## 1lbrea2021001

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---

### Context
- Main objectives: restoring macroeconomic stability, providing a foundation for sustainable inclusive growth, and addressing weaknesses in governance.
- Policy stance since COVID-19 onset:
  - slight fiscal loosening to meet humanitarian needs;
  - tight monetary policy;
  - much improved public financial management, domestic revenue mobilization;
  - zero central bank financing to support price and exchange rate stability.
- Authorities remain committed to the Pro-Poor Agenda for Prosperity and Development (PAPD).

### Program status and request
- IMF approvals:
  - Four-year arrangement under the ECF (60 percent of quota) approved in December 2019.
  - Debt relief under the Catastrophe Containment and Relief Trust (4.5 percent of quota) approved in April 2020.
  - Disbursement under the Rapid Credit Facility (RCF) (14 percent of quota) in June 2020.
- Authorities’ request (Date: December 8, 2020):
  - A waiver for nonobservance of the end-December 2019 and end-June 2020 performance criteria (PCs) on the basis of corrective actions taken.
  - Completion of the first and the second reviews.
  - Modification of PCs.

### Recent economic developments
- Economic activity and trade:
  - High-frequency indicators suggest activity is down from the previous year by about 3 percent.
  - Imports in the first half of 2020 are down by about 7 percent.
  - Signs of recovery in the second half of 2020.
- Inflation:
  - Headline inflation declined to 14 percent in September from about 30 percent at program inception.
  - Domestic food inflation spiked to 30 percent in March and April, declining to 14 percent by September.
  - Health and education inflation spikes identified as a measurement issue.
- Reserves and external liquidity:
  - Gross official reserves of the CBL as of end-June rose by US$16.1 million due to increased donor support.
  - End-June 2020 net international reserves (NIR) declined by US$21.1 million compared to end-December 2019, mostly because the RCF disbursement of US$50 million was on-lent to the government.
- Other shocks and disruptions:
  - Acute Liberian dollar banknote shortage in December;
  - Heightened U.S. dollar liquidity needs in the banking sector;
  - A three-week fuel shortage in February;
  - Long-standing delays in government payments, poor provision of public services, and COVID-19 related lockdowns.
- Social support:
  - COVID Household Food Support Program (COHFSP) launched in June with RCF support; delivery delays due to capacity constraints in enumerating food-insecure households.

### Outlook and risks
- Growth forecasts:
  - 2020 forecast revised down from 1.4 percent at program inception to -3.0 percent.
  - Current 2020 forecast is ½ percentage point lower than the forecast at the time of the RCF request in June.
  - 2021 growth forecast is 3.2 percent, ½ percentage point down from the RCF forecast.
  - Medium-term growth expected to average 4.5 percent.
- Main downside risks:
  - Worse- and longer-than-anticipated impact of COVID-19, including a second wave;
  - Slippage from fiscal spending pressures leading to larger drawdowns on government deposits than programmed;
  - Re-emergence of U.S. dollar liquidity needs in the banking sector;
  - Re-emergence of Liberian dollar banknote shortages.

### Program performance (selected quantitative outcomes)
- Summary: Performance weak at end-December 2019 largely due to monetary program slippage; end-June 2020 performance negatively affected by COVID-19.
- End-December 2019:
  - PCs met: three out of six end-2019 PCs were not met (i.e., three met, three not met).
  - Missed PC on NIR by US$17.8 million due to:
    - higher foreign exchange interventions than programmed (US$10 million);
    - U.S. dollar liquidity assistance to the banking sector (US$7 million);
    - CBL budget overrun (US$0.8 million).
  - PC on new external arrears of the government not met; external arrears totaling US$1.4 million emerged in end-2019 and were cleared shortly after the due dates.
- End-June 2020:
  - Three of six end-June 2020 PCs were not met as pandemic impact made targets infeasible.
  - Missed floor on primary fiscal balance excluding grants and missed the PC on the CBL’s gross direct credit to the government.
  - NIR missed by US$26.1 million due to on-lending of RCF disbursement (US$50 million), partially offset by the CCRT (US$16.1 million) and higher-than-expected accumulation from CBL operations (US$7.8 million).
  - IT on NDA of the CBL was not met due to on-lending of the RCF disbursement.

### Structural benchmarks (SBs) and governance
- SBs: Two met; four not met as pandemic strained implementation capacity.
- PFM and governance:
  - Civil service payroll registry SB not met but 80 percent of government workers on the payroll have verified biometric identification cards (prior action).
  - Controls on compensation of employees not met but implemented with delay via centralizing hiring and payment.
  - Quarterly financial performance reports for FY2019 and FY2020Q1-Q2 of SOEs were met.
  - Inventory and rationalization of bank accounts for TSA not met, but most MACs currently comply with one USD and one LD account at the CBL.
- CBL governance:
  - Amendments and Restatement of the CBL Act submitted January 2020 and passed in October 2020.
  - Progress on CBL Action Plan with delays mostly due to capacity constraints.
  - CBL started reviewing the new Financial Institutions Act of 1999 with IMF technical assistance.
- Anti-corruption:
  - SB not met. Proposed amendments to upgrade anti-corruption framework in line with UNCAC were submitted to the Legislature; passage of the LACC Bill delayed due to Judiciary requirements.
  - LACC Bill would provide: (i) prosecutorial powers over corruption and related economic and financial offenses; and (ii) functions for asset recovery and asset declaration regime setup and operation.

### Policy commitments and mitigation measures
- Fiscal authorities:
  - Improving fiscal cash management and control; mobilizing domestic revenue.
  - Prior actions: adopting a FY2021 budget in line with program parameters and clearing all debt service arrears.
- Central Bank of Liberia (CBL):
  - Address root causes of U.S. dollar liquidity needs; ensure adequate supply of Liberian dollar banknotes.
  - Committed to rebuilding NIR to reduce vulnerability to external shocks.
- Governance:
  - Adopted a comprehensive resolution to fight corruption; effective implementation emphasized as vital.
- Risks: Program faces high risks despite mitigation measures embedded in prior actions and PCs.

### Fiscal stance and budget execution (FY2020 and FY2021)
- FY2020:
  - On-budget primary deficit excluding grants declined from 1.0 percent of GDP in FY2019 to 0.9 percent of GDP.
  - Primary deficit (including off-budget project spending) declined from 5.1 percent of GDP to 2.8 percent of GDP.
  - Budget support of US$108 million—including US$50 million from RCF—enabled full execution of the recast budget and COVID-19 response.
- Domestic revenue:
  - Domestic revenue outturn for FY2020 was US$435 million (13.9 percent of GDP), lower than budgeted US$465 million but higher than the US$395 million projected in the recast budget.
  - A surcharge of 30 cent per gallon on fuel introduced in June—expected to yield 1.2 percent of GDP—and formalized as an excise tax in the FY2021 budget law.
  - Positive revenue momentum continued in Q1 FY2021.
  - Legislature approved changes to mandate LRA to start collecting all revenues from LMA and LTA from January 2021 onward.
- FY2021 budget:
  - Legislature approved a budget of US$570 million for FY2021.
  - FY2021 allocations include:
    - wage bill of US$292 million;
    - contributions to the National Road Fund (NRF) of US$24 million;
    - arrears clearance of US$10 million;
    - US$31 million to prevent re-emergence of U.S. dollar liquidity needs in the banking sector.
  - Revenue projected to overperform FY2021 budget by US$20 million; these savings will be held until a supplementary budget.
  - On-budget primary deficit excluding grants projected at 1.1 percent of GDP in FY2021—a relaxation of 0.2 percentage points of GDP compared to FY2020.

### Cash management, expenditure control, and debt service workflow (Annex I highlights)
- Operational improvements:
  - Created a special debt service bank account at the CBL where 10 percent of daily revenue is being transferred.
  - Introduced quarterly debt service allotment.
  - Resumed monthly Liquidity Management and weekly Treasury Management Committee meetings since July 2020.
  - Moved to quarterly expenditure reconciliation; began recording all direct debits into IFMIS at the beginning of the month; eliminated advances to autonomous agencies.
- Prior process involved 34 steps; reforms estimated to save 2-3 weeks in debt payment processing.

### Civil service payroll reform
- Payroll regulation issued March 2020; circular suspending wage payments for those without biometric IDs issued November 2020.
- Public employees reduced from around 74,000 at the beginning of FY2020 to 67,100 by November 20 through elimination of duplicates, ghost workers, and retirement.
- At least 80 percent of government workers on the payroll have verified biometric identification cards (prior action); original target of 100 percent not achieved due to COVID-19 constraints.
- Suspension of salaries delayed from end-June 2020 to end-March 2021 (new SB).
- Payroll Cleaning Taskforce centralized hiring and record keeping via CSA and integrated presidential appointees.

### Monetary policy and price stability
- CBL reduced the policy rate by 500-basis points to 25 percent in May, reserve requirements unchanged initially.
- Annual inflation was 14 percent at end-September, implying an increase in the real rate by 8 percentage points since December 2019.
- CBL shortened tenor for CBL bills from one year to two weeks (option to one year retained).
- Staff endorses CBL plans to:
  - reduce Liberian dollar Reserve Requirement to 15 percent from 25 percent;
  - increase U.S. dollar RR to 15 percent from 10 percent.
- Coordination between CBL and MFDP being formalized via a Memorandum of Understanding for data sharing in the Liquidity Management Committee; Liquidity Working Group (MFDP, LRA, CBL) established.

### Exchange rate, FX operations, and currency management
- Anomalies: retail depositors with Liberian dollar balances withdraw cash and buy FX at bureaus rather than sell Liberian dollars at banks due to banks’ aversion to buy Liberian dollars.
- Authorities intend to:
  - retain CBL’s foreign exchange auction guidelines for transparent price determination;
  - strengthen the auction mechanism and review framework for regulation and supervision of banks and bureaus.
- Authorities suspended reintroduction of the surrender requirement and committed to refrain from introducing additional Capital Flow Management measures.
- CBL adopted a three-year currency management plan; emergency printing of LD4 billion approved by Legislature and banknotes delivered in July 2020.
- CBL plans to print enough banknotes to meet 2021 demand and replace unfit notes; presented three-year banknote demand estimates to the Legislature.

### Financial sector stability and supervision
- Financial sector risks were elevated pre-pandemic; some institutions not meeting minimum prudential requirements.
- NPLs increased: Non-performing Loans to Total Gross Loans rose to 24.4 percent by Sep-20 (series: 14.0, 17.5, 19.9, 24.4 for Dec-18, Dec-19, Jun-20, Sep-20).
- Regulatory capital to risk-weighted assets above minimum: 26.1, 24.8, 29.4, 27.5 (Dec-18, Dec-19, Jun-20, Sep-20).
- Moratorium on asset classification and provisioning (extended to September 2020) was lifted in early November.
- Near-term actions:
  - CBL Board to adopt a reform plan (prior action);
  - Authorities working with institutions not meeting prudential requirements to ensure full compliance by June 2021;
  - CBL revising the New Financial Institution Act (1999) and committed to issue the new Risk-Based Supervision (RBS) Guideline by end-June 2021 (SB).

### Debt sustainability (DSA) — key assessments and projections
- DSA classification:
  - Moderate risk of external debt distress;
  - High risk of overall public debt distress.
- Public debt and projections (selected):
  - Public debt reached 56.6 percent of GDP at end-FY2020.
  - Public sector debt projected: 64.9 in 2020; 64.5 in 2022; 58.8 in 2026; 47.8 in FY2031 (percent of GDP).
  - PV of public debt-to-revenue and grants: 160.7 percent in FY2022 and 115 percent by FY2031.
  - Debt-service-to-revenue and grants ratio: increases to 11.5 percent in FY2024 and reaches 12.9 percent by FY2031.
- Key macro assumptions (selected):
  - Real GDP growth: -3.0 in 2020; 3.2 in 2021; medium-term average 4.5 percent.
  - Gross official reserves (selected): 331 million in 2020 (2.5 months of imports) revised to 403 million in 2021 (2.9 months of imports).
- Stress tests:
  - PV of debt-to-GDP breaches relevant benchmarks under standard sensitivity analysis; largest breaches from deterioration of other flows, shock to primary balance, real GDP growth shock.
  - Contingent liability stress test: one-off increase in debt-to-GDP to 58 percent in FY2022 (around 13 percentage points increase).

### TMU clarifications and requested adjustments
- Requested TMU changes and adjusters (selected):
  - Add adjuster to NIR to recognize GOL deposits to the CBL on the test dates on the day of the deposit even if not recognized in CBL accounting.
  - Add adjuster for receipt and deposits of U.S. dollar mutilated banknotes in transit (data: on average US$6.5 million of unfit notes deposited annually).
  - Clarify accounting basis: CBL operational spending on a commitment basis; CBL capital spending on a cash basis.
  - Add adjusters to NIR, NDA of the CBL, and CBL’s gross direct credit to the government to adjust targets for on-lending of IMF disbursements and debt relief under the CCRT.
  - Revise definition of domestic arrears to distinguish suppliers’ arrears (unchanged) and domestic debt service arrears to be recognized when payment is not made on due date.
  - Add adjuster to primary fiscal balance to allow for capital injection to the banking sector to ensure financial stability.

### Financing proposal and program support
- Staff propose disbursement of SDR34 million (about US$48.8 million).
  - Of which SDR 26.9 million (about US$38 million) to be on-lent to the government to fill the fiscal financing gap arising from COVID-19.
- Financing gap details:
  - Additional spending needs of US$150 million for 2020 (IMF Country Report 20/202), part financed by:
    - RCF (US$50 million);
    - Donor support from development partners (US$56 million);
    - Bilateral donors (US$6 million).
- Staff supports waivers for missed PCs, modifications to PCs and TMU clarifications, and completion of first and second reviews.

### Program monitoring, reporting, and sequencing
- Program monitored by QPCs, SBs, ITs and semi-annual reviews.
- Third review to be completed on or after June 1, 2021 (based on end-December 2020 targets).
- Fourth review to be completed on or after December 1, 2021 (based on end-June 2021 targets).
- Reporting architecture: MFDP, CBL, LRA to provide specified daily, weekly, monthly and quarterly reports within defined timing (e.g., within three weeks after the end of the month; within five days after the end of the week).

