10; 2019: 10.46; 2020: 20.04; 2021: 22.97; 2022: 26.28.
  - Charges/Interest forthcoming: 2018: 0.00; 2019: 0.00; 2020: 0.00; 2021: 0.00; 2022: 0.06.
  - Total forthcoming: 2018: 2.10; 2019: 10.46; 2020: 20.04; 2021: 22.97; 2022: 26.29.
- Implementation of HIPC Initiative — Enhanced Framework:
  - Decision point date: March 2008.
  - Assistance committed by all creditors: 2,739.20 US$ Million.
  - 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 548.53 SDR Million.
  - 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.

*Source: cr18172 - 7. Exchange systems and restrictions (current and capital), IMF staff report content.*

### 3.      The International Finance Corporation (IFC) investment over the CPS period is

### 3.      The International Finance Corporation (IFC) investment over the CPS period is 

### IFC investment and portfolio composition
- IFC investment over the CPS period is expected to 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 for direct on-lending to, or equity in SMEs (US$6.8 million allocated for Liberia and balance for Sierra Leone)
  - US$33.5 million debt financing approved and committed to the rubber and cocoa sectors
- Priority sectors for IFC investments:
  - agribusiness
  - infrastructure including power
  - financial services
  - mining
- IFC advisory services will include:
  - strategic engagement in investment climate improvement
  - leasing
  - finance services infrastructure
  - private sector development

### World Bank Group extraordinary support in response to the Ebola Virus Disease (EVD) outbreak
- The World Bank Group provided extraordinary support to Liberia, well beyond the scope of the CPS and significantly above the IDA Performance Based Allocation, including commitment of some US$197 million equivalent from the IDA Crisis Response Window (CRW).
- Augmented support objectives:
  - contain the spread of Ebola infections
  - assist communities to cope with the economic impact of the crisis
  - rebuild and strengthen essential public health systems and service delivery platforms in the region
- Rapid review undertaken to ensure strategy and portfolio remain aligned with country development needs after the crisis

### World Bank support to mitigate fiscal and poverty impact of subsequent shocks
- Support measures included:
  - Augmentation of the PRSDPO-II from US$10 million credit equivalent to US$20 million equivalent, including US$10 million equivalent of grants from the IDA CRW
  - Supplemental financing to PRSDPO-II amounting to US$5 million equivalent on grants from the Ebola Recovery and Reconstruction Trust Fund (ERRTF)
  - Augmentation of PRSDPO-III from US$10 million grant equivalent to US$39.1 million equivalent of grants, including US$8 million from the IDA CRW
  - Supplemental financing to PRSDPO-III amounting to US$16.3 million equivalent, consisting of US$10.8 million of grants, including US$4.3 million in grants from Liberia Forest Landscape Single Donor Trust Fund, and US$5.5 million equivalent of IDA credit
  - PRSDPO-IV amounting to US$24.67 million equivalent, consisting of US$20 million equivalent of IDA grants and US$4.67 million in grants from the Liberia Forest Landscape Single Donor Trust Fund

### Strategic diagnostics and partnership framework
- Systematic Country Diagnostic (SCD) for Liberia started in October 2016.
- The SCD has been finalized and expected to be approved by the Board in June 2018.
- The SCD serves as the reference point for new Country Partnership Framework (CPF) for FY18–22, expected to be presented to the Bank Board in early FY19.

### Active projects (summary statistics and recent approvals)
- There are currently twenty-one active projects in Liberia, including four regional projects, with a total net commitment of approximately US$938.8 million equivalent, of which approximately US$426 million is undisbursed.
- Twelve new projects were approved between FY2016 and FY2018 for a total net commitment of approximately US$162 million.
- Non-IDA trust-funded projects during FY16–18 were approved in forestry, MSMEs rural finance, health, and urban sanitation.

### Selected active project highlights (project, approval/commitment and objectives)
- Liberia Youth Opportunities Project — approved November 2015 — US$10 million — improve access to income generation opportunities for targeted youth; benefit 15,000 youth.
- Liberia Renewable Energy Access Project — approved January 2016 — net commitment US$27 million (including US$25 million from the Strategic Climate Fund) — increase access to electricity; expand access to about 9,000 new users; support national market for solar-powered systems to more than 100,000 people.
- Liberia Urban Water Supply Project — approved March 2016 — net commitment US$10 million — increase access to piped water in Monrovia; improve operational efficiency of Liberia Water and Sewer Corporation (LWSC).
- Liberia Social Safety Net Project — approved April 2016 — net commitment US$10 million — establish national safety net delivery system; cash transfers to about 10,000 extremely poor and food insecure households.
- Liberia Forest Sector Project — approved April 2016 — net commitment US$36.7 million — improved management and increased benefit-sharing in targeted forest landscapes; institutional capacity building and reforestation.
- MSME and Rural Finance Post-Ebola Project — approved May 2016 — net commitment US$4.8 million — enhance capacity of local private sector financial institutions to lend profitably to MSMEs; partial credit guaranty scheme with default risk shared 50/50 with participating banks.
- Strengthening Liberia Health Systems Project — approved June 2016 — net commitment US$4.9 million — improve maternal and neonatal health services; complements earlier US$31 million project approved in 2013.
- West Africa Regional Fisheries Program—Additional Financing (Liberia) — approved September 2016 — net commitment US$1.0 million — improve Mesurado Complex unloading and processing; support Mesurado-Robertsport cluster integration.
- REDISSE Phase II — approved March 2017 — net commitment US$15 million — strengthen national and regional collaborative disease surveillance and epidemic preparedness; provide immediate response in an Eligible Emergency.
- Cheesemanburg Landfill and Urban Sanitation Project — approved June 2017 — net commitment US$10.5 million — construct new landfill; sustain waste management activities in Monrovia.
- Liberia Land Administration Project — approved September 2017 — net commitment US$7 million — strengthen Liberia Land Authority and establish land administration system.
- Liberia Fourth Poverty Reduction Support Development Policy Project — approved January 2018 — net commitment US$24.7 million (includes US$4.7 million from the Liberia Forest Landscape Single Donor Trust Fund) — strengthen governance, address constraints to growth including electricity, and improve human capital development.