_International Monetary Fund staff; source: IMF staff report text (1lbrea2021001)._

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- Main objectives: restoring macroeconomic stability, providing a foundation for sustainable inclusive growth, and addressing weaknesses in governance.
- Policy stance since COVID-19 onset: slight fiscal loosening to meet humanitarian needs, tight monetary policy, much improved public financial management, domestic revenue mobilization, and zero central bank financing to support price and exchange rate stability.
- Program importance: authorities consider bringing the ECF-supported program back on track of utmost importance and remain committed to the Pro-Poor Agenda for Prosperity and Development (PAPD).

### Program status and request
- IMF approvals:
  - Four-year arrangement under the ECF (60 percent of quota) approved in December 2019.
  - Debt relief under the Catastrophe Containment and Relief Trust (4.5 percent of quota) approved in April 2020.
  - Disbursement under the Rapid Credit Facility (RCF) (14 percent of quota) in June 2020.
- Authorities’ request:
  - A waiver for nonobservance of the end-December 2019 and end-June 2020 performance criteria (PCs) on the basis of corrective actions taken.
  - Completion of the first and the second reviews.
  - Modification of PCs.
- Date: December 8, 2020

### Recent economic developments
- Economic activity:
  - High-frequency indicators suggest activity is down from the previous year by about 3 percent.
  - Imports in the first half of 2020 are down by about 7 percent.
  - Signs of recovery in the second half of 2020.
- Inflation:
  - Headline inflation declined to 14 percent in September from about 30 percent at program inception.
  - Domestic food inflation (year-on-year) spiked to 30 percent in March and April, declining to 14 percent by September.
  - Health and education inflation spiked in July; identified as a measurement issue (Box 1).
- Reserves and external liquidity:
  - Gross official reserves of the CBL as of end-June rose by US$16.1 million due to increased donor support.
  - End-June 2020 net international reserves (NIR) declined by US$21.1 million compared to end-December 2019, mostly because the RCF disbursement of US$50 million was on-lent to the government.
- Other shocks and disruptions: acute Liberian dollar banknote shortage in December, heightened U.S. dollar liquidity needs in the banking sector, a three-week fuel shortage in February, long-standing delays in government payments, poor provision of public services, and COVID-19 related lockdowns affecting livelihoods.
- Social support: With RCF support, the COVID Household Food Support Program (COHFSP) launched in June; delivery delays occurred due to capacity constraints in enumerating food-insecure households.

### Outlook and risks
- Growth forecasts:
  - 2020 forecast revised down from 1.4 percent at program inception to -3.0 percent.
  - Current 2020 forecast is ½ percentage point lower than the forecast at the time of the RCF request in June.
  - 2021 growth forecast is 3.2 percent, ½ percentage point down from the RCF forecast.
  - Medium-term growth expected to average 4.5 percent, supported by higher capital spending and improved business confidence.
- Main downside risks:
  - Worse- and longer-than-anticipated impact of COVID-19, including a second wave of cases.
  - Slippage from fiscal spending pressures leading to larger drawdowns on government deposits than programmed.
  - Re-emergence of U.S. dollar liquidity needs in the banking sector.
  - Re-emergence of Liberian dollar banknote shortages.

### Program performance
- Summary: Overall performance at end-December 2019 was weak largely due to significant slippage on the monetary program; end-June 2020 performance was negatively affected by COVID-19 impacts.
- End-December 2019:
  - PCs met: three out of six end-2019 PCs were not met (i.e., three met, three not met).
  - Fiscal targets: all fiscal targets except two were met. The PC on the primary balance excluding grants was met. PCs on the CBL’s gross direct credit to the government and new external non-concessional debt of the public sector were met.
  - Arrears: The PC on new external arrears of the government was not met; external arrears totaling US$1.4 million that emerged in end-2019 were cleared shortly after the due dates.
  - Monetary: The PC on NIR was missed by US$17.8 million due to:
    - higher foreign exchange interventions than programmed (US$10 million);
    - U.S. dollar liquidity assistance to the banking sector (US$7 million);
    - CBL budget overrun (US$0.8 million).
  - The PC on the CBL’s operational and capital spending was not met due to unanticipated severance payments; the IT on net domestic assets (NDA) of the CBL was met.
- End-June 2020:
  - Three of the six end-June 2020 PCs were not met as pandemic impact made targets infeasible.
  - Fiscal program: two PCs (primary fiscal balance excluding grants and the CBL’s gross direct credit to the government) were not met; the PC on contracted new non-concessional debt of the public sector was met; the IT on total revenue collection was met; the IT on social and other priority spending was met; the IT on on-budget capital spending was not met.
  - Notable fiscal measures: elimination of ghost workers and new retirees in the social sector; reallocation of US$25 million of non-essential spending on goods and services for the COHFSP (not part of an IT).
  - Monetary program: the PC on the CBL’s operational and capital spending was met; the PC on NIR was not met and missed by US$26.1 million due to the on-lending of the RCF disbursement (US$50 million), partially offset by the CCRT (US$16.1 million) and higher-than-expected accumulation from the CBL’s operations (US$7.8 million); the IT on NDA of the CBL was not met due to on-lending of the RCF disbursement.
- Structural benchmarks (SBs):
  - Two SBs were met; four were not met as the pandemic strained implementation capacity.
  - PFM and governance SBs: progress on most fronts; SB to improve civil service payroll registry not met but 80 percent of government workers on the payroll have verified biometric identification cards (prior action); SB to improve controls of compensation of employees not met but implemented with delay via centralizing hiring and payment; provision of quarterly financial performance reports for FY2019 and FY2020Q1-Q2 of SOEs was met; SB on inventory and rationalization of bank accounts for Treasury Single Account not met, but most Ministries, Agencies, and Commissions (MACs) currently comply with having only one account in U.S. dollar and one in Liberian dollar at the CBL.
  - CBL governance SBs: progress on operational independence and governance arrangements, including submission to the Legislature of Amendments and Restatements of the CBL Act 1999 in January 2020 and its passage in October 2020; progress on priority items of the CBL Action Plan with delays mostly due to capacity constraints; CBL started reviewing the new Financial Institutions Act of 1999 with IMF technical assistance.
  - Anti-corruption SB: not met. Proposed amendments to upgrade the anti-corruption framework in line with UNCAC were submitted to the Legislature; passage of the Liberia Anti-Corruption Commission (LACC) Bill delayed due to requirements involving the Judiciary Branch. The LACC Bill would provide the Commission with (i) prosecutorial powers over corruption and related economic and financial offenses and (ii) new functions for asset recovery and asset declaration regime setup and operation.

### Policy commitments and mitigation measures
- Fiscal authorities:
  - Focused on improving fiscal cash management and control and mobilizing domestic revenue to finance development needs and better protect the poor.
  - Key prior actions implemented to strengthen program performance include adopting a FY2021 budget in line with program parameters and clearing all debt service arrears.
- Central Bank of Liberia (CBL):
  - Rebuilding confidence in the banking sector by addressing root causes of U.S. dollar liquidity needs and ensuring adequate supply of Liberian dollar banknotes.
  - Committed to rebuilding NIR to reduce vulnerability to external shocks.
- Governance:
  - Authorities have adopted a comprehensive resolution to fight corruption; effective implementation is emphasized as vital.
- Risks to the program:
  - High risks despite mitigation measures embedded in prior actions and PCs; principal risks listed above under "Outlook and risks."

*International Monetary Fund staff; discussions held virtually (September 28-October 27, 2020).*

### 11.      Overall, the FY2020 fiscal stance was tight mostly thanks to fiscal discipline in the first

### 11. Overall, the FY2020 fiscal stance was tight mostly thanks to fiscal discipline in the first

### Fiscal stance and budget execution
- FY2020 on-budget primary deficit excluding grants declined from 1.0 percent of GDP in FY2019 to 0.9 percent of GDP.
- Primary deficit (including off-budget project spending) declined from 5.1 percent of GDP to 2.8 percent of GDP—broadly equal to the medium-term debt-stabilizing primary deficit.
- Budget support of US$108 million—including US$50 million from RCF disbursed in the last quarter of FY2020—enabled full execution of the recast budget, provision of COVID-19 response, and some carryover (accumulation of deposits) for FY2021.
- Despite a revenue shortfall and significant spending pressures (including wage arrears in the first half of FY2020), expenditure stayed within available resources.

### Domestic revenue developments
- Domestic revenue outturn for FY2020 was US$435 million (13.9 percent of GDP), lower than the US$465 million originally budgeted but higher than the US$395 million projected in the recast budget.
- In June, a surcharge of 30 cent per gallon on fuel was introduced—expected to yield 1.2 percent of GDP—and was formalized as an excise tax in the FY2021 budget law.
- End-year collection of one-off measures partly offset the revenue shortfall projected at the time of the RCF request.
- Positive revenue momentum continued in the first quarter of FY2021.
- The Legislature approved changes to relevant laws to mandate the Liberia Revenue Authority (LRA) to start collecting all revenues from the Liberia Maritime Authority (LMA) and the Liberia Telecommunication Authority (LTA) from January 2021 onward.

### Cash management, expenditure control, and debt service
- Regular fiscal reports and cash plans are informing allotment and financial budget decisions; summary fiscal reports have been published on the MFDP website since June 2020.
- Debt service payments (domestic and external) were delayed, with domestic debt service significantly delayed, due partly to tight fiscal conditions and poor integration of direct debits into cash management and lengthy reconciliation processes.
- To avoid recurrence, authorities created a special debt service bank account at the CBL, where 10 percent of daily revenue is being transferred, and introduced a quarterly debt service allotment.
- Operational improvements implemented:
  - resumed monthly Liquidity Management and weekly Treasury Management Committee meetings since July 2020;
  - moved to quarterly expenditure reconciliation;
  - began recording all direct debits into IFMIS at the beginning of the month;
  - eliminated advances to autonomous agencies.

### Civil service payroll reform
- Payroll regulation to centralize all wage payments issued in March 2020; circular to suspend wage payments of those without biometric identification cards issued in November 2020.
- Number of public employees reduced from around 74,000 at the beginning of FY2020 to 67,100 by November 20 through elimination of duplicates, ghost workers, and retirement.
- At least 80 percent of government workers on the payroll have verified biometric identification cards (prior action); original target of 100 percent not achieved due to COVID-19 constraints.
- Suspension of salaries was delayed from end-June 2020 to end-March 2021 (new SB).
- Payroll Cleaning Taskforce improvements:
  - centralized hiring and record keeping via the Civil Service Agency (CSA) (except integrity and transparency institutions);
  - integrated presidential appointees with the general payroll;
  - centralized hiring of consultants.

### FY2021 budget stance
- Legislature approved a budget of US$570 million for FY2021, a slight loosening relative to FY2020 (prior action).
- FY2021 budget allocations include:
  - wage bill of US$292 million;
  - contributions to the National Road Fund (NRF) of US$24 million;
  - arrears clearance of US$10 million;
  - US$31 million to prevent re-emergence of U.S. dollar liquidity needs in the banking sector.
- Given revenue momentum, revenue is projected to overperform the FY2021 budget by US$20 million; these savings will be held until a supplementary budget in early 2021.
- On-budget primary deficit excluding grants is projected at 1.1 percent of GDP in FY2021—a relaxation of 0.2 percentage points of GDP compared to FY2020—reflecting higher revenue from reforms (e.g., petroleum excise) more than offset by the pandemic’s adverse effects across all of FY2021.

### Monetary policy and price stability
- The Central Bank of Liberia (CBL) reduced the policy rate by 500-basis points to 25 percent in May, while keeping reserve requirements unchanged.
- Annual inflation was 14 percent at end-September, implying an increase in the real rate by 8 percentage points since December 2019.
- CBL shortened the tenor for CBL bills from one year to two weeks (retaining option for up to one year) to make bills more attractive amid bank uncertainty.
- Staff endorses CBL plans to:
  - reduce the Liberian dollar Reserve Requirement (RR) to 15 percent from 25 percent;
  - increase the U.S. dollar RR to 15 percent from 10 percent.
- Coordination between CBL and MFDP being formalized via a Memorandum of Understanding for data sharing in the Liquidity Management Committee; Liquidity Working Group (MFDP, LRA, CBL) to coordinate liquidity management.

### Exchange rate market and FX operations
- Anomalies exist: retail depositors with Liberian dollar balances do not sell them to purchase U.S. dollar balances at commercial banks due in part to banks’ aversion to buy Liberian dollars; depositors instead withdraw Liberian dollars to buy foreign exchange at bureaus despite better commercial bank rates.
- Authorities intend to:
  - retain CBL’s foreign exchange auction guidelines for transparent price determination;
  - strengthen the auction mechanism through a comprehensive review of the CBL’s foreign exchange auction guidelines and the framework for regulation and supervision of banks and bureaus.
- Authorities suspended reintroduction of the surrender requirement and committed to refrain from introducing additional Capital Flow Management measures.

### CBL budget, currency management, and governance
- CBL operational budget prepared following IMF TA recommendations; in 2021 CBL aims to reduce its deficit and eliminate drawdown on reserves to finance its budget.
- Measures to reduce reserve drawdown include increasing the local currency component of the wage bill to 50 percent from 35 percent and directing management to negotiate local contracts in local currency.
- Amendments and Restatement of CBL Act 1999 (legislated in October 2020) include:
  - provisions granting CBL power to seek general approvals for currency printing from the Legislature for a three-year period;
  - creation of a monetary policy committee separate from the Board.
- CBL published Audited Annual Financial Statements for 2019 on its website.