### Advisory services and analytics
- BOOST re-engagement to link expenditure data in current Chart of Accounts (CoA) to earlier CoA and guide budget analysts; subject to GoL approval, upload to an accessible website to improve external accountability.
- Financial Inclusion technical assistance (FIRST-funded) objectives:
  - develop agent banking regulatory framework
  - enhance mobile money strategy and regulatory framework
  - foster payment systems’ development, regulations, and oversight
  - enhance consumer protection framework
  - design financial education strategy, program, and media campaign
  - strengthen regulatory, supervisory, and governance framework for MFIs
  - support operationalization of the FSDIP and Financial Inclusion and Financial Infrastructure working groups
- Technical assistance to LISGIS under a Multi-Donor Trust Fund (National Statistics Strengthening Project) to support key economic statistics:
  - implementation of the Household Income and Expenditure Survey (HIES) — 2016 HIES completed in February 2017; statistical abstract published; dissemination programmed for April–June 2018
  - compilation of benchmark estimates for Poverty indicators, Consumer Price Index, National Accounts
  - capacity building; CPI basket re-weighted using 2014 HIES data; National Establishment Census (NEC) completed between July and September 2017; National Accounts Annual Survey (NAAS) launching in 2018 to support GDP rebasing
- Public Expenditure Financial Accountability (PEFA) assessment completed May 2016:
  - despite IT-based modernization (TSA, IFMIS, SIGTAS, ASYCUDA, CSMS), PFM performance strengthened only slowly and weakened in some areas
  - constraints: human resource capacity, power and connectivity problems, financial resource shortfalls, impact of EVD, frequent in-year budget adjustments, insufficient compliance with expenditure commitment and non-salary internal controls

### Financial relations — portfolio summary (as of March 31, 2017–end of Q3 FY18)
- Active and Disbursing Projects table aggregates:
  - Overall Result: Net Commitment US$938.8; Total Disbursed US$487.8; Total Undisbursed Bal US$426.6
- Selected project entries (Approval FY / Closing FY / Net Comm Amt ($m) / Tot Disb ($m) / Tot Undisb Bal ($m)):
  - Liberia Road Asset Management Project - LIBRAMP — FY11 / FY24 / 266.6 / 173.80 / 84.08
  - Liberia Smallholder Tree Crop Revitalization Support Project — FY12 / FY19 / 15.0 / 12.79 / 1.06
  - West Africa Power Pool (Phase 1) — FY12 / FY20 / 189.8 / 44.72 / 134.59
  - Liberia Health Systems Strengthening — FY13 / FY18 / 31.0 / 8.32 / 22.48
  - Liberia Accelerated Electricity Expansion Project (LACEEP) — FY13 / FY20 / 95.0 / 42.55 / 51.79
  - Liberia Public Sector Modernization Project — FY14 / FY20 / 6.3 / 5.55 / 0.73
  - Liberia - Strengthening the National Statistics System — FY14 / FY18 / 3.8 / 3.68 / 0.10
  - Ebola Emergency Response Project — FY15 / FY21 / 167.0 / 145.28 / 17.44
  - Supporting Psychosocial Health and Resilience in Liberia — FY15 / FY19 / 2.8 / 2.26 / 0.49
  - Liberia Forest Sector Project — FY16 / FY20 / 36.7 / 5.09 / 31.61
  - Liberia Youth Opportunities Project — FY16 / FY21 / 10.0 / 2.75 / 7.41
  - Liberia Renewable Energy Access Project — FY16 / FY21 / 27.0 / 3.27 / 21.73
  - Liberia Social Safety Nets Project — FY16 / FY22 / 10.0 / 1.00 / 9.59
  - Liberia Urban Water Supply Project — FY16 / FY21 / 10.0 / 1.18 / 9.18
  - Liberia MSME & Rural Finance post Ebola Reconstruction — FY16 / FY19 / 4.8 / 3.63 / 1.18
  - Strengthening Liberia Health System — FY16 / FY19 / 4.9 / 4.90 / 0.00
  - Cheesemanburg Landfill and Urban Sanitation Project — FY17 / FY20 / 10.5 / 1.14 / 9.36
  - West Africa Region Fisheries Program — FY17 / FY18 / 1.0 / 0.53 / 0.47
  - Regional Disease Surveillance Systems — FY17 / FY24 / 15.0 / - / 16.27
  - Liberia Fourth Poverty Reduction Support Development Policy — FY18 / FY19 / 24.7 / 25.4 / 0.00
  - Liberia Land Administration Project — FY18 / FY23 / 7.0 / 0.00 / 7.01
- Note: Amounts may not add up to original principal due to changes in the SDR/US exchange rate since signing. The table combines financing from IDA and trust funds.

### IDA disbursements and debt service (since HIPC Completion Point)
- Total disbursements by period (US$ Million):
  - Jul 2010–Jun 2011: 61.83
  - Jul 2011–Jun 2012: 55.27
  - Jul 2012–Jun 2013: 40.18
  - Jul 2014–Jun 2015: 183.6
  - Jul 2015–Jun 2016: 131.0
  - Jul 2016–Jun 2017: 85.35
  - Jul 2017–Mar 2018: 73.36
- Repayments by period (US$ Million): 0.33; 0.00; 0.00; 0.00; 0.00; 0.00; 0.00
- Net disbursements by period (US$ Million): 61.49; 55.27; 40.18; 183.6; 131.0; 85.35; 73.36
- Interest and fees by period (US$ Million): 0.05; 0.12; 0.25; 0.79; 0.96; 1.84; 1.19

*Prepared by the World Bank (content as provided).*

### 1. Integrated Public Financial Management Reform Project Phase 2 (IPFMRP - II): This is a

### 1. Integrated Public Financial Management Reform Project Phase 2 (IPFMRP - II): This is a

### Major Project Financing and Structure
- USD 8.89 million AfDB funding to support the implementation of the Integrated Public Financial Management Reform Program (IPFMRP).
- The Bank had previously provided USD 4.26 million in 2012 to support Phase I of the Program which was completed on March 31, 2017.
- The current project (IPFMRP - II) was approved on January 30, 2017 and will run for three years.
- The project is co-funded with the World Bank and the USAID and uses a pooled funding arrangement to harmonize donor support.