### Financial sector stability and supervision
- Financial sector risks were elevated pre-pandemic; some institutions not meeting minimum prudential requirements.
- Preliminary assessment: loans to service and hospitality sectors contributed to a marginal rise in nonperforming loans (NPLs) for some institutions; reported income remains strong and total capital adequacy is above the minimum ratio.
- The moratorium on asset classification and provisioning (extended to September 2020) was lifted in early November.
- Near-term actions:
  - CBL Board will adopt a reform plan (prior action); government is seeking funding sources and U.S. Treasury technical assistance to ascertain financial viability (MEFP ¶30).
  - Authorities working with institutions not meeting prudential requirements to ensure full compliance by June 2021.
  - CBL revising the New Financial Institution Act (1999) and committed to issue the new Risk-Based Supervision (RBS) Guideline by end-June 2021 (SB).

### Currency supply and banknote quality
- CBL Board adopted a three-year currency management plan; with USAID support, secure delivery and verification of banknotes occurred in July.
- Quality of banknotes in circulation remains poor.
- CBL plans to adopt a proposal before end-December to print enough banknotes needed for transactions in 2021 and over the medium term, and to replace unfit banknotes; CBL has presented three-year banknote demand estimates to the Legislature and plans to secure the first batch to meet 2021 demand once approved.

### Growth, debt, infrastructure, and social spending
- Debt Sustainability Analysis (DSA) assesses Liberia at moderate risk of external debt distress and high risk of overall public debt distress.
- Downward revision to economic growth and higher near-term borrowing needs have reduced Liberia’s medium-term borrowing capacity; DSA points to short- and medium-term debt service pressure (some alleviated by CCRT debt relief).
- Road infrastructure: only 5 percent of roads are paved. SECRAMP implementation is lagging and underfunded.
  - Estimated about US$260 million needed to connect the country with paved roads; only US$100 million has been identified in grants, concessional loans, and annual government contributions to the NRF.
  - Note: total cost of US260 million is estimated at US$1 million per kilometer for roads from Ganta to Tapeta (144 km, Phase 1) and Tapeta to Zwerdu (114 km, Phase 2).
- COVID-19 response estimated at US$84.8 million, of which US$32.8 million is on-budget and US$52 million is off-budget; aims to support most vulnerable cohorts by redirecting and scaling-up existing social programs.
- Capacity constraints and the absence of a social registry hinder targeting the most vulnerable.

### Policy priorities and resource mobilization
- Working with development partners, contributing to the NRF, and prioritizing limited resources are critical to deliver PAPD objectives.
- Authorities face limited concessional resources for road construction and limited non-concessional borrowing space in the DSA; competing demands include past obligations (debt service and arrears), financial stability needs, and social sector spending such as COHFSP.
- Government commitment to meet NRF contribution is critical to mobilize more resources and complete SECRAMP.
- Given scarce resources and competing demands, authorities need careful assessment and prioritization of public resource use.

### Governance, audits, and procurement transparency
- Fiscal governance has improved with better cash management and budget controls; publication of regular fiscal reports enhances accountability.
- Audits of budget execution (FY2018 and FY2019) are behind, delaying arrears quantification. Authorities target completion of FY2018 and FY2019 audits by end-December 2020 (SB) and FY2020 audits by end-February 2021 (SB).
- Procurement transparency steps since March 2020:
  - publishing procurement contract awards for FY2019 and FY2020 on PPCC website and legal ownership information of contract awardees;
  - changing data collection template from MACs to include beneficial ownership of contract awardees for publication on PPCC website;
  - working to publish beneficial ownership information, validate delivery of goods and services, and post contracts on PPCC website;
  - committed to publish at least 75 percent of FY2020 contracts awarded by end-January 2021;
  - conducted a first round of compliance audit to ensure MACs follow procurement procedures.

*Source: IMF staff report text.*

### 30.      The authorities are taking steps to expedite the resubmission of the necessary

### 30.      The authorities are taking steps to expedite the resubmission of the necessary

### Anti‑corruption legal framework and timelines
- Adopted a resolution at the anti-corruption conference held during September 16-17, 2020 to guide medium-term anti-corruption efforts.
- Streamlined resubmission priorities:
  - (i) Submitting to the Legislature amendments to the LACC Act to give the LACC first tier prosecutorial power and the function to operate the asset declaration and verification regime of the Government by end-March 2021 (SB).
  - (ii) Submitting to the Legislature draft Whistle Blower and Witness Protection bill by end-June 2021 (SB).
- The SB set out to strengthen anti-corruption measures was not met but the adoption of the resolution of anti-corruption is an important first step.

### Business climate constraints
- July 2020 business climate conference identified key obstacles:
  - High fees.
  - Difficulties in obtaining business registries (MEFP ¶40).
- The Ministry of Commerce is developing an implementation plan with stakeholders to improve the business environment.

### Statistical issues and capacity development
- COVID crisis capacity development focus areas:
  - Domestic revenue mobilization.
  - Strengthening bank supervision.
  - Cash management.
  - Monetary policy operations.
- Capacity Development Strategy prioritizes these areas during the recovery period.

### Program issues, waivers, and corrective actions
- Staff support waivers for nonobservance of program conditionality due to COVID-19 impacts and corrective actions:
  - Waivers for the nonobservance of the floor on the fiscal primary balance and the CBL’s gross direct credit to the central government for end-June 2020. Corrective action: adopting a FY2021 budget to reset fiscal policy in line with program objectives (¶15).
  - Waivers for nonobservance of the ceiling on the change in NIR for end-December 2019 and end-June 2020. Corrective actions: CBL Board adopting a reform plan to prevent re-emergence of U.S. dollar liquidity needs in the banking sector; and a viable plan to make up for lost reserves (Text Table 2).
  - Waiver for missing the ceiling on the CBL’s operational and capital expenses for end-December 2019. Corrective action: adopting (by the CBL Board) a 2021-23 CBL budget in line with program parameters.
  - Waiver for missing the ceiling on new external arrears of the central government (continuous). Corrective action: the MFDP is streamlining debt service payments (¶13).

### Requested TMU changes (Staff support)
- Add an adjuster to the definition of NIR to recognize GOL deposits to the CBL on test dates on the day of the deposit, even if the CBL’s accounting records do not recognize the deposit.
- Add an adjuster to the definition of NIR for:
  - (i) the receipt of US$ mutes in transit; and
  - (ii) regular deposits of mutes.
  - Data: On average, US$6.5 million of unfit notes are deposited to the CBL annually.
- Clarify accounting basis to prevent accumulation of arrears:
  - CBL’s operational spending on a commitment basis.
  - CBL’s capital spending on a cash basis to facilitate long-term investment plan.
- Add adjusters to definitions of NIR, NDA of the CBL, and the CBL’s gross direct credit to the government to adjust targets for on-lending of IMF disbursements and debt relief under the CCRT.
- Revise definition of domestic arrears to distinguish:
  - Arrears to domestic suppliers of goods and services (unchanged per PFM law).
  - Domestic debt service arrears to be recognized as soon as payment is not made on the due date.
- Add an adjuster to the definition of primary fiscal balance to allow for capital injection to the banking sector to ensure financial stability.

### Revised NIR targets (Text Table 2) — (Million U.S. dollars)
- Targets at ECF Approval
  - NIR stock69.443.753.763.7
  - NIR flow (QPC target)‐25.71010
  - CBL operations / forex purchases1010
- New targets (proposed)
  - NIR stock26.813.369.7
  - NIR flow (QPC target)‐13.556.4
  - CBL operations / forex purchases
    - 1
    - 24.725.3
  - Budget support‐88.0
  - CCRT31.531.1
  - Unfit banknote operations (net)18.30.0
- Sources: Liberian authorities; and IMF Staff estimates and projections.
- Note: 1 The pace of accumulation raised to recover the missed target at end‐2019.

### Financing proposal and composition
- Staff propose disbursement of SDR34 million (about US$48.8 million).
  - Of which SDR 26.9 million (about US$38 million) to be on-lent to the government to fill the fiscal financing gap arising from the impact of COVID-19.
- Financing gap details:
  - Additional spending needs of US$150 million for 2020 (IMF Country Report 20/202), part financed by:
    - RCF (US$50 million).
    - Donor support from development partners (US$56 million).
    - Bilateral donors (US$6 million).
- The program is fully financed for the next twelve months with good prospects thereafter.

### Program risks and mitigation
- Main downside risks:
  - (i) A worse and longer than anticipated impact of COVID-19.
  - (ii) Slippages from fiscal spending pressures.
  - (iii) Re-emergence of U.S. dollar liquidity needs in the banking sector.
  - (iv) Re-emergence of Liberian dollar banknotes shortages.
- Mitigating factors: program features, authorities’ swift action and commitment.

### Capacity to repay and debt assessment
- Staff assessment: Liberia has adequate capacity to repay the Fund (Table 8).
  - Assessment based on Liberia’s track record in meeting Fund obligations, strength of the program, catalytic role, favorable medium-term outlook, and a sustainable debt position.
- Debt distress classification:
  - DSA shows Liberia at moderate risk of external debt distress and high risk of public debt distress.
- Policy implication: Need to continue working with donors and development partners to secure grants and concessional borrowing; government commitments to NRF critical to mobilize more resources and complete SECRAMP.

### Safeguards assessment for the CBL
- 2020 safeguards assessment identified significant deterioration in:
  - Governance, autonomy, compliance, internal audit and the internal control environment.
- Prior actions, PCs, and SBs incorporated to address vulnerabilities, including:
  - Filling Board vacancies.
  - Strengthening the CBL Law.
  - Appointing a firm to co-source internal audit activity.
  - Updating the CBL’s Action Plan in line with staff’s recommendations.
  - Revising the CBL budget to limit the drawdown of foreign reserves.
- Remaining delays and gaps:
  - Improving independent oversight.
  - Establishing a compliance function.
  - Formalizing month-end closing procedures.
  - Conducting semi-annual external audits on the foreign reserves (last audit conducted at end-December 2019).
  - Pandemic impacted co-sourcing arrangement and delayed internal audits on budget execution, procurement, and government banking operations.
- New structural benchmarks established (MEFP, Table 3b).

### Staff appraisal and policy recommendations
- Macroeconomic stabilisation:
  - Growth expected to contract by 3 percent in 2020; restoring macroeconomic stability is urgent and a precondition for PAPD implementation.
- Fiscal policy:
  - Slight loosening of the fiscal stance for FY2021 is appropriate.
  - Critical priorities: improving cash management, enhancing transparency and accountability, mobilizing domestic revenue.
  - MFDP actions: improved cash management allowing expenditure cuts when resources fall short and more proactive allocation of scarce resources, including the wage bill.
  - Remaining needs: faster reconciliation, better management of direct debits and debt service payments.
  - Revenue measures: welcome introduction of excise tax on fuel; staff urges amendments to LMA and LTA Acts to allow LRA to collect all revenue from these institutions.
  - Recommend cleaning up tax expenditure and streamlining processes to limit tax exemptions to necessary ones.
- Monetary policy:
  - Monetary stance appropriately aligned with inflation objective.
  - Need to finetune open market instruments as government increases Liberian dollar expenditure.
  - Require improved coordination between MFDP and CBL.
  - Medium-term actions: review required reserve framework to incentivize greater usage of Liberian dollar; rein in CBL’s operational expenses; resume non-discriminatory foreign exchange auctions consistent with Article VIII obligations.
- Financial sector stability:
  - Prompt measures needed to prevent re-emergence of heightened U.S. dollar liquidity needs; request Legislature for supplementary budget if needed.
  - Priorities: address breaches in minimum prudential standards; conduct further assessments of financial sector performance given likely adverse effects on NPLs and liquidity; address corporate governance issues; eliminate operational inefficiencies in weak financial institutions.
  - Ensure currency stocks adequate to meet expected seasonal and transactional demand within the next 6 months through timely procurement of banknotes.
- Governance and transparency:
  - Clear audit backlog:
    - Clear FY2018 and FY2019 audit backlog by end-December 2020.
    - Clear FY2020 audit backlog by end-February 2021.
  - Publish procurements above threshold awarded by MACs, including beneficial owners of these contracts.
  - Speed up preparation of whistleblower and witness protection and illicit enrichment bills and ensure consultation with all relevant stakeholders.
- Program support:
  - Staff supports completion of the first and second reviews.
  - Staff supports authorities’ requests for waivers and modifications of performance criteria and TMU clarifications, including:
    - Accounting rule clarification: CBL operational expenses on a commitment basis; capital expenses on a cash basis.
    - NIR definition adjustments: recognize GOL deposits on day of deposit; adjust for receipt and deposits of U.S. dollar mutilated banknotes; allow on-lending of IMF disbursements and debt relief under CCRT.
    - NDA and CBL gross direct credit adjusters for on-lending and CCRT.
    - Adjuster to primary fiscal balance to allow for banking sector capital injection.
    - Add domestic debt service payment arrears to definition of domestic arrears.

*Source: IMF staff report (selected sections).*

### introduction of excise on petroleum products.

### introduction of excise on petroleum products.

### Overview
- Real GDP: 1.2-2.5
- Real sector projections (selected): 3.4, 4.0, 3.2, 4.1, 4.9, 5.3, 5.4
- Nominal GDP (millions of U.S. dollars): 326, 431, 763, 099, 292, 830, 673, 131, 295, 431, 073, 247, 341, 136, 013, 828
- Population (millions): 4.5, 4.6, 4.7, 4.7, 4.7, 4.8, 4.8, 4.8, 4.9, 5.1, 5.2, 5.3

### Revenue composition and domestic revenue performance
- Liberia: Revenue Composition, FY2015-21 (Millions of US$) — chart present in source (tax categories listed: Taxes - Income, profits, and capital gains tax; Taxes - Goods and services tax; Taxes - International trade; Taxes - Other; Other revenue; Budget support grants and loans).
- Total revenue and grants (percent of GDP): 25.9, 28.0, 29.9, 27.6, 28.1, 29.8, 27.7, 29.1, 28.9, 28.7, 28.2, 27.3
- Total revenue (percent of GDP): 12.9, 14.3, 14.9, 13.1, 13.9, 15.9, 13.7, 14.2, 16.2, 17.0, 17.5, 17.8
- Grants (percent of GDP): 13.0, 13.8, 15.1, 14.5, 14.1, 13.9, 14.0, 14.9, 12.7, 11.7, 10.7, 9.5
- Domestic revenue performance (cumulative, share of annual GDP) — FY2019, FY2020, FY2021 series shown in charts; Taxes on International Trade (Cumulative, Share of Annual GDP) values include 5.5, 4.7, 0.4, 0.9, 1.4 (monthly series across Jul–Jun).
- Taxes (millions of U.S. dollars) in FY2022: 376; FY2023: 386; FY2024: 391; FY2025 projection examples: 405, 445, 482, 521 (across scenarios/columns).