### Components and Activities
- Three components:
  - (i) strengthening transparency and accountability in public financial management;
  - (ii) enhancing domestic revenue mobilization from the natural resource sector;
  - (iii) project management.
- Activities will include:
  - Upgrade of the Integrated Financial Management Information System (IFMIS) platform;
  - Strengthening the capacity of institutions in PFM;
  - Strengthening debt management;
  - Macroeconomic forecasting;
  - Financial reporting;
  - Better domestic revenue mobilization.

---

### Other Active Projects and Funding (selected items)

### 2. Liberia–Urban Water Supply and Sanitation Project (UWSSP)
- USD 37.01 million grant project to improve Monrovia and three other county capitals’ water and sanitation facilities.
- Objectives:
  - (i) provide access to adequate, safe and reliable water supply and public sanitation services in Monrovia, Buchanan, Kakata, and Zwedru;
  - (ii) enhance the institutional, operational, management capability, and the long-term financial viability of LWSC.
- Components:
  - (i) Rehabilitation and augmentation of water treatment and distribution systems;
  - (ii) Provision of public sanitation facilities;
  - (iii) Institutional support;
  - (iv) Environmental and Sanitation Sensitization.
- Implementation status:
  - Completed all activities in Zwderu, Kakata and Buchanan;
  - Currently at about 95% completion of the activities in Monrovia.
- Project closes on 31 May 2018.

### 3. Smallholder Agricultural Productivity Enhancement and Commercialization (SAPEC) Project
- USD 54.02 million project jointly funded by the Bank and the Global Agriculture and Food Security Program (GAFSP).
- Objectives: reduce rural poverty and household food insecurity by increasing income for smallholder farmers and rural entrepreneurs, particularly women, youths and the physically-challenged.
- Coverage and timing:
  - Implemented in 12 of the 15 counties of Liberia over 2014 to 2019.
  - Seeks to scale-up the Agricultural Sector Rehabilitation Project (ASRP) which was funded with USD 17 million by the AfDB and was completed in 2017.
- Components:
  - (i) Sustainable Crop Production Intensification;
  - (ii) Value Addition and Marketing;
  - (iii) Capacity Building and Institutional Strengthening;
  - (iv) Project Management.
- Implementation highlights:
  - Undertook an e-registration of over 350,000 farmers and farm inputs suppliers in all the counties.
  - Progress in implementation is currently estimated at about 48%.
  - Project expected to close in 2019.

### 4. Equity investment in Access Bank (ABL)
- Equity and support totaling US$1.2 million: capital investment of US$0.91 million and US$0.31 million in technical assistance.
- Project undertaking closure activities until end March 2018 when it will close.

### 5. Paving Fish Town–Harper Road Project (Phase I)
- Objective: provide efficient road transport access to South East Counties of Liberia and neighboring Mano River Union States.
- Scope: upgrade Fish Town–Harper Road (Phase 1): Harper–Karloken section (50 km) to bitumen standard.
- Estimated cost: USD 61.11 million.
- Expected outcomes:
  - improved socio-economic inclusion of population in south-east region;
  - attraction of investments with employment creation and stronger government presence;
  - facilitated cross-border trade in MRU member states;
  - employment generation during construction and post construction phase.
- Implementation status: currently at about 38% progress; measures in place to accelerate to close Project at the end of 2019.

### 6. Mano River Union (MRU) Road Development and Transport Facilitation Program (Phases 1 and additional financing)
- Program will upgrade to bitumen standard 276.35 km of roads in eastern Guinea, West and South-West Côte d’Ivoire, and eastern Liberia.
- Execution period: June 2015 to June 2019.
- Estimated net total cost: USD 315.20 million.
- Liberia’s portion: Karloken-Fish Town (80 km) and Harper-Cavalla junction (16 km) financed by a USD 109.17 million loan from ADF and TSF.
- Includes construction of joint border control posts.
- Project currently at 29% progress and will close in 2020.

### 7. Regional Electricity Interconnection Project (CLSG)
- Countries: Côte d’Ivoire, Liberia, Sierra Leone and Guinea (CLSG).
- Scope: construct a 1,357-km-long double circuit high voltage (225 kV) line to connect national networks of the four countries.
- Overall cost: USD 331.51 million.
- Bank Group contribution: USD 128.15 million (or 38.7 percent of the total cost).
- Implementation period: 2014–19.
- Impact: will raise the average electricity access rate in the four countries from 28 percent in 2012 to 33 percent by 2017.
- Project currently undertaking construction works and closes in end 2019.

### 8. Rural Electrification (Under CLSG-RE)
- Will finance construction of 151 km of 33kv distribution networks and about 550 substations along the TRANSCO-CLSG 225KV transmission line.
- Electrification targets: 130 small towns, villages and communities in Nimba, Bong, Grand Bassa, and Rivercess counties; extend connections to 8086 households and install 748 Street lights.
- Project amount: USD 25.56 million.
- Implementation started in 2017; currently completing procurement of the engineering design firm.
- Expected completion in 2020.

### 9. Liberia Energy Efficiency Access Project (LEEAP)
- USD 44.56 million project.
- Objectives:
  - (i) expand the electricity transmission and distribution network in Liberia;
  - (ii) improve electricity accessibility of the communities in Pleebo to Fish Town in the River Gee County, and the Roberts International Airport (RIA) corridor;
  - (iii) promote energy efficiency in the country;
  - (iii) improve the human and technical capacity of the energy sector by training skilled professionals (including engineers, technicians, maintenance and administrative personnel) from LEC, MLME, EPA and RREA.
- Project was ratified in August 2017 and implementation began after fulfilment of all loan and grant conditions.

### 10. Trust Funded Projects (selected)
- a. Technical Assistance and Capacity Building Support to LISGIS (TCB-LISGIS): USD 0.710 million grant; supported LISGIS since 2014; expected to close in March 2018.
- b. Youth Entrepreneurship and Employment Project (YEEP): USD 2.3 million; aimed at improving entrepreneurial skills of the youth; will close in June 2019.
- c. Program of Assistance to Trade Support Institutions in Liberia (PATSIL): USD 0.936 million; focuses on human capacity building of trade support institutions; currently recruiting technical assistance; will close in 2019.
- d. The Development of Agriculture Value Chains: USD 0.174 million; supports the Development of Agriculture Value Chains in the Ministry of Agriculture under LATA; grant approved in 2017 and expected to end in 2019.