### Fiscal operations and public debt
- Total expenditure (percent of GDP): 30.8, 34.2, 34.6, 33.6, 31.7, 33.5, 33.2, 32.3, 31.7, 30.6, 29.9, 29.5
- Current expenditure (percent of GDP): 21.3, 23.3, 22.7, 22.6, 21.7, 22.0, 22.0, 21.6, 20.4, 19.3, 19.1, 18.7
- Capital expenditure (percent of GDP): 9.5, 11.0, 11.9, 11.0, 9.9, 11.5, 11.2, 10.7, 11.3, 11.3, 10.7, 10.8
- Overall fiscal balance, including grants (percent of GDP): -4.9, -6.2, -4.7, -6.0, -3.6, -3.7, -5.6, -3.2, -2.8, -1.9, -1.7, -2.2
- Overall fiscal balance, excluding grants (percent of GDP): -17.9, -20.0, -19.7, -20.5, -17.7, -17.6, -19.5, -18.1, -15.5, -13.6, -12.3, -11.7
- Primary balance (percent of GDP): -4.3, -5.1, -3.7, -5.0, -2.8, -3.4, -4.6, -2.3, -2.0, -1.2, -1.0, -1.5
- Total public debts (millions of U.S. dollars): 1,115; 1,333; 1,787; 1,788; 1,766; 1,902; 1,930; 1,928; 2,062; 2,146; 2,201; 2,260
- Public external debt (percent of GDP): 25.9, 31.5, 38.0, 39.2, 37.2, 42.7, 45.4, 43.1, 46.2, 46.9, 46.5, 46.1
- Public domestic debt (percent of GDP): 8.1, 9.9, 19.1, 20.3, 19.4, 18.4, 20.2, 19.3, 18.8, 17.5, 16.3, 14.7

### Balance of payments and external financing
- Trade balance (millions of U.S. dollars): -726, -609, -414, -541, -550, -385, -486, -588, -593, -599, -595, -595 (2018–25 series)
- Exports, f.o.b. (millions of U.S. dollars): 417, 424, 630, 456, 412, 685, 463, 462, 485, 503, 534, 561
- Imports, c.i.f. (millions of U.S. dollars): -1,144, -1,033, -1,044, -997, -962, -1,070, -949, -1,050, -1,078, -1,102, -1,129, -1,157
- Current account balance (millions of U.S. dollars): -754, -714, -662, -669, -656, -687, -598, -689, -734, -780, -786, -793
- Current account balance (percent of GDP), including grants: -23.1, -22.5, -21.4, -22.8, -21.4, -21.9, -20.2, -22.2, -22.6, -22.9, -21.8, -20.7
- Current account balance (percent of GDP), excluding grants: -37.8, -36.4, -35.9, -37.3, -36.1, -35.5, -33.8, -36.1, -34.8, -34.0, -31.9, -30.3
- Gross official reserves (millions of U.S. dollars): 297, 292, 308, 336, 331, 333, 401, 403, 429, 448, 438, 443
- Gross official reserves (months of next year's imports): 2.2, 2.3, 2.3, 2.7, 2.5, 2.4, 3.2, 2.9, 3.0, 3.1, 2.9, 2.8
- Total Financing Requirement (millions of U.S. dollars, Table 6): -1,364; -1,169; -1,152; -1,146; -1,193; -1,156; -1,180; -1,138; -1,167
- Total Sources (millions of U.S. dollars, Table 6): 1,364; 1,169; 1,152; 1,099; 1,146; 1,109; 1,130; 1,138; 1,167
- Expected Disbursements (official) (millions of U.S. dollars): 745; 545; 573; 546; 585; 537; 500; 471; 465
- Grants (millions of U.S. dollars): 664; 479; 442; 451; 432; 396; 381; 363; 369
- Foreign direct investment (net) (millions of U.S. dollars): 257; 304; 269; 244; 251; 276; 298; 318; 347
- Financing gap (millions of U.S. dollars) in projections: -47; -47; -47; -50; 0; 0 (years indicated in Table 6)

### Monetary and financial indicators
- M2/GDP (percent): 19.6, 20.3, 16.7, 22.0, 21.6, 16.3, 22.3, 22.3, 22.6, 22.6, 22.6, 22.6
- Credit to private sector (percent of GDP): 16.3, 14.8, 17.3, 15.9, 15.7, 17.8, 16.5, 16.1, 16.4, 16.6, 16.6, 16.7
- Net official reserves / CBL's net int'l reserves (millions of U.S. dollars): 702, 754, -161, 363, 287, 075, 821, 051, 35 (table shows series with negative and positive values)
- Broad money (M2) (millions of U.S. dollars, Depository Corporations Survey): 641, 644, 517, 645, 662, 509, 659, 693, 733, 770, 812, 864
- Broad money (annual change) in USD: 4.9, 0.5, -4.2, 0.2, 2.8, -1.4, 2.2, 4.7, 5.7, 5.1, 5.6, 4.4

### Financial soundness
- Regulatory Capital to Risk-Weighted Assets (percent): 26.1, 24.8, 29.4, 27.5 (Dec-18, Dec-19, Jun-20, Sep-20)
- Non-performing Loans to Total Gross Loans (percent): 14.0, 17.5, 19.9, 24.4 (Dec-18, Dec-19, Jun-20, Sep-20)
- Return on Assets (percent): 1.2, 2.4, 0.7, 1.0 (Dec-18, Dec-19, Jun-20, Sep-20)
- Liquid Assets to Total Assets (Liquid Asset Ratio) (percent): 28.5, 27.3, 25.3, 31.1 (Dec-18, Dec-19, Jun-20, Sep-20)
- Staff note: "CBL should revise its risk-weights and risk-weighted asset calculation to reflect the credit risk of the underlying instruments appropriately. Additionally, discrepancies in measuring revaluation of paid-in capital may lead to inaccurate measures for capital for some banks."

### Key projections, program disbursements and capacity to repay
- ECF arrangement total (SDR millions): 155.0 (Total for the ECF arrangement), representing 60.0 percent of quota (Table 7)
- Schedule of ECF disbursements (SDR amounts per availability date): 17.0; 17.0; 17.0; 17.0; 17.0; 17.0; 17.0; 18.0; 18.0 (dates and conditions listed in source)
- Indicators of capacity to repay IMF (selected, Table 8): Fund obligations based on existing credit (SDR millions, selected years) — Repayment of principal: 10.5; 5.6; 0.0; 18.4; 27.3; 24.4; 20.2; 19.1; 13.6; 10.6; 10.6; 3.6
- Outstanding Fund credit (in millions of SDRs): 162.6; 204.4; 215.9; 231.5; 240.2; 215.8; 195.6; 168.0; 139.1; 106.3; 68.0; 36.8
- Outstanding Fund credit (in millions of US$): 226.2; 284.2; 300.2; 322.0; 334.0; 300.2; 272.0; 233.6; 193.4; 147.8; 94.6; 51.2

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

### Annex I. Improving the Debt Service Workflow

### Annex I. Improving the Debt Service Workflow

### Streamlining debt service: findings and operational changes
- Prior process required waiting to receive payment invoices (typically one month before the due date) to start allotment, financial budget, voucher, and payment processes; the full repayment process involved 34 steps and multiple departments at the Ministry of Finance, Development and Planning (MFDP).
- Consequence: burdened process under a tight timeline left no room to accommodate delays (including those related to liquidity constraints), resulting in some domestic and external debt service paid past their due date.
- Delays were driven by:
  - tight fiscal conditions;
  - poor integration of direct debit payments into cash management decisions;
  - a cumbersome loan repayment process.

- Operational reforms implemented to avoid recurrence:
  - Created a special debt service bank account at the CBL, where 10 percent of daily revenue is being transferred with the aim of smoothing cash availability for debt obligations.
  - Introduced quarterly allotment based on a debt service plan.
  - Introduced monthly financial budget, to be approved at the beginning of the month based on cash availability.
  - Rationale: near-term debt service projections are accurate; doing allotment and financial budget before receiving invoices allows better incorporation of upcoming debt service into cash plans and smoothing of loan repayment.

### Recent economic context and key figures
- COVID-19 incidence: 1,528 reported cases as of November 19.
- Growth:
  - Projected GDP growth for 2020: -3.0 percent (0.5 percentage points below the RCF baseline).
  - Projected GDP growth for 2021: 3.2 percent (RCF projection: 4 percent).
- Inflation:
  - End-2020 inflation estimate revised down to 12 percent from 15 percent.
  - Note: headline inflation measurement issues in education and health categories due to infrequent surveys; recent survey inclusion unjustifiably increased inflation by 5 percentage points.
- External buffers and reserves:
  - Gross official reserves of the CBL increased by US$16.1 million to end-June 2020 due to increased donor support and partial payment of Emergency Liquidity Assistance (ELA).
  - Net International Reserves (NIR) declined by US$21.1 million compared to end-December 2019, mostly because the RCF disbursement of US$50 million was on-lent to the government.

### Program performance: quantitative outcomes and misses
- End-December 2019:
  - Three out of six end-2019 performance criteria (PC) were met.
  - Met: target on the primary balance excluding grants; ceiling on the CBL’s gross direct credit to government; ceiling on new external non-concessional debt of the public sector.
  - Missed: ceiling on new external arrears of the government (external arrears totaling about $1.4 million emerged in December 2019; these have since been cleared).
  - Missed: floor on the change in NIR for end-December 2019 by US$17.8 million due to ELA in foreign currency and foreign exchange intervention.
  - Indicative targets: three out of four ITs met; cumulative target for the ceiling on the CBL’s operational and capital spending missed (reasons: compensation for laid-off staff, upfront payments to auditors, over-expenditure on general goods and services).

- End-June 2020:
  - Three out of six end-June 2020 PCs were met; three out of five ITs were met.
  - Fiscal:
    - Target on primary fiscal balance excluding grants not met because of COVID-19 related expenditure increases.
    - Missed ceiling on the CBL’s gross direct credit to government due to on-lending of the RCF disbursement.
    - Continuous ceiling on contracted new non-concessional debt of the public sector was met.
    - Indicative target on the floor on total revenue collection was met.
  - Monetary:
    - Ceiling on the CBL’s operational and capital spending was met by US$1.9 million.
    - Target floor on the change in NIR was missed by US$26.1 million due to net impact of RCF on-lending to the GOL and CCRT, and higher than expected accumulation by US$7.8 million from the CBL’s operations.
    - Indicative target on the ceiling on net domestic assets of the CBL was missed due to on-lending of the RCF disbursement to the government.

### Structural reforms and implementation status
- Public Financial Management (PFM) and governance:
  - Mixed performance, but significant progress on several fronts.
  - Civil service payroll registry: not fully met; at least 80 percent of public employees on the payroll have been verified with biometric identification cards.
  - As of November 2020, pay was suspended for civil servants whose national identification registry has not been verified but are resident in Monrovia until verified.
  - Controls on compensation of employees: not met but implemented with delay; hiring and payment of most workers centralized.
  - Quarterly financial performance reports for FY2019 and FY2020Q1-Q2 for largest SOEs submitted before end-May 2020; work ongoing to finalize remaining quarterly reports.
  - Inventory and rationalization of bank accounts for Treasury Single Account: not met, but significant progress; most Ministries, Agencies, and Commissions (MACs) now in compliance with requirement to have only one account in USD and one in LD at the CBL.

- Central Bank of Liberia (CBL) governance and independence:
  - Amendments to the CBL Act submitted to the Legislature in January 2020 and passed in October 2020 (met).
  - Significant progress on the CBL Priority Action plan on most items; some items delayed due to capacity constraints.
  - Review of the new Financial Institutions Act of 1999 commenced with IMF technical assistance.

- Anti-corruption measures:
  - Structural benchmarks to strengthen anti-corruption measures were not met; proposed amendments to upgrade anti-corruption framework and establish a special corruption court have required further stakeholder consultation and Judiciary engagement.
  - SBs not met have been rephased to the third and fourth reviews.

### Requests, policy actions, and conditionality adjustments
- Waiver requests for nonobservance of quantitative performance criteria (QPC):
  - Waivers requested for nonobservance of the floor on the fiscal primary balance and the CBL’s gross direct credit to the central government for end-June 2020.
  - Waivers for nonobservance of the ceiling on the change in NIR for end-December 2019 and end-June 2020.
  - Waiver for missing the ceiling on the CBL’s operational and capital expenses for end-December 2019.
  - Waiver for missing the continuous ceiling on new external arrears of the central government (based on corrective action taken).

- Modifications requested to end-December 2020 performance criteria and indicative targets (selected):
  - Performance Criteria: floor on fiscal primary balance; ceiling on contracted new non-concessional external debt; ceiling on the CBL’s gross direct credit to government to reflect recent developments and prospective on-lending of ECF disbursements and debt relief; floor on the change in NIR.
  - Indicative Targets: floor on total revenue collection of the central government; ceiling on new domestic arrears/payables; floor on social and other priority spending; floor on on-budget capital spending; ceiling on net domestic assets (NDA) of the CBL.

- Technical Memorandum of Understanding (TMU) clarifications requested:
  - Clarify accounting rule of CBL operational and capital expenses: operational expenses on a commitment basis, capital expenses on a cash basis.
  - Clarify definition of NIR to:
    - recognize GOL deposits to the CBL on the day of the deposit even if CBL accounting records do not recognize it on the same day;
    - add an adjuster for the receipt of U.S. dollar mutilated banknotes in transit and regular deposits of mutilated banknotes at the CBL to avoid transitory transactions affecting NIR;
    - add an adjuster to allow for on-lending of IMF disbursements and debt relief under the CCRT.
  - Add adjusters to definitions of NDA of the CBL and the CBL’s gross direct credit to the government to allow for on-lending of IMF disbursements and debt relief under the CCRT.
  - Add adjuster to the definition of primary fiscal balance to allow for capital injection to the banking sector to ensure financial stability.
  - Add domestic debt service payment arrears to the definition of domestic arrears.