---

### Statistical Issues (As of April , 2018)

### Assessment of Data Adequacy for Surveillance — General
- Data provision has serious shortcomings that significantly hamper surveillance.
- Most affected areas: national accounts, government finance, and balance of payments statistics.

### National Accounts
- Comprehensive national accounts data are not available.
- Fund staff estimates GDP by activity using the production approach and primary source data provided by LISGIS.
- Estimates for GDP by expenditure are not available.
- NAAS 2012: collected information for years 2010 and 2011; processing completed in June 2014 but data presented serious inconsistencies.
- AFRITAC West 2 and STA experts made final adjustments to GDP figures for 2008–13.
- AFRITAC West 2 experts are assisting LISGIS in compiling estimates for 2014–16.
- These estimates will not be published until the next rebase.
- Shortcomings in NAAS 2012 data led to recommendation that an Economic Census be conducted with respect to 2016. This undertaking was completed and was strongly supported by AFRITAC West 2 and the World Bank.
- A full 12-month Household Income and Expenditure Survey (HIES) for 2016 was completed in February 2017 and the statistical abstract containing the broad findings has been published.
- The data will be used in developing preliminary estimates of household final consumption expenditure (HFCE).
- CPI basket has been re-weighted using the 2014 HIES data and latest CPI and HFCE estimates are being included into the GDP calculations.
- These GDP estimates will also incorporate the complete trade in goods data set.
- The national accounts staff is currently 40 percent under strength; urgent recruitment needed to bring the team up to complement.
- A review of the status of NAAS was carried out during the April 2018 mission. All survey instruments are being designed, sample selected, enumerators recruited. Fieldwork expected to commence in April–May 2018, pending some final procurement issues.

### Price Statistics
- Assisted by the EDDI 2 project, 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.
- LISGIS does not currently compile a PPI for Liberia because this requires that an Economic Census be conducted. Work on the development of the PPI is expected to 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, so 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 and produced a bridge table to GFSM 2014 classifications and further improvements.
- Despite this work, the Liberian authorities have submitted no further data to the GFS team. A proposed follow up mission will encourage the authorities to update their data.

### Monetary and Financial Statistics (MFS) and Financial Sector Surveillance
- Liberia does not submit monetary data to STA using Standardized Report Forms (SRFs), but still uses the old reporting forms 10R and 20R.
- Data are generally submitted with long delays; latest available data is for April 2017.
- STA recently received SRF-based data compiled by the Central Bank of Liberia (CBL) following April 2013 TA mission recommendations; STA reviewed the data and provided comments which CBL is implementing.
- CBL developed FSIs for deposit takers under the Japan Sub-Account (JSA) project but these have so far not been sent to STA or released for publication.
- CBL submits some supervisory ratios to AFR for surveillance purposes.

### External Sector Statistics
- Under the UK DFID Project, CBL has received sustained TA missions; quality of ESS improving gradually but still not yet adequate for surveillance.
- Balance of payments statistics compiled quarterly since August 2016 on a BPM6 basis and submitted to STA since start of 2017.
- CBL has recently compiled preliminary annual International Investment Position (IIP) and submitted it to STA.
- February 2018 TA mission tapped new administratively sourced cross-border flows and positions and assisted CBL to implement an International Transactions Reporting System (ITRS).
- Mission helped compilers prepare tables with longer time series data for publication in a user-friendly format.

### Data Standards and Reporting
- Participant in the enhanced General Data Dissemination System (e-GDDS) since October 2005. Metadata for most data categories were updated in November 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.

---

### Table of Common Indicators Required for Surveillance (selected entries)
- Exchange Rates: Date of Latest Observation 1/2018; Date Received Feb/2018; Frequency of Data D; Frequency of Reporting M; Frequency of Publication D
- International Reserve Assets and Reserve Liabilities of the Monetary Authorities: Date of Latest Observation 1/2018; Date Received Feb/2018; Frequency of Data M; Frequency of Reporting M; Frequency of Publication Q
- Reserve/Base Money: 1/2018; Feb/2018; M; M; Q
- Broad Money: 1/2018; Feb/2018; M; M; Q
- Central Bank Balance Sheet: 1/2018; Feb/2018; M; M; Q
- Consolidated Balance Sheet of the Banking System: 1/2018; Feb/2018; M; M; Q
- Interest Rates: 1/2018; Feb/2018; M; M; Q
- Consumer Price Index: 1/2018; Feb/2018; M; M; Q
- Revenue, Expenditure, Balance and Composition of Financing – General Government: NA; NA; NA; NA; NA
- Revenue, Expenditure, Balance and Composition of Financing – Central Government: 12/2017; 02/2018; M; M; Q
- Stocks of Central Government and Central Government-Guaranteed Debt: 12/2017; 02/2018; M; M; Q
- External Current Account Balance: 12/2017; 02/2018; Q; Q; Q
- Exports and Imports of Goods and Services: 12/2017; 02/2018; M; M; Q
- GDP/GNP: 2016; 12/07/2017; A; A; I
- Gross External Debt: 9/2017; 02/2018; M; M; Q
- International Investment Position: 2015; March 2017; A; A; NA

---

### Debt Sustainability Analysis — Key Finding
- Risk of external debt distress: Moderate
- Augmented by significant risks stemming from domestic public and/or private external debt? No
- Under the baseline scenario, Liberia will remain at moderate risk of debt distress but move closer to thresholds that mark a high probability of debt distress.
- Adverse risks to the baseline are significant.
- Alternative reform scenario discussed by staff would ease the risk of debt distress while achieving roughly the same level of spending. The reform scenario assumes:
  - all external financing would be on concessional terms;
  - the amount of additional borrowing would be strictly controlled and supplemented with domestic resource mobilization.
- Such steps would improve the safety margin for preservation of debt and macroeconomic stability and sustain broad-based growth over the forecast horizon.