- Requests related to IMF financing:
  - Requesting completion of the first and second reviews of the ECF-supported program and a disbursement of SDR 34.0044 million (13.18 percent of quota).
  - Request that US$38 million out of this disbursement be on-lent to the government to finance the gap created by the impact of COVID-19.
  - Authorization for IMF to publish the staff report, this letter, the MEFP supplement, the TMU, the informational annex, and the update to the debt sustainability analysis upon IMF Executive Board approval.

_Annex I. Improving the Debt Service Workflow; Appendix I. Letter of Intent; Attachment I. Memorandum of Economic and Financial Policies (excerpts)._

### 10.      Despite the impact of COVID-19 on our FY2020 budget, the fiscal stance did not

### 10.      Despite the impact of COVID-19 on our FY2020 budget, the fiscal stance did not

### Fiscal outturns and stance
- Domestic revenue overperformed RCF projections by 0.8 percent of GDP owing to better than expected compliance and the introduction of excise tax on fuel in May2020.
- Expenditure was kept in line with the FY2020 recast budget after a lengthy reconciliation between July and September.
- Change allowing the LRA to retain 4 percent of revenue collected to fund its operations (as opposed to a budget allocation) improved operational efficiency.
- Estimated primary balance excluding grants for FY2020 is 1.3 percent of GDP better compared to the RCF estimate of a deficit of 1.8 percent of GDP and remains consistent with the medium-term debt stabilizing deficit of 2.5 percent.
- The cash surplus has been transferred to FY2021 to finance economic recovery, in particular, road construction and other capital expenditure.
- Delivery of food aid to those whose livelihoods were negatively affected by COVID-19 was slower than expected due to enumeration challenges, but has since picked up pace.

### FY2021 budget approval and composition
- Legislature approved a budget of US$570 million for FY2021 that is fully financed, further rationalizes wages and salaries, and set aside funds to support a financial sector reform plan.
- Original budget submitted in June was US$535 million (17 percent of GDP).
- Additional fiscal space arose from FY2020 budget surplus, an increase in the revenue forecast for FY2021, and additional budget support disbursed in FY2021, enabling increase to US$570 million.
- Approved budget allocations: wage bill at US$292 million; contributions to National Road Fund (NRF) at US$24 million; clearance of FY2019 arrears at US$10 million; US$31 million for the financial sector reform plan.
- Current domestic revenue trend indicates an additional US$20 million could be generated; this amount will be set aside for the reform plan if needed and approved through a recast or supplementary budget in early 2021.

### Budget execution and cash management reforms
- Progress made to strengthen budget execution: modalities to speed up expenditure reconciliation and better management of direct debits.
- Achievements include: budget execution in FY2020 staying within total available resources; fiscal report and cash plans produced regularly and used to inform allotment and financial budget decisions; summary fiscal report published since early June 2020 on the MFDP’s website.
- Liquidity Management and Technical Management Committees resumed monthly and weekly meetings respectively since early July; policy discussions are more proactive.
- Moved to quarterly reconciliation of expenditure to avoid long delays from end-of-year reconciliation.
- All direct debits, including transfers to the Road Fund, are being entered in IFMIS at the beginning of the month to facilitate cash planning.
- Eliminated advances to autonomous agencies; they are now required to process expenditure in IFMIS.

- Footnote detail: GOL’s annual contribution to the National Road Fund (commitment) is about $24 million; 40 percent of which goes to new constructions of (i) road from Ganta to Tapeta (144 km) and (ii) road from Tapeta to Zwerdu (114 km). Both (i) and (ii) still have a financing gap of about US$60 million each even if the GOL delivers its commitments in full.

### Wage bill streamlining and payroll reforms
- Payroll regulation issued in March 2020 to enforce two layers of validation: biometric identification card and verification of skills.
- Public employees listed reduced from around 74,000 to about 67,100 through elimination of duplicates, ghost workers, retirees past mandated age, and database cleaning.
- Of 67,100 public employees, 53,700 (80 percent of total) had both national identification registry (NIR) card and skills verified by November 20.
- Of the 13,400 with outstanding IDs to be validated, 5,000 have had their skills verified; remaining 8,400 are mostly in remote areas and verification was interrupted by COVID.
- Circular issued on November 10, 2020 announcing suspension of salary beginning with the November pay for those who fail to submit valid biometric NIR.
- Target: have all civil servants verified by end-January.
- Payroll Cleaning Taskforce created (MFDP chair, Internal Audit Agency co-chair, Civil Service Agency member, National Identification Registry member).
- Hiring centralized and managed through CSA (except institutions required to be independent); taskforce monitoring payroll and integrated presidential appointees’ payroll into general payroll.
- Centralization of hiring of consultants at CSA (except security and integrity agencies) to ensure greater control.
- All Ministries, Agencies, and Commissions (MACs) migrated to the new payroll system, except for the General Auditing Commission to ensure operational independence.

### Debt service prioritization and payment process improvements
- Special debt service bank account created at the CBL where 10 percent of daily revenue collection is being transferred to smooth debt servicing.
- Debt service allotment made on a quarterly basis (instead of waiting to receive the invoice); financial budget based on availability of cash.
- Improved near-term projection of debt service to make data reliable for allotment ahead of invoice; discrepancies minimized primarily to changes in exchange rates.
- Improved collaboration between the DMU and cash management team to ensure timely payment of debt service.
- Streamlined process for debt payments by frontloading some stages; estimated to save 2-3 weeks in the process of debt payment.
- Government redeemed local currency Treasury bond maturities for July 2020 and the US$9 million redemption on the US$65 million bond for arrears on September 30, 2020.
- Impact on banking sector liquidity was limited as GOL payment merely offset previously undisclosed overdue tax liabilities owed by some banks.

### Debt sustainability and borrowing strategy
- Debt Sustainability Analysis assesses Liberia at moderate risk of external debt distress and high risk of overall public debt distress.
- Overall public debt assessment reflects recognition of old GOL debt to the CBL not recognized under previous DSA framework prior to 2018.
- Downward revision to growth and higher near-term borrowing needs to fight the pandemic have reduced Liberia’s ability to borrow in the medium-term.
- Total public and publicly guaranteed debt and total public external debt reached 56.6 and 37.2 percent of GDP at end-FY2020, respectively.
- DSA points to short- and medium-term debt service pressure; some pressure alleviated by debt relief from the Catastrophe Containment and Relief Trust (CCRT).
- Policy: continue to prioritize borrowing on concessional terms.

### Local currency wage payments and reserve/ de-dollarization support
- Increased share of the wage bill paid in local currency from 20 percent to 35 percent to support reserve accumulation at the CBL and contribute to de-dollarization.
- The switch increased Liberian dollar expenses beyond local currency denominated revenue.
- Program set to purchase Liberian dollar from the CBL using excess US dollar inflows.
- Even with switch to 35 percent and selling part of the GOL’s FX to the CBL, Government will still save before end-December sufficient U.S. dollars at the CBL for the financial sector reform plan.
- Government will progressively increase local currency share in the wage bill in subsequent years until it reaches 50 percent.

### Debt and aid management capacity building
- Developed a comprehensive Debt Management Manual and National Aid and NGO Policy of Liberia.
- Cleaned underlying debt data in collaboration with creditors and donor partners.
- Improved DMU capacity to monitor debt and create short-term debt service projections.
- Additional capacity needed to run upgraded CSDRM-S system to version 2.3 and produce long-term debt service projections.
- DMU staff working with counterparts from the Government of Ghana to build capacity to run the system and produce a variety of reports.

### Monetary policy stance and implementation
- Since program inception in December 2019, monetary policy remained tight with caution on COVID-19 uncertainties.
- In May, the CBL effected a 500-basis points reduction in the policy rate to 25 percent.
- With annual inflation down to 14 percent at end-October, this amounts to an increase in the real rate by 8 percentage points since November 2019.
- Average stock of CBL bills for June-September was LD4.7 billion increasing from the average of LD2.4 billion for January–March 2020.
- Tenor shortened to two weeks, with option to conduct longer tenor issues up to one year to signal expectation of declining inflation.
- Delivery of LD banknotes in July 2020 boosted confidence; procurement, delivery and verification supported by USAID and Kroll.
- CBL and MFDP improving coordination via MOU and enhanced participation of CBL in Liquidity Management Committee; strengthened Liquidity Working Group (MFDP, LRA, CBL).

### CBL budget, banknote printing, and operational plans
- CBL budget in the first half of 2020 under-executed due to expenditure control measures and COVID-19 lockdown savings.
- Operating costs expected to be contained within QPC target of US$24.2 million to end-December, despite need to pay-off former staff acquitted in the LRD banknote case and strengthen IT security.
- Negotiating with vendors to phase payments for IT upgrade contracts of US$2 million for upgrading core banking software expected to come on-stream in last quarter of 2020.
- Legislature approved amendments to the CBL Act strengthening central bank independence, transparency and accountability.
  - Amended CBL Act grants CBL power to seek approvals for currency printing from Legislature for a three-year period with flexibility on printing within approved period.
  - Provides for creation of monetary policy committee as a separate decision-making body from the Board.
- CBL commits to printing banknotes in 2021 and over the medium-term to meet growing transaction demand and replace unfit banknotes.
- CBL Board planning to adopt banknote printing plan for next three years and submit to Legislature for approval before end-December.
- For 2021-23, currency printing costs estimated at US$7.1 million per year to meet increase in demand and replacement needs.
- CBL committed to further cut personnel costs and increase share of Liberian Dollar payment in wages to 50 percent beginning January 2021; Board approved 2021-2023 budget with commitment to pay at least 50 percent of all goods and services in Liberian dollars.
- Policy to consolidate CBL’s operational and capital expenses excluding interest expense on monetary policy instruments and currency printing, though a higher ceiling than this year is needed to accommodate increase.

### FX operations, auction framework, and capital flow stance
- In the medium-term, CBL commits to resuming non-discriminatory foreign exchange auctions consistent with Article VIII of the Fund’s Articles of Agreement:
  - Retain FX auction guidelines to achieve transparent price determination and avoid discriminatory provision of foreign exchange that could lead to multiple currency practices (MCPs) and exchange restrictions (ERs); publication of auction outcomes to ensure transparency.
  - Strengthen auction mechanism using a single price auction system accessible to all licensed intermediaries in good standing; no constraints on bid prices; allotment determined solely by price submitted.
  - Request technical assistance to: (i) review CBL’s FX auctions guidelines to make them robust; and (ii) review framework for regulation and supervision of banks and bureaus to ensure FX market transparency and competitiveness.
  - Accept that Capital Flow Management (CFM) measures should not substitute for warranted macroeconomic adjustments; maintain suspension of the surrender requirement and refrain from introducing additional CFMs except in severe deterioration in Liberia’s balance of payments as provided in section 29, subsection 4(b), of the Amended CBL Act.
- Maintain containment of reserve drawdown arising from gap between CBL’s revenue and expenditure on operations and capital development.
- CBL committed to further rationalize benefits and goods and services while increasing Liberian dollar component of new contracts.

### Financial sector vulnerabilities and supervision
- Financial sector remains challenged by COVID-19 fallout; addressing sector vulnerabilities is CBL focus.
- Non-performing loans for the banking sector increased by 5 percentage points since March 2020, with increase most pronounced for some banks and the service sectors.
- Further assessments planned over next months on NPLs and impact on banks’ liquidity from the moratorium on asset classification and provisioning rules (moratorium extended to September 2020 and subsequently discontinued).
- Banks advised to fully comply with provisioning and prudential standards.
- With Fund assistance, CBL will shortly update financial soundness indicators to September 2020, with regularization of semi-annual updates thereafter.

*International Monetary Fund — Liberia: selected program implementation and policy measures (excerpts).*

### 29.      Strengthening prudential regulatory requirements, including revisiting the framework

### 29.      Strengthening prudential regulatory requirements, including revisiting the framework

### Prudential regulation and financial stability
- Strengthen prudential regulatory requirements and revisit the framework for monitoring banks’ foreign currency exposures to underpin financial sector resilience.
- Examine refinements in the reserve requirements framework to incentivize intermediation in local currency once clarity on the impacts from the COVID-19 pandemic emerges.
- Reduce banks’ liquidity risks from high intermediation in foreign currency to support financial system stability.
- Advance work, with the help of the Fund, to revise the New FIA (1999) for submission to the Legislature by June 2021 (revised SB), to:
  - strengthen the CBL’s capacity to discharge its expanded mandate to cover financial stability under the Amended CBL Act; and
  - introduce a Comprehensive Resolution Regime (CRR).

### Addressing weaknesses in financial institutions
- Adopt a reform plan for financial institutions with notable breaches of regulatory requirements.
- Intensify surveillance of the entity; the CBL has made progress in identifying prudential weaknesses.
- Seek funding sources for the reform plan and work with Fund staff and U.S. Treasury technical assistance to assess financial viability.
- Recognize need for additional actions to address corporate governance weaknesses.
- Enhance microprudential supervision to address remaining weaknesses in financial institutions by end-June 2021.

### Public Financial Management reforms
- Civil service payroll reform progress:
  - 80 percent of public sector employees verified with both national identification registry (NIR) card and skills as of November 20.
  - Payroll cleaning taskforce integrated across institutions related to payroll; tasked to automate and digitize tracking, keep database streamlined, and eliminate/prevent ghost workers.
- Interfacing of the payroll system and IFMIS completed; updates and payments to payroll now reflected in IFMIS real time for individual-level tracking and better cash management.
- Audit commitments:
  - Collaborate with the General Audit Commission (GAC) to conclude FY2018 and FY2019 budget execution audits as soon as possible but no later than end-December 2020.
  - Conduct audit for FY2020 budget execution timely and report to the Legislature by end-February 2021; FY2020 expenditure numbers reconciled and submitted to the GAC by end-October.
  - GAC expected to conclude the audit by end-February 2021 and submit to the Legislature by -end-March 2021.
  - Completion of FY2018 and 2019 audits set as a structural benchmark for the third review; commit to completing these audits without disclaimer.
- Treasury single account (TSA) groundwork:
  - Concept note drafted in consultation with the IMF.
  - Complete inventory and rationalize bank accounts with the CBL and commercial banks before end-January 2021.
  - MACs instructed to maintain only one operational account in USD and one in LD at the CBL and to close all accounts in commercial banks (excluding donor-funded projects); currently most MACs are in compliance.

### Domestic revenue mobilization
- Submitted amendments to the Liberia Maritime Authority (LMA) and Liberia Telecommunication Authority (LTA) Acts to the Legislature for adoption in January 2021 to gather all domestic revenue for the budget; continue to collect per existing revenue sharing formula until formula approved.
- Prioritized tax administration measures:
  - Modernize the customs code with support from the World Bank by reviewing at least 22 regulations before December.
  - Build on recent work to curb smuggling through enhanced post clearance audits and adoption of four-level customs’ inspection at the Nimba port.
  - Improve transparency in customs administration by posting all procedures and fact sheets on the recently revamped website of the LRA.
  - Review tax exemptions to streamline the process by (i) improving coordination between MFDP and LRA to analyze the impact of exemptions, and (ii) requiring cost-benefit analysis before exemptions are granted.

### Governance and anti-corruption
- Expedite resubmission of necessary amendments to upgrade the anti-corruption framework.
- Adopted resolution of the anti-corruption conference held September 16-17, 2020 to guide medium-term efforts.
- Prioritize as structural benchmarks for 2021:
  - Enact the revised LACC Act providing (i) the LACC first tier prosecutorial power over corruption and related economic and financial offenses; (ii) scope and requirements of an effective system of asset declarations for senior public officials in line with international best practices, including providing the LACC power to receive and verify declarations, ensure public access, and sanction failures or false information.
  - Enact the Whistle Blower and Witness Protection Act to provide effective protection for reporting persons, witnesses and victims in accordance with the UNCAC and best international practices.

### Procurement transparency and e-procurement foundations
- Publish on the PPCC website all information on procurement contract awards (started March 2020).
- Set up a team of audit experts and conducted first round of compliance audits to ensure MACs follow correct procurement procedures.
- Changed data collection template to include beneficial ownership of contract awardees for publication on the PPCC website.
- Revise PPCC regulations to require MACs to publish on the PPCC’s website all relevant information on procurement activities (from planning to awards).
- Set up a reliable and comprehensive procurement database as the first step toward an e-procurement system to collect, maintain, and publish procurement information for monitoring efficiency and compliance.
- Publish on the PPCC’s website procurement contracts paid from the budget above specified thresholds, along with names of companies and beneficial owners:
  - above US$200,000 for goods;
  - above US$400,000 for works;
  - above US$100,000 for services.
- Expect to have published this information for 75 percent of the FY20 contracts by end-January 2021.
- Ensure the PPCC has adequate funding to implement these reforms.

### Business climate and COVID-19 response
- COVID-19 pandemic negatively affected the business climate, with service sector (hotels and restaurants) particularly suffering due to suspension of major international flights.
- Measures to dampen negative impact:
  - Allocated US$2 million to provide support to market women and petty traders.
  - CBL permitted financial institutions additional flexibility to solvent borrowers in hard-hit sectors experiencing temporary liquidity shortfalls, while maintaining loan reporting, classification, and provisioning standards.
  - CBL improved access and affordability of electronic payment services: temporarily suspended fees and charges for transfers; suspended processing fees at point-of-sale outlets used by merchants; and increased allowable limits for transfers.
- Medium- and long-term reforms to improve business climate to lower cost of doing business, remove administrative barriers, and expand import-competing and export-oriented activities:
  - Held a business climate conference including a Judicial forum on 07/22/2019 to identify impediments; identified high fees, transportation costs, customs duties, and difficulties obtaining business registries as key obstacles; Ministry of Commerce working on an implementation plan.
  - Plan a major investment and business climate conference as part of an annual judicial conference under the Chief Justice, planned for first half of 2021.
  - Reduce bottlenecks on road transportations (e.g., checkpoints) to improve trade and movement efficiency.
  - Maintain close communication between Minister of Finance, Minister of Commerce and Industry, and the Liberia Chamber of Commerce to improve investment and business climate.

### Improving statistics for program monitoring
- Commit to reconcile cash and commitment expenditure and share monthly fiscal report within 3 weeks from the end of each month in line with the ECF program requirement.
- Produce quasi-weekly summary fiscal reports and publish a short report on the MFDP website to enhance budget monitoring and transparency.
- Progress on debt statistics production and monitoring and on ensuring timely debt service payments:
  - Estimates and composition of debt outstanding and short-term projections of debt service have significantly improved.
  - Continue to build capacity to produce long-term debt service projections.

### Program monitoring and review timetable
- Program monitored by quantitative performance criteria, structural benchmarks, indicative targets, and semi-annual reviews as set out in Tables 1, 2, and 3 and the attached technical memorandum of understanding.
- Third review to be completed on or after June 1, 2021 will be based on end-December 2020 targets and other relevant performance criteria.
- Fourth review to be completed on or after December 1, 2021 based on end-June 2021 targets and other relevant performance criteria.

### Selected quantitative performance outcomes and status (as presented in Table 1)
- Floor on primary fiscal balance:
  - Dec. 2020 PC Est. Status: -0.7 18.0 Met
  - Mar. 2021 IT Est. Status: -1.2 26.0 Met
  - Jun. 2021 PC Prel. Status: -1.6 -28.4  Not met
  - Sep. 2021 IT Prel. Status: 5.2 0.0  Not met
  - Dec. 2021 PC IT: -15.0 -25.0 -33.4 8.4 18.2
- Ceiling on contracted new non-concessional external debt of the public sector (continuous basis):
  - multiple period entries show 100.0, 125.0, 0.0 with statuses Met and 0.0 for later periods.
- Ceiling on new external arrears of the central government (continuous basis):
  - several periods show 0.0, with Dec. 2020 showing 0.0 0.7 Not met and Sep. 2021 showing 0.0 3.5  Not met.
- Ceiling on the CBL’s operational and capital expenses:
  - Dec. 2020: 3 32.9 32.9 Not met
  - Mar. 2021: 9.3 6.4 Met
  - Jun. 2021: 14.1 12.2 Met
  - Sep. 2021: 19.4 19.3 Met
  - Dec. 2021: 24.2 12.8 20.6 26.3 30.1
- Floor on the change in the CBL’s net international reserves:
  - Dec. 2020: -25.7 -43.3 Not met
  - Mar. 2021: 2.5 13.9 Met
  - Jun. 2021: 5.0 -21.1 Not met
  - Sep. 2021: 7.4 -4.4 Not met
  - Dec. 2021: -13.5 4.8 29.4 34.1 56.4
- Ceiling on CBL's gross direct credit to central government:
  - Dec. 2020: 5 487.5 487.5 Met
  - Mar. 2021: 487.5 487.5 Met
  - Jun. 2021: 487.5 528.6 Not met
  - Sep. 2021 and Dec. 2021 entries include 487.5    528.6  Not met and a series: 557.7 557.7 548.8 548.8 539.9
- Indicative targets (examples):
  - Floor on total revenue collection of the central government:
    - Dec. 2020: 2 184.0 196.0 Met
    - Mar. 2021: 293.0 312.0 Met
    - Jun. 2021: 414.0 435.1 Met
    - Sep. 2021: 108.5 107.3 Not met
  - Ceiling on new domestic arrears/payables of the central government (continuous basis): n.a. entries and Sep. 2021 shows 0.0 0.0 Met.
  - Floor on social and other priority spending: multiple periods met; examples include Dec. 2020: 2 29.3 36.3 Met.
  - Floor on on-budget capital spending: several periods Not met; Dec. 2020 shows 8 4.3 0.0 Not met.
  - Ceiling on net domestic assets of the CBL: Dec. 2020: 9 250.3 253.9 Met; Mar. 2021: 242.6 189.0 Met; Jun. 2021: 223.6 231.6 Not met.
- Memorandum items (selected):
  - Ceiling on disbursement of concessional external debt:
    - Dec. 2020: 65.0 58.1 Met
    - Mar. 2021: 100.0 98.2 Met
    - Jun. 2021: 130.0 116.0 Met
    - Sep. 2021: 175.0 145.2 Met
    - Dec. 2021: 310.0 338.0 365.0 405.0 440.0
  - Floor on wage bill of school teachers:
    - Dec. 2020: 2 16.7 20.3 Met
    - Mar. 2021: 25.0 29.0 Met
    - Jun. 2021: 33.4 37.5 Met
  - Floor on wage bill of core and non-core clinical health workers:
    - Dec. 2020: 2 12.4 16.0 Met
    - Mar. 2021: 18.6 24.3 Met
    - Jun. 2021: 24.8 32.4 Met
  - Floor on spending on home-grown school feeding program:
    - Dec. 2020: 2 0.25 0.0 Not met
    - Mar. 2021: 0.38 0.00 Not met
    - Jun. 2021: 0.50 0.00 Not met
    - Sep. 2021: 0.03

*Source: 1lbrea2021001 - 29.      Strengthening prudential regulatory requirements, including revisiting the framework*

### 0.00  Not met

### 1lbrea2021001 - 0.00  Not met

### Prior Actions for First and Second Reviews of ECF, 2020
- FY2021 Fiscal Budget
  - Adopt (by the Legislature) a FY2021 budget in line with program parameters for the deficit, revenue, and wage bill.
  - Rationale: Budget credibility.
  - Status: Met
- Public Financial Management and Governance
  - Clear all debt service arrears, including to domestic financial institutions.
  - Rationale: Boost confidence in the government and financial sector stability.
  - Status: Met
  - At least 80 percent of government workers on the payroll have verified biometric identification cards.
  - Rationale: Improve payroll efficiency, record keeping, means of controls, and yield savings.
  - Status: Met
- Safeguard Central Bank Foreign Exchange Reserves
  - In consultation with Fund staff, the CBL Board to adopt a financial sector reform plan.
  - Rationale: Financial sector stability and safeguarding external buffers.
  - Status: (no explicit status line in source)

Sources: Liberian authorities and IMF staff estimates and projections.

### Structural Benchmarks — First and Second Reviews
- Public Financial Management and Governance
  - Improve and clean the civil service payroll registry by:
    - (i) Issuing a regulation by end-December 2019 establishing an end-June 2020 deadline for all public employees to have obtained a national biometric identification;
    - (ii) no government worker will be paid without biometric ID from end-June 2020; and
    - (iii) the MFDP to provide a detailed report to IMF staff—with format and content outlined in the TMU—on the scope and impact of the salary suspension by August 15, 2020.
  - Target/Report date: August 15, 2020
  - Rationale: Necessary to eliminate ghost workers.
  - Status: Not Met — significant progress has been made: more than 80 percent of the public sector employees verified by end-November 2020.
  - Improve controls of compensation of employees by issuing (or amending) the regulation on hiring of public servants to establish that employment and HR management will be jointly controlled by the CSA and MFDP and that all MACs (except for security sector and integrity agencies) will not be able to complete the hiring process without registering the new hire at the CSA...
    - Target: End-January 2020
    - Rationale: Improve payroll efficiency, record keeping, means of controls, and yield savings.
    - Status: Not Met, implemented with a delay
  - The 8 largest State-Owned Enterprises (SOEs) to provide quarterly reports... for FY2019Q1-Q4 and FY2020Q1 to the SOE Unit at the Ministry of Finance by end-March 2020 and these be shared with IMF staff by end-April 2020; and (ii) the SOE Unit to prepare and share with IMF staff by end-May 2020 a comprehensive report...
    - Target: End-May 2020
    - Rationale: Enhance transparency of major revenue source.
    - Status: Met
  - Complete the inventory and rationalize bank accounts with the CBL and commercial banks, which will entail: i) review and refine the policy restricting the number of bank accounts held by MACs; ii) complete the stock-taking exercise of bank accounts; iii) instruct MACs to close their bank accounts at commercial banks and transfer balances to the CBL (excluding donor funded projects, salaries funding accounts and revenue collection accounts); iv) the CBL to set up bank accounts following the closure of MACs bank accounts and transfer of cash balances to the CBL by commercial banks; and v) supply a list of bank accounts that remain at commercial banks to IMF staff along with a rationale for their continued existence.
    - Target: End-June 2020
    - Rationale: A preparatory measure to prepare for eventual adoption of a treasury single account.
    - Status: Not Met — significant progress has been made: the concept note was developed with IMF TA support; rationalization of bank accounts will be completed in January; and issued a guideline to maintain one account for each currency.
- Improve Governance at the Central Bank of Liberia
  - Submit the amendments to the CBL Act consistent with Fund staff advice to the National Legislature to strengthen the CBL’s mandates, autonomy, decision-making structures, and transparency and accountability.
    - Target: End-March 2020
    - Rationale: Promotion of greater CBL independence
    - Status: Met - Approved by the Legislature in October 20, 2020.
  - Fully implement the priority actions of the updated CBL Action Plan in line with revised due dates.
    - Target: Quarterly updates starting with End-March 2020
    - Rationale: Strengthen the CBL’s operations and governance
    - Status: See Table 4.
- Strengthen Anti-Corruption Measures
  - Submit to the National Legislature amendments to the anti-corruption and penal laws to upgrade the anti-corruption framework in line with the UNCAC, including by criminalizing illicit enrichment and the bribery of foreign officials and to establish a special fast-track process for prosecuting corruption.
    - Target: End-September 2020
    - Rationale: Improve governance and reduce corruption vulnerabilities.
    - Status: Not Met. Rephased in line with the anti-corruption resolution.