*Prepared by the African Development Bank; International Monetary Fund and World Bank materials as presented in the source.*

### 1.      This debt sustainability analysis (DSA) was conducted in the context of the 2018

### cr18172 - 1.      This debt sustainability analysis (DSA) was conducted in the context of the 2018

### Background and country context
- DSA conducted in the context of the 2018 Article IV consultation. Last LIC-DSA update considered by the Executive Board in November 2017 as part of Liberia’s seventh and eighth reviews under the Extended Credit Facility Arrangement (ECF).
- Liberia completed its first democratic political transition between different political parties since 1944 in January (year implied 2018).
- Liberia does not currently have a Fund-supported program but continues to be subject to the IDA Non-Concessional Borrowing Policy (NCBP).
- Legacy effects of two civil wars (1989–2003): average income at end-war was one-quarter of 1989 level and one-sixth of pre-1980 coup level.
- By 2008, total external debt reached $4.7 billion in nominal terms (over 600 percent of GDP), mostly in arrears. HIPC completion reached in 2010 followed by debt-financed reconstruction.
- Infrastructure and services gaps: Mount Coffee rehabilitated, but an estimated 81 percent of households still have no electricity; only 5 percent of roads are paved.
- Grant inflows declined from 19.3 percent of GDP in FY2016 to 16.7 percent of GDP in FY2017. Overall fiscal deficit increased from 2.7 percent of GDP in FY2016 to 4.8 percent of GDP in FY2017.
- National accounts revisions indicate nominal GDP is higher than previously reported by a factor of between 1.5 to 1.6.
- Remittances averaged close to 18 percent of GDP and 78 percent of exports of goods and services between 2015 and 2017.

### Recent debt and fiscal stock-taking
- Total public external debt stock was $736 million (25 percent of GDP) at end-FY2017, composed mostly of multilateral loans.
- Ratified but undisbursed loans amount to $422 million.
- Two thirds of total debt outstanding ($431 million) was disbursed during FY2014–17.
- Distribution of external loans by sector (Staff Report, Annex VII): infrastructure (excluding energy) and basic services 37 percent; energy 29 percent; public administration 24 percent; agriculture 7 percent; health 4 percent.
- FY2016 revenue reported at $453 million (14.0 percent of GDP); reported grants now include budget support and project financing grants amounting to $624 million (19.3 percent of GDP) instead of $199 million previously reported.
- Fiscal data coverage expanded to include off-budget grant-financed project spending; fiscal data cover the central government and all public external debt is included in the analysis.

### Underlying assumptions (baseline and changes since November 2017 DSA)
- Real GDP growth:
  - Projected at 3.2 percent in 2018 (previous DSA projected 3.9 percent).
  - Growth mostly driven by expansion of the mining sector.
- Fiscal position revised to reflect revenue shortfalls since November 2017.
- Financing gap:
  - Average annual financing gap of about 26 million (0.7 percent of GDP) projected under the assumption that current expenditure would not fully adjust.
  - Gap expected to be filled with non-debt creating flows or under execution of spending.
- Current account:
  - Revised downwards for 2018 and subsequent years relative to previous DSA update; trade balance improved due to decline in fuel imports.
  - Assumes substantially lower iron ore production in medium to long term; no medium-term return of China Union assumed.
- External borrowing and disbursement assumptions:
  - Annual external loan disbursements assumed to almost double from about $60 million during the past four years to $120 million in the medium term.
  - Already ratified but not disbursed loans ($422 million) assumed to be disbursed by end of medium term.
  - Combination would increase public external debt by about $1 billion in the next five years.
  - If financing gap filled with additional borrowing, public external debt to GDP ratio would increase to over 40.7 percent of GDP by 2023.
- Financing terms:
  - Baseline assumes no constraint on availability of concessional loans; grant element assumed at 45 percent.
  - Borrowing assumed mostly on IDA terms until 2030 when grant element begins to gradually decline to 35 percent.
- Box 1 baseline macro assumptions (2018–37 highlights):
  - GDP growth: 3.2 percent in 2018, increasing to 5.3 percent by 2023.
  - Inflation: estimated 11.7 percent in 2018, declining to 6.3 percent in 2023; long-run stabilizing at around 5½ to 6 percent.
  - Tax revenues: revenue-to-GDP ratio improves from 12.9 percent in FY2018 to 15 percent in FY2023.
  - Fiscal deficit: declines from 5.1 percent of GDP in FY2018 to 4.4 percent of GDP in FY2023.
  - External account: current account deficit projected at 22.4 percent of GDP in 2018; gross international reserves projected to decrease to about 3 months of imports by end-2018.

### External debt sustainability analysis (findings)
- Overall assessment: Risk of distress remains moderate under baseline if government implements infrastructure program with care and precision.
- Infrastructure plan (national road rehabilitation) will significantly raise PV of debt relative to foreign exchange earning capacity, bringing it closer to the high risk threshold.
- Debt service burden:
  - Given concessional financing, debt service-to-exports and debt service-to-revenue ratios remain within ranges associated with moderate risk of debt distress.
  - Debt service remains relatively low until 2030 and only rises marginally thereafter.
- Vulnerabilities:
  - Sustainability most vulnerable to terms of trade shocks and exchange rate changes.
  - Sensitivity analysis: PV of external debt surpasses threshold under extreme shocks — either a one-time 30 percent depreciation or a one-standard-deviation terms of trade shock.
- If financing gap in baseline financed by external borrowing, Liberia would move to a high risk of debt distress even if additional borrowing were on IDA terms.

### Public sector debt sustainability
- PV of public debt-to-GDP projected to increase from an estimated 19.5 in FY2018 to a peak of 22.3 in FY2027 and decline slowly thereafter, staying well below the 38 percent of GDP benchmark for high risk.
- Alternative scenario with current primary deficit remaining at 4.6 percent of GDP underlines need for gradual adjustment.
- Sensitivity analysis: most extreme shock — a one standard deviation shock to growth in 2019–20 — underscores vulnerability to growth shocks; sustained growth is critically important.

### Reform scenario (to ease debt risk while maintaining spending)
- Key elements:
  - Annual external loan disbursements increase from about $60 million (FY2014–17) to about $85 million in the medium term (i.e., $35 million less than baseline).
  - Financing on IDA terms with close to 60 percent grant element rather than 45 percent.
  - Ratified but not disbursed loans totaling US$422 million disbursed by end of medium term (same as baseline).
  - Additional domestic resources of 3 percentage points of GDP mobilized by FY2023 to compensate for reduced borrowing.
- Outcome: Same level of public resources for development and social spending while significantly reducing risk factors.

### Uncertainties and downside/ upside risks
- Uncertainties around borrowing limits with implications for debt sustainability:
  - Timing of disbursement: If the whole $422 million of ratified loans disbursed in next few years, timing alone could elevate risk of debt distress.
  - Concessionality: If new loans are less concessional than IDA terms, risk could deteriorate to “high” due to higher PV of debt and debt service.
- Main sources of downside and upside risk in reform scenario mirror baseline:
  - High volatility in exports: standard deviation of export growth rate about 15 percent; vulnerability to commodity price shocks. Sharp decline in exports could bring high debt distress; upside includes increased remittances or return of China Union.
  - High volatility in growth: shocks to growth could have nontrivial impacts; sustained growth is critical.

### Policy recommendations and priorities (conclusions)
- Adopt prudent fiscal policy and maintain fiscal anchor on debt accumulation.
- Prioritize grants and concessional loans to keep debt levels at moderate levels.
- Implement effective measures to mobilize domestic resources (e.g., adopt a Medium-Term Revenue Strategy (MTRS)).
- Enhance debt management capacity by improving information flow between entities and strengthening the capacity of the Debt Management Unit (DMU) within the Ministry of Finance.

*Prepared jointly by IMF and World Bank staff in collaboration with the authorities of Liberia, as presented in the 2018 Article IV consultation DSA.*

### 19.      The authorities concurred on the importance of macroeconomic stability and debt

### 19.      The authorities concurred on the importance of macroeconomic stability and debt sustainability in the medium term, but remain more optimistic than staff

### Authorities' stance and key observations
- The authorities concurred on the importance of macroeconomic stability and debt sustainability in the medium term, but remain more optimistic than staff.
- They maintained that debt thresholds should be country- and context-specific and that Liberia’s borrowing space is significantly larger than that estimated by staff.
- The authorities are more optimistic about medium-term growth and the return on investment from infrastructure projects.

### Debt indicators and projections (selected series from the External Debt Sustainability Framework and Public Sector DSA)
- External debt (nominal) series (percent of GDP): 14.6, 19.0, 25.0, 28.2, 31.1, 33.2, 35.3, 37.0, 37.9, 38.7, 27.3.
- Change in external debt (percent of GDP): 6.1, 4.3, 6.0, 3.2, 2.9, 2.2, 2.0, 1.7, 1.0, -0.3, -0.9.
- PV of external debt (selected years, percent of GDP/exports/revenues):
  - PV of external debt (percent of GDP): 15.4, 17.1, 18.7, 19.7, 20.5, 21.2, 21.6, 22.1, 17.5.
  - In percent of exports: 66.2, 78.5, 88.7, 96.5, 101.2, 106.1, 111.8, 125.4, 114.1.
  - In percent of government revenues: 108.0, 131.8, 137.3, 138.9, 141.6, 143.9, 145.5, 149.2, 117.7.
- Debt service ratios (selected series):
  - Debt service-to-exports ratio (in percent): 1.0, 0.7, 1.4, 3.0, 3.7, 4.9, 6.1, 6.1, 6.7, 4.7, 7.5.
  - PPG debt service-to-revenue ratio (in percent): 2.1, 1.2, 2.3, 5.0, 5.7, 7.0, 8.5, 8.3, 8.7, 5.7, 7.8.
- Total gross financing need (Millions of U.S. dollars): 233.5, 209.9, 213.9, 248.1, 252.2, 252.3, 261.0, 262.0, 264.1, 184.6, 178.3.
- Grant-equivalent financing and grant element:
  - Grant element of new public sector borrowing (in percent, selected years): 50.6, 50.1, 52.2, 52.9, 53.5, 50.4, 51.6, 54.0, 37.1, 46.4.
  - Grant-equivalent financing (in percent of GDP, selected years): 17.6, 17.1, 16.1, 14.7, 13.7, 12.3, 6.8, 2.1, 5.3.
  - Grant-equivalent financing (in percent of external financing, selected years): 88.5, 87.7, 86.9, 85.8, 85.0, 82.9, 83.0, 65.2, 77.0.
- Aid flows (Millions of US dollars) and composition (selected years):
  - Aid flows total: 500.8, 623.6, 648.3, 629.3, 653.1, 681.6, 671.8, 682.6, 685.6, 550.5, 421.3.
  - Of which: Grants: 500.8, 623.6, 541.6, 512.9, 506.6, 494.0, 468.7, 461.9, 448.9, 347.4, 208.0.
  - Of which: Concessional loans: 0.0, 0.0, 106.8, 116.5, 146.5, 187.6, 203.1, 220.7, 236.7, 203.1, 213.4.
- Memorandum items:
  - Nominal GDP (Millions of US dollars): 3110.4, 3233.0, 3244.7, 3367.1, 3441.8, 3676.3, 3926.8, 4236.0, 4609.1, 6763.6, 14370.6.
  - PV of PPG external debt (Millions of US dollars) (selected values): 455.1, 533.0, 615.6, 699.5, 781.6, 871.7, 973.2, 1474.5, 2470.2.
  - Gross workers' remittances (Millions of US dollars): 544.2, 582.5, 560.8, 570.6, 580.6, 609.2, 636.4, 663.1, 690.1, 845.1, 1237.0.