### Structural Benchmarks — Third Review
- Tax Administration
  - Develop an inventory of tax exemptions by type and industry; and specify whether it is discretionary or provided for in the tax law and the timeframe for which it applies.
    - Target: End-December 2020
    - Rationale: Assess amount of revenue foregone
    - Status: TA was provided in April on customs-related exemptions.
- Public Financial Management and Governance
  - Submit audit reports for FY2018 and FY2019 budget to the Legislature, and submit the audit report for FY2020 budget to the Legislature.
    - Targets: End-December 2020 (FY2018 and FY2019); End-February 2021 (FY2020)
    - Rationale: Improve fiscal transparency and accountability.
    - Status: In progress. FY2018 is near completion; while FY2019 and 2020 were submitted to the GAC.
  - Improve and clean the civil service payroll registry by: (i) no government worker will be paid without biometric ID; and (ii) the MFDP to provide a detailed report to IMF staff—with format and content outlined in the TMU—on the scope and impact of the salary suspension.
    - Target: End-March 2021
    - Rationale: Necessary to eliminate ghost workers.
    - Status: In progress.
  - Complete the inventory and rationalize bank accounts with the CBL and commercial banks, which will entail: i) review and refine the policy restricting the number of bank accounts held by MACs; and ii) complete the stock-taking exercise of bank accounts.
    - Target: End-March 2021
    - Rationale: A preparatory measure to prepare for eventual adoption of a treasury single account.
    - Status: In progress.
- Improve Governance at the Central Bank of Liberia
  - In line with the Enterprise Risk Management Policy, submit quarterly compliance reports to BOG with details of deviations from CBL’s policies and procedures, as well as stated regulatory requirements.
    - Target: 30 days after each quarter beginning for 2020 Q4
    - Rationale: Improve compliance with policies and regulations.
    - Status: (no explicit status line in source)
- Internal Controls of the CBL
  - Enhance reporting practices on foreign exchange withdrawals through compilation of reports on foreign exchange withdrawals from the CBL and timely submission of these reports to the BOG monthly.
    - Target: Starting with the report for November 2020.
    - Rationale: Enhance internal controls.
    - Status: Monthly FX reports have been produced but not been submitted to the Board.
  - Enhance reporting practices on foreign exchange withdrawals through semi-annual external audits on the foreign exchange reserves of the CBL.
    - Target: Within six weeks after every six months
    - Status: (no explicit status line in source)
- Cash currency management
  - Improve vault security by: (i) limiting access to vault area to the currency unit only; (ii) limit to currency unit use the additional vault for currency unit only; (iii) cleaning up the area of the currency destruction machine by removing stationary to a different room.
    - Target: Rephased to end-December 2020.
    - Rationale: Improve cash currency management
    - Status: In progress.
  - Set up a dual control security strategy. One example may be by implementing two door lock-system.
    - Target: End-December 2020.
    - Rationale: Improve cash currency management
    - Status: In progress.
- Strengthen Anti-Corruption Measures
  - Enact the revised LACC Act that provides (i) the LACC first tier prosecutorial power over corruption and related economic and financial offenses; (ii) for scope and requirements of an effective system of asset declarations for senior public officials in line with international best practices,...
    - Target: End-March 2021
    - Rationale: Improve governance and reduce corruption vulnerabilities.
    - Status: In progress.

### Structural Benchmarks — Fourth Review
- Public Financial Management and Governance
  - Complete the inventory and rationalize bank accounts with the CBL and commercial banks (instruct MACs to close accounts at commercial banks and transfer balances to the CBL; CBL to set up accounts; supply list of remaining commercial bank accounts to IMF staff).
    - Target: End-June 2021
    - Rationale: A preparatory measure to prepare for eventual adoption of a treasury single account.
    - Status: In progress.
- Improve Governance at the Central Bank of Liberia
  - In line with the Enterprise Risk Management Policy, submit quarterly compliance reports to BOG with details of deviations from CBL’s policies and procedures, as well as stated regulatory requirements.
    - Target: 30 days after the end of the quarter beginning with a report for 2020 Q4
    - Rationale: Improve compliance with policies and regulations.
    - Status: (no explicit status line in source)
- Internal Controls of the CBL
  - Enhance reporting practices on foreign exchange withdrawals through compilation of reports on foreign exchange withdrawals from the CBL and timely submission of these reports to the BOG monthly.
    - Target: Starting with the report for November 2020.
    - Status: (no explicit status line in source)
  - Enhance reporting practices through semi-annual external audits on the foreign exchange reserves of the CBL.
    - Target: Within six weeks after every six months
- Bank Supervision
  - Issue the Risk-Based Supervision (RBS) Guideline in accordance with IMF TA recommendations.
    - Target: End-June 2021
    - Rationale: Improve financial sector stability.
    - Status: Draft already developed with IMF TA support.
  - Introduce a Comprehensive Resolution Regime (CRR) with legislative amendments, operational guidelines, and an organizational unit to develop and execute resolution strategies; include ELA and CRR operational frameworks.
    - Targets: End-June 2021 (submit amendments to the Financial Institutions Act), End-September 2021 (approve operational guidelines), End-December 2021 (establish organizational unit)
    - Rationale: Improve financial sector stability.
    - Status: The IMF's Legal department completed a desk review of the draft Financial Institutions Act in October 2020 and shared with the CBL. A drafting mission is expected in early 2021 to finalize the draft FIA.
- Cash currency management
  - Develop a methodology for forecasting future demand for bank notes by denomination, including by setting benchmark stocks against which to measure the risk of currency shortage.
    - Target: End-June 2021
    - Rationale: Improve cash currency management
    - Status: In progress.
  - Destroy unfit notes to create space in the operational vaults, mitigate risks, and better and more accurately reflect circulation figures.
    - Target: End-June 2021
    - Status: In progress.
- Strengthen Anti-Corruption Measures
  - Enact the Whistle Blower and Witness Protection Act to provide effective protection from potential retaliation for reporting persons, witnesses and victims in accordance with the UNCAC and best international practices.
    - Target: End-June 2021
    - Rationale: Improve governance and reduce corruption vulnerabilities.
    - Status: In progress.

### Central Bank of Liberia (CBL) Action Plan: Priority Items (August 31, 2020)
- Governance of the CBL
  - Amendments to the CBL Act to be submitted to the Legislature by end-March 2020.
    - Responsible Party: BOG
    - Status/Comment: Met. Subsequently, approved by the Legislature in October 20, 2020.
  - Enhance annual and interim financial statement disclosures starting with 2019 Financial Statement; establish month-end closing procedures.
    - Responsible Party: Finance Department (FD)
    - Due Date: Starting with 2019 Financial Statement; End-December 2019 for month-end procedures.
    - Status/Comment: (i) Met for disclosure enhancements; (ii) Not met, implemented with a delay for month-end closing procedures. Revised year-end closing procedures being reviewed by management; new system activated on June 13, 2020.
  - In line with the Enterprise Risk Management Policy, submit quarterly compliance reports to BOG with details of deviations from CBL’s policies and procedures, 30 days after the end of the quarter beginning with a report for 2019 Q4.
    - Responsible Party: BOG / ERMD
    - Status/Comment: Not met. Compliance reports have not been submitted to and discussed by the BOG.
- Internal Controls of the CBL
  - Enhance reporting practices on foreign exchange withdrawals: (i) compilation of reports and timely monthly submission to the BOG starting with November 2019; and (ii) semi-annual external audits on the foreign exchange reserves within six weeks after every six months.
    - Responsible Party: FD
    - Status/Comment: Not Met. Monthly FX reports have not been submitted to the Board but semi-annual audit report for December 2019 submitted to the Board.
  - The IAD to work with the co-sourcing internal firm to strengthen capacity for risk-based auditing.
    - Responsible Party: BAC
    - Due Date: Quarterly, beginning with 2019 Q4 report.
    - Status/Comment: Met. PricewaterhouseCoopers was recruited as a co-sourcing firm and is working with the CBL’s IAD.
- Bank Supervision
  - Complete on-site examinations of financial institutions that have overdrawn balances at the CBL as of end-September 2019.
    - Responsible Party: RSD
    - Due Date: End-November 2019
    - Status/Comment: Met.
  - Appoint a reputable external auditor to review findings of on-site examinations.
    - Due Date: End-December 2019
    - Status/Comment: Not met, implemented with a delay. The CBL issued request for proposals in April 2020 to 4 investment banks but none responded. CBL requested technical assistance from the U.S. Treasury. Findings of U.S. Treasury TA will inform the reform plan.
  - Conduct a detailed assessment of credit underwriting standards across banks and provide an assessment of credit quality and adequacy of provisioning; if unclear, conduct an Asset Quality Review (AQR).
    - Responsible Party: RSD
    - Due Dates: End-June 2020; End-December 2020
    - Status/Comment: Not met.
  - Introduce a Special Resolution Regime (SRR) that enables the resolution of nonviable banks without systemic disruption and without exposing taxpayers to loss; submit amendments to the Financial Institutions Act; approve operational guidelines; establish institutional capacity.
    - Status/Comment: In progress. Draft Crisis Management Framework developed and shared with AFRITAC West II; finalization dependent on amendment of the New FIA. Submission to Legislature (Legal Counselor) due End-September 2020 — Not met. IMF Legal department completed a desk review of the draft FIA in October 2020 and shared with the CBL. A drafting mission was expected to finalize the draft FIA.
  - Strengthen the compliance-based regime for imposing supervisory corrective measures to achieve compliance with Basel Core Principles #11.
    - Responsible Party: RSD
    - Due Date: End-March 2020
    - Status/Comment: Not Met. A Regulation on Supervisory Intervention reinforcing zero tolerance for regulatory breaches has been developed, approved by the CBL Board and issued to banks; enforcement is not being proactively applied. This SB will be subsumed under the Risk-Based Supervision (RBS) Guideline for third and fourth reviews.
- Cash Currency Management (selected items)
  - Improve inventory management of cash by ensuring all vault stock movements are recorded and all vault stocks are recorded in the system immediately on receipt.
    - Responsible Party: Banking Department (BD)
    - Due Date: End-November 2019
    - Status/Comment: Met.
  - Improve data collection and reporting by keeping daily records in numbers of notes and value and recording by denomination and level of fitness (new, fit, unfit).
    - Due Date: End-December 2019
    - Status/Comment: Met.
  - Develop a methodology for forecasting future demand for bank notes by denomination, including setting benchmark stocks.
    - Due Date: End-June 2020. Rephased to end-June 2021.
    - Status/Comment: Not met. CBL able to forecast banknote demand based on a template developed in collaboration with staff; template yet to be updated with appropriate denomination structure; thresholds not set.
  - Destroy unfit notes to create space in the operational vaults.
    - Due Date: On-going starting with end-December 2019. Rephased to end-June 2021.
    - Status/Comment: Not met. CBL destroyed unfit banknotes in March but has not destroyed any since due to Board concerns about improper disposal and environmental damage. CBL engaged a waste management firm to dispose waste once banknotes are destroyed.
  - Transfer currency held at waterside reserve vault to the reserve vault at the CBL and discontinue use of Waterside reserve vault.
    - Due Date: End-December 2019
    - Status/Comment: Met. The CBL transferred cash from the Waterside reserve vault to the CBL in December 2019.
  - Enhance control of access to restricted areas by enforcing swiping device on doors linking banking hall teller unit and vault and install swiping devices on entrance to each teller unit.
    - Due Date: End-June 2020
    - Status/Comment: Met.
  - Set up a dual control security strategy (e.g., two door lock-system).
    - Due Date: End-December 2020
    - Status/Comment: In progress. CBL improved security condition including CCTV and security personnel.
  - Improve vault security by limiting access to vault area to the currency unit only; clean up currency destruction machine area.
    - Due Date: End-December 2019. Rephased to end-December 2020.
    - Status/Comment: Not met. CBL activated biometric access, removed some unwanted items; preparing to transfer remaining items that do not belong to the currency unit from the vault area to the DR Site by first quarter of 2021.
  - Submit the emergency procurement request to the Legislature to ensure printing of sufficient Liberian dollar banknotes.
    - Responsible Party: OG / Ministry of State
    - Due Date: End-January 2020
    - Status/Comment: Met. The legislature approved the printing of LD4 billion, and banknotes were delivered in July 2020.
  - Ensure an open tender process for design/printing of any Liberian dollar banknotes that occurs after the emergency procurement request, based on a tender template with clearly defined timelines and technical and other requirements and allowing for multiple bidders to participate.
    - Status/Comment: Continuous — Met. Based on IMF TA currency denomination structure the CBL Board adopted a currency printing strategy for 2021-2023, and the Legislature adopted the plan November [], 2020. The CBL is already preparing to issue request for procurement for 2021.

### Key Status Highlights and Exact Numeric Items
- "At least 80 percent of government workers on the payroll have verified biometric identification cards." — Status: Met.
- More than 80 percent of the public sector employees verified by end-November 2020.
- Legislative approval: Amendments to the CBL Act — Approved by the Legislature in October 20, 2020.
- Emergency printing: Legislature approved printing of LD4 billion; banknotes delivered in July 2020.
- Action plan dates referenced include: end-December 2019; end-January 2020; end-March 2020; end-June 2020; August 15, 2020; end-September 2020; end-December 2020; end-March 2021; end-June 2021; end-September 2021; end-December 2021; 30 days after the end of the quarter beginning with a report for 2019 Q4; Starting with the report for November 2019; Within six weeks after every six months; Quarterly, beginning with 2019 Q4.
- IMF technical assistance (TA) involvement noted for customs-related exemptions, RBS guideline drafting, concept note for bank account rationalization, and desk review of draft Financial Institutions Act (October 2020).

*Sources: IMF staff; and Liberian Authorities.*

### 1.      This memorandum sets out the understandings between the Liberian authorities and

### 1lbrea2021001 - 1.      This memorandum sets out the understandings between the Liberian authorities and

### Scope and Monitoring Framework
- Memorandum sets out understandings between the Liberian authorities and the International Monetary Fund (IMF) on:
  - Definitions of quantitative performance criteria (QPCs) and indicative targets (ITs) for the program supported by the Extended Credit Facility (ECF) arrangement.
  - Related reporting requirements, methods to assess program performance, and information requirements for monitoring targets.
- Consultation requirement: The authorities will consult with the Fund before modifying measures in this letter or adopting new measures that would deviate from program goals, and provide necessary information for program monitoring.
- Evaluation convention: Unless otherwise specified, all QPCs and ITs will be evaluated in terms of cumulative flows from the beginning of the period.