### Public sector debt and fiscal projections (selected series from Public Sector DSA)
- Public sector debt (percent of GDP): 16.0, 19.3, 27.1, 30.7, 32.0, 33.9, 35.8, 37.6, 38.4, 38.8, 27.3.
- Change in public sector debt (percent of GDP): 5.4, 3.4, 7.8, 3.5, 1.3, 1.9, 1.9, 1.8, 0.8, -0.3, -1.1.
- Identified debt-creating flows (percent of GDP): 6.2, 2.9, 5.5, 3.4, 3.3, 2.4, 2.6, 2.3, 1.1, -0.8, -1.5.
- Revenue and grants (percent of GDP): 30.1, 33.3, 31.0, 28.2, 28.3, 27.6, 26.4, 25.6, 24.6, 20.0, 16.3.
  - Of which: grants (percent of GDP): 16.1, 19.3, 16.7, 15.2, 14.7, 13.4, 11.9, 10.9, 9.7, 5.1, 1.4.
- Primary (noninterest) expenditure (percent of GDP): 36.2, 35.8, 35.6, 33.0, 32.7, 32.0, 31.0, 30.3, 28.7, 21.7, 16.4.
- PV of public sector debt (selected percent of GDP): 17.6, 19.6, 19.6, 20.3, 21.1, 21.8, 22.1, 22.3, 17.5.
- PV of public sector debt-to-revenue and grants ratio (percent): 56.8, 69.4, 69.1, 73.6, 79.8, 85.1, 89.8, 111.5, 107.2.
- PV of public sector debt-to-revenue ratio (percent): 123.1, 151.0, 144.0, 143.6, 145.6, 148.2, 148.9, 150.2, 117.7.
- Gross financing need (percent of GDP) 2/: 7.0, 3.7, 5.0, 7.3, 8.0, 6.2, 6.4, 6.3, 6.0, 3.1, 1.7.
- Debt service-to-revenue and grants ratio (in percent): 1.8, 1.3, 1.2, 3.3, 6.5, 5.6, 6.4, 6.2, 7.1, 6.3, 8.8.
- Debt service-to-revenue ratio (in percent): 3.9, 3.2, 2.7, 7.2, 13.6, 11.0, 11.6, 10.9, 11.8, 8.4, 9.7.

### Key macroeconomic assumptions (selected)
- Real GDP growth (in percent): 0.0, -1.6, 2.5, 4.4, 3.8, 3.2, 4.7, 4.8, 5.3, 5.2, 5.3, 4.8, 5.1, 5.2, 5.1.
- GDP deflator in US dollar terms (change in percent): -0.7, 5.7, -2.1, 5.6, 5.5, 0.5, -2.4, 1.9, 1.5, 2.6, 3.3, 1.2, 2.7, 1.9, 2.6.
- Effective interest rate (percent): 1.6, 0.9, 1.0, 0.7, 0.6, 1.3, 0.7, 0.6, 0.6, 0.7, 0.7, 0.8, 1.0, 1.2, 1.0.
- Growth of exports of G&S (US dollar terms, in percent): -14.8, -14.5, -4.5, 5.3, 18.9, -3.3, -1.1, 3.4, 6.3, 6.1, 5.3, 2.8, 6.3, 5.6, 6.2.
- Growth of imports of G&S (US dollar terms, in percent): 10.4, -9.1, -16.1, 3.1, 12.8, -11.8, -4.8, -0.4, 3.5, 4.1, 3.9, -0.9, 6.0, 5.1, 5.1.
- Government revenues (excluding grants, percent of GDP): 14.0, 14.0, 14.3, 12.9, 13.6, 14.2, 14.5, 14.7, 14.8, 14.8, 14.8, 14.8.
- Grant element assumed on residual financing (mem. item): 5 repeated across scenarios (Memorandum item: "Grant element assumed on residual financing ... 5 5 5 5 5 5 5 5 5 5 5").

### Sensitivity and stress-test results (high-level)
- DSA Figures and Tables present multiple stress tests and alternative scenarios; examples of extreme stress test outcomes (selected indicators):
  - PV of debt-to-GDP ratio and PV of debt-to-exports ratio increase substantially under shocks (see tables for scenario-specific values).
  - Table 2 and Table 4 present sensitivity analysis across Alternative Scenarios (A1, A2) and Bound Tests (B1–B6), including a one-time 30 percent nominal depreciation shock (B6).
- Table notes:
  - 1/ Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
  - 2/ Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline, while grace and maturity periods are the same as in the baseline.
  - 3/ Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
  - 4/ Includes official and private transfers and FDI.
  - 5/ Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
  - 6/ Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.

### Implications highlighted in the chapter
- Staff estimates and projections show stress-test outcomes and multiple indicators of public and publicly guaranteed external debt under alternative scenarios for 2018–38.
- The authorities consider their borrowing space to be significantly larger than staff estimates, underpinned by their more optimistic medium-term growth projections and expectations of higher returns on infrastructure investment.
- The chapter preserves detailed scenario and sensitivity tables that quantify how debt and debt-service indicators respond to alternative growth, financing, and shock scenarios.

*Source: cr18172 - 19.      The authorities concurred on the importance of macroeconomic stability and debt*

### 1. The Liberian authorities extend their appreciation to staff for the candid discussions

### 1. The Liberian authorities extend their appreciation to staff for the candid discussions

### Authorities' message and strategic intent
- The Liberian authorities extend their appreciation to staff for the candid discussions and policy advice during the Article IV Consultations, and look forward to continuation of the dialogue in support of the country’s macroeconomic and debt sustainability goals.
- Following a nation-wide consultative process, the authorities have embarked on the preparation of a medium-term national development plan, Pro-Poor Agenda for Prosperity and Development (PAPD)-2019-2023, expected to be unveiled by the government in July 2018 to coincide with the new budget year.
- The PAPD aims to: strengthen public institutions; accelerate infrastructure investments (with a major thrust on construction of roads); improve productivity in the real sector to enhance economic diversification; increase investment in human capital (youth employment and health); and improve competitiveness while safeguarding macroeconomic and debt sustainability.

### Recent economic developments and outlook
- GDP growth and projections:
  - GDP expanded by 2.5 percent in 2017, from a negative base of 1.6 percent in 2016.
  - Mining and panning sector grew by 28.8 percent in 2017, driven by a rise in industrial gold production.
  - Real GDP growth in 2018 is forecasted to improve to 3.2 percent.
  - Medium-term GDP growth expected to rise at an average of 5.1 percent, supported by sound policies, steady recovery in commodity prices, and gains from public investment.
  - Noted: significant downside risks to the outlook that would be addressed as the PAPD is rolled-out.
- Inflation and external sector:
  - Inflation remains high at 11 percent, but is expected to abate over the medium term as demand pressures subside.
  - Current account deficit widened from 18.5 percent of GDP in 2016 to 22.7 percent of GDP in 2017.
  - Current account is expected to marginally improve to -22.4 in 2018, following a contraction in imports, including fuel and service payments.
  - Diminishing aid flows expected to substantially contribute to a further decline in the external position, but increased investment and anticipated increase in Foreign Direct Investments (FDIs) are expected to offset this.
  - More utilization of local currency in domestic transactions and limited market intervention are expected to ease pressure on foreign reserves and support their accumulation.

### Medium-term plan — Fiscal policy and public finance management
- Fiscal strategy:
  - Geared towards fiscal consolidation while creating fiscal space for investment in growth-enhancing projects and targeted pro-poor expenditures.
  - FY 18/19 draft national budget reflects objective to contain recurrent costs, including the huge wage bill.
  - Measures taken include:
    - Reduced cabinet members’ salaries by 10 percent.
    - Implemented haircuts in public servants’ salaries at the upper echelon of the pay scale.
    - Capped salaries of heads of public corporations and autonomous agencies.
    - Initiated a review of contractual obligations to public servants.
  - Allocations to education, health, and agricultural sectors have been increased.
  - Civil service reforms, including pay and grading reforms, remain on course.
- Domestic resource mobilization:
  - Liberia Revenue Authority (LRA) developing a Medium-Term Revenue Strategy (MTRS) to strengthen revenue and tax administration.
  - LRA implementing an action plan to modernize revenue administration in line with recent Tax Administration Diagnostic Assessment Tool (TADAT) and Public Expenditure and Financial Accountability (PEFA) recommendations, including preparing for VAT introduction in 2019.
  - LRA launched the country’s first mobile money tax payment scheme and intends to deploy more robust IT systems to support core revenue processes.
- Public financial management (PFM) and systems:
  - Assessment of the current Integrated Financial Management Information System (IFMIS) expected to begin in June 2018 to improve system credibility.
  - Coverage of the Civil Service Management (CSM) module expanded to five (5) ministries and agencies.
  - Ministry of Finance and Development Planning (MFDP), Central Bank of Liberia (CBL), and LRA have commenced implementing an Electronic Funds Transfer System expected to become fully operational by July 2018.
  - Monitoring and reporting coverage of key State-owned Enterprises (SOEs) extended from nine (9) to fifteen (15); financial performance reports (including risk analyses and going concern assessments) are regularly posted on the MFDP website.

### Debt management
- Authorities commit to maintaining debt sustainability and responsibly sourcing financing only on highly-concessional terms.
- Plans to evaluate previously contracted loans with a view to rolling back disbursements inconsistent with the development plan and re-negotiating others on highly concessional terms.
- Ensure that debt financing arrangements do not breach the debt thresholds under the Debt Sustainability Framework for Low-Income Countries (LIC-DSF).

### Monetary policy and de-dollarization
- CBL policy stance:
  - CBL committed to policies sustaining a stable macroeconomic environment with broad exchange rate stability and low inflation.
  - Monetary policy underpinned by a managed float exchange rate regime and the need to maintain inflation in single digit levels.
  - CBL officially maintains the exchange rate as its policy anchor but has reverted to a managed float regime owing to low inflows of foreign exchange; this regime is seen as facilitating reserve accumulation.
- Governance and institutional measures:
  - CBL has commenced drafting amendments to its current Act to strengthen governance and operational independence; management will engage members of the National Legislature to create greater awareness and support.
  - Discussions ongoing between the CBL and the MFDP on the Bank’s recapitalization.
- De-dollarization approach:
  - Authorities committed to a gradual and sequential de-dollarization process underpinned by market fundamentals and supported by PAPD implementation.
  - Authorities have scaled up transactional de-dollarization with increased use of Liberian dollars to pay vendors and civil servants.
  - Surrender requirements introduced in 2016 viewed as temporary and to be phased out once the environment permits.
- Planned monetary instruments and tools:
  - Create a secondary market and develop additional policy instruments for effective management of excess liquidity, including adding retail sales of T-Bills and T-Bonds, as well as CBL bills.
  - Develop a Consumer Confidence Index (CCI) and a Business Confidence Index (BCI).
  - Create standing deposit facilities to expand available policy tools.

### Financial sector measures
- Banking system resilience:
  - Confidence in the banking system increasing, with strong balance sheet positions.
  - Key macro-prudential indicators, including capital adequacy and liquidity ratios, remain above minimum requirements.
- Measures to address Non-Performing Loans (NPLs):
  - Publishing names of delinquent borrowers.
  - Barring delinquent borrowers from access to formal financial services.
  - Introduction of vRegCoss, an automation of loan classification to compel banks to report true loan statuses.
  - Rigorous onsite review of commercial banks’ loan books.
  - Considering engaging the government to service its direct and indirect exposure to the sector.
- Financial inclusion:
  - CBL supported a pan-African financial institution to launch a new platform to provide services to unbanked and underbanked segments of the population.

### Structural reforms and governance
- Expected effects of PAPD:
  - With political transition completion and PAPD roll-out, the economy is expected to recover faster and investor confidence is expected to strengthen.
  - Efforts to mitigate dependence on primary commodities include improving the investment climate and increasing access to electricity.
  - Improved road connectivity (targeted primarily in the south-eastern belt) expected to link agricultural production areas to markets, improve productivity gains, and help the external sector.
- Legal and concession reviews:
  - National Legislature reviewing draft legislative enactments to address land ownership and citizenship issues.
  - A commission of lawyers appointed to review all concession agreements to ensure contractual and legal tenets are adhered to by all parties.
- Data quality improvements:
  - Government will continue to leverage Fund TA, including AFRITAC West support to the Liberia Institute of Statistics and Geo-Information Services (LISGIS).

### Conclusion and requests for continued support
- The new administration requires support and regular constructive dialogue with development partners, particularly the Fund, as a trusted advisor.
- Institutionalizing reforms to propel the national development agenda, including maintaining macroeconomic and debt stability, will require careful policy calibration and capacity development initiatives.
- The authorities will continue to work very closely with the Fund and remain particularly grateful for the level of capacity building support provided.

*Source: cr18172 - 1. The Liberian authorities extend their appreciation to staff for the candid discussions*

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18172.pdf_