### Program Exchange Rates (Table 1)
- Program exchange rate basis: Foreign currency denominated values for 2019 converted into Liberian currency (Liberian Dollar) using a program exchange rate of LD 211.50/US$ and cross rates as reported in the IMF’s International Financial Statistics as of October 31st, 2019.
- Table 1. Liberia: Program Exchange Rates (As of end-October 2019)
  - Currency / Currency Units Per SDR / Liberian Dollars Per Currency Unit / US dollars Per Currency Unit
  - US dollars: 1.38 / 211.50 / 1.00
  - British Pound Sterling: 1.06 / 274.09 / 1.30
  - Japanese Yen: 150.12 / 1.94 / 0.01
  - Euro: 1.24 / 235.90 / 1.12
  - SDR: 1.00 / 291.74 / 1.38

### Key Definitions
- Government for program purposes:
  - Defined as the budgetary central government of Liberia (GoL).
  - Excludes extrabudgetary units of the central government, public nonfinancial corporations, public financial corporations, social security funds, and local government.
  - Operations of the budgetary central government presented in U.S. dollars with Liberian dollar revenues and expenditures converted at the period average exchange rate.
- Budgetary central government:
  - Defined as central government entities with budgets covered by the main budget controlled by the Ministry of Finance and Development Planning.
  - Coverage includes on-budget operations and off-budget transactions managed by these entities.
- Revenue collection of the budgetary central government:
  - Includes all tax and non-tax receipts transferred into GoL revenue accounts at the CBL for the relevant fiscal year, including income and transfers from state-owned enterprises and public institutions, as well as budget support loans and grants.
  - Tax revenue includes taxes on income, profits, capital gains, goods and services, international trade, and other taxes (including property tax and social contribution by foreign concessions).
  - Non-tax revenue includes property income (dividends and interest income, royalty and rent, and assets sales), administrative fees, fines, penalties and forfeits, voluntary transfers and other grants, sales of other goods and services, withholding on other payments by government (non-resident), and taxes on financial and capital transactions.
  - External loans and grants for off-budget projects managed by the budgetary central government are excluded unless otherwise stated.
  - For program purposes, revenue is measured in U.S. dollars, with GoL revenue account receipts in Liberian dollars converted to U.S. dollars using the period average exchange rate.
- Public sector:
  - Defined as the general government (central government, local government and social security funds), public nonfinancial corporations and public financial corporations.
  - Public corporations are resident institutional units controlled by government, or another public corporation, principally engaged in the production of market goods or services.
- Public external debt (program definition):
  - Refers to debt of the central Government owed to non-residents, including commitments contracted or guaranteed for which value has not been received.
  - External debt considered contracted for program monitoring once all conditions for its entrance into effect have been met, including ratification if required.
  - External debt considered guaranteed when all conditions for entry into effect, including ratification, have been met for both external debt and the guarantee.

### Quantitative Performance Criteria (QPCs)
- QPCs proposed for December 31, 2020, and June 30, 2021 cover:
  - Primary fiscal balance (floor)
  - New arrears on public external debt (ceiling)
  - New non-concessional public external debt contracted or guaranteed (ceiling)
  - CBL’s operational and capital expenditure (ceiling)
  - CBL’s net international reserves (floor)
  - CBL’s gross direct credit to government (ceiling)

Primary Fiscal Balance
- Measurement:
  - A floor applies to the cumulative flow of the primary fiscal balance since the beginning of the fiscal year (runs from July 1 to June 30).
  - Primary fiscal balance relates to revenue and expenditure of the budgetary central government.
  - Focus for monitoring and QPCs is on on-budget operations only.
  - Primary balance used equals difference between revenue excluding budget-support grants and loans and expenditure net of interest payments (including on-budget gross investment in nonfinancial assets).
  - Revenue defined as all revenue collected by the LRA. Expenditure measured on a commitment basis (non-payroll: commitment when payment voucher issued following receipt; payroll: commitment when payment is approved).
  - Primary fiscal balance used for debt sustainability analysis includes off-budget transactions.
- Adjuster:
  - If sum of cumulative budget support grants and concessional budget support loans received up to the relevant quarter in FY2019/20 exceeds amounts in Table 2, the floor for the primary fiscal balance excluding grants in that quarter will be adjusted downward by the amount of the excess.
  - Concessional vs non-concessional determination per paragraph 12 criteria.
  - If part of expenditure were for capital injection consistent with the financial sector reform plan adopted by the CBL Board in consultation with Fund staff, the floor will be adjusted downward by that amount.
- Table 2. Liberia: Adjustor to the Primary Balance Excluding Grants, FY2020 (Millions of U.S. dollars, Cumulative)
  - FY2020 Q1 / FY2020 Q2 / FY2020 Q3 / FY2020 Q4* / FY2021 Q1 / FY2021 Q2 / FY2021 Q3 / FY2021 Q4
  - Budget support: 0.0 / 6.0 / 46.0 / 61.0 / 14.0 / 72.0 / 0.0 / 46.0
  - Primary fiscal balance excluding grants: 28.9 / 21.9 / -2.3 / 0.0 / -3.9 / -5.0 / 8.9 / -23.4
  - *As reported at end-September after full reconciliation of the fiscal year.

New Arrears on Public External Debt
- A zero ceiling applies on payment arrears on public external debt.
- External payment arrears accrue when undisputed payments such as interest or amortization on Government debts to non-residents are not made within contractual terms (taking into account contractual grace periods).
- Excludes arrears from obligations being renegotiated and arrears on debts in dispute.
- Source of data: Debt Management Unit of the Ministry of Finance and Development Planning; other fiscal and monetary sources used to reconcile data where gaps arise.
- Monitoring frequency: Continuous.

New Non-Concessional Public External Debt Contracted or Guaranteed
- Continuous ceiling applies to contracting and guaranteeing by the public sector of new non-concessional external debt.
- Concessionality definition:
  - A debt is concessional if it includes a grant element of at least 35 percent.
  - Grant element calculated as difference between net present value (NPV) of debt and its nominal value, expressed as percentage of nominal value.
  - NPV at contracting calculated by discounting future stream of debt service payments using a discount rate of 5 percent.
  - Loans by private entities not considered concessional unless accompanied by a grant or grant element provided by a foreign official entity, with combined grant element at least 35 percent.
- Non-concessional public external debt: external debt that does not meet the concessionality definition.
- Reporting: External debt and its concessionality reported by the Debt Management Unit and measured in U.S. dollars at current exchange rates.

CBL’s Operational and Capital Expenditure
- Ceiling applies on operational and capital expenditure of the CBL.
- Defined as sum of total accrual based operating expenses and cash based capital expenditure excluding interest paid on CBL instruments and facilities.
- Budget measured in U.S. dollars, with Liberian dollar expenditures converted at monthly period-average exchange rate.

CBL’s Net International Reserves (NIR)
- Definition: Difference between gross official reserve assets and gross reserve liabilities; net foreign exchange position presented in U.S. dollars.
- Valuation: Assets and liabilities denominated in SDRs valued at fixed U.S. dollar/SDR rate at program exchange rate (Table 1); other currencies valued at cross rates using program exchange rates (Table 1).
- Gross official reserve assets include:
  - (i) monetary gold holdings; (ii) holdings of SDRs; (iii) reserve position in the IMF; (iv) foreign convertible currency holdings; (v) foreign currency denominated deposits held in central banks and other investment-grade banks and institutions abroad; (vi) loans to foreign banks of investment-grade redeemable upon demand; (vii) investment-grade foreign securities; and (viii) other unpledged convertible liquid claims on non-residents.
- Exclusions from gross official reserve assets:
  - (i) any foreign currency claims on residents; (ii) Resident banks’ foreign currency assets held at the CBL; (iii) capital subscriptions in international institutions; (iv) foreign assets in nonconvertible currencies; (v) unfit foreign currency bank notes in vault and in transit; (vi) gross reserves in any way encumbered or pledged, including assets blocked as collateral, assets lent not available before maturity and not marketable, assets blocked for letters of credit, assets ring-fenced in accordance with guarantees.
- Gross reserve liabilities defined as sum of:
  - (i) outstanding liabilities of the CBL to the IMF; (ii) all short-term foreign currency liabilities of the CBL to non-residents with original maturity up to, and including, one year; and (iii) all foreign currency deposits of the government with the CBL.
  - SDR allocations excluded from gross reserve liabilities.
- Data sources and test dates:
  - End-of-the-month foreign exchange numbers audited by the Internal Audit Department of the CBL used for QPC calculation on NIR, except IMF accounts numbers (Reserve tranche position, SDR holdings, Use of Fund resources taken from IMF records).
- Adjusters to QPC on the floor on the change in NIR:
  - QPC floor on change in NIR adjusted down by difference between value credited to CBL’s account and value of unfit U.S. dollar banknotes shipped to the Federal Reserve.
  - QPC on NIR adjusted up by amount of debt relief provided under the CCRT and down by amount of any foreign currency on-lending to the GOL of IMF disbursements above projections specified in Table 3, converted to U.S. dollar at program exchange rate.
- Table 3. Liberia: Adjustor to the Floor on NIR, 2020-21 (Millions of U.S. dollars)
  - End-December 2020 / End-June 2021 / End-December 2021
  - CCRT* : 31.5 / 15.6 / 31.1
  - On-lending of IMF disbursements: 38 / 0.0 / 0.0
  - *Cumulative from beginning of year.
- Recognition of GOL deposits on test dates:
  - GOL deposits credited to CBL accounts before or on the test date but whose liability is recognized by the CBL after the test date shall be recognized as occurring on the test date for program purposes.

CBL’s Gross Direct Credit to Government
- Ceiling applies on CBL’s gross direct credit to the Central Government.
- Definition: Sum of all claims on the government in local and foreign currency, including:
  - loans to Government in local currency including all suspense accounts;
  - loans to Government in foreign currency including all suspense accounts;
  - securities in local currency (other than shares);
  - securities in foreign currency (other than shares);
  - negative balances (overdrafts) on deposits of the central government in local currency including “other deposits”;
  - negative balances (overdrafts) on deposits of the central government in foreign currency including “other deposits”;
  - and all other claims on the government in local currency.
- Adjustment: Ceiling adjusted up by amount of on-lending to the GOL of IMF disbursements converted to U.S. dollar at program exchange rate.

### Indicative Targets
- Indicative targets set for December 31, 2020, and June 30, 2021 with respect to:
  - Total revenue collection of the budgetary central government (floor)
  - New domestic arrears/payables of the budgetary central government (ceiling)
  - Social and other priority spending (floor)
  - On-budget capital spending (floor)
  - Net domestic assets of the CBL (ceiling)

Total Revenue Collection (Indicative Target)
- For the indicative target, total revenue is the revenue collection of the budgetary central government including budget support loans and grants.

New Domestic Arrears/Payables (Indicative Target)
- Ceiling applies on new domestic arrears of two types of government expenditure:
  - Payments to commercial contractors for goods and services or fixed assets:
    - Expenditure considered in arrears when “cash expenditure” is lower than “IFMIS expenditure” in expenditure code 22 (goods and services), code 23 (consumption of fixed capital) and code 31 (capital expenditures) reported in the final reconciled ECF report of the corresponding fiscal year.
    - Processing period cannot be more than 90 days from the end of the fiscal year.
  - Payment of interest or principal on government debt:
    - Expenditure falls into arrears as soon as the scheduled date for payment has passed (subject to any applicable grace period).

Social and Other Priority Spending (Indicative Target)
- For end-December 2019 and end-June 2020, social spending defined as education, health, and social development services.
- Education spending items:
  - Total wage bill and workforce of teachers by subsector (early childhood, primary, junior high, and senior higher).
  - Spending on home-grown school feeding program.
- Health spending items:
  - Total wage bill and workforce of core clinical health workers (physician, physician assistant, midwife, registered nurses) and noncore clinical health workers (clinical support, EHT, dentist, lab technician and pharmacist).

On-Budget Capital Spending (Indicative Target)
- Defined as gross investment in nonfinancial assets as stated in the budgetary central government statement of operations table.
- Excludes off-budget projects.
- Indicative target based on annual gross investment and tested in June 2020 based on gross investment over FY 2019/2020.

Net Domestic Assets of the CBL (Indicative Target)
- Defined as monetary base expressed in U.S. dollars minus the net foreign assets of the CBL (converted into U.S. dollars at program exchange rates).
- Definitions applied:
  - Monetary base expressed in U.S. dollars = monetary base expressed in Liberian dollars divided by Liberian dollar/USD exchange rate published by the CBL for the relevant test date.
  - Monetary base in Liberian dollars = stock of Liberian dollars in circulation (including vault cash of ODCs in Liberian dollars) plus reserve deposits of ODCs at the CBL in both Liberian dollars and U.S. dollars.
  - Net foreign assets of the CBL (expressed in U.S. dollars) = foreign assets of the CBL minus foreign liabilities of the CBL.
  - Foreign assets of the CBL = sum of gross reserves (defined earlier) and other foreign assets (including but not limited to foreign currency trade credit/advances of non-resident).
  - Foreign liabilities of the CBL = sum of short-term foreign liabilities and other foreign liabilities (short-term foreign liabilities include but not limited to the use of Fund credit and loans; other foreign liabilities include but not limited to other foreign currency loans to nonresidents and SDR allocation).

*Source: Memorandum between the Liberian authorities and the International Monetary Fund (program definitions, QPCs, ITs, and reporting requirements as provided in the supplied content).*

### 30.      Adjustment to the indicative target on the ceiling on the net domestic assets of the

### Adjustment to the indicative target on the ceiling on the net domestic assets of the CBL

### Adjustment rule
- The ceiling on the net domestic assets of the CBL will be adjusted up by the amount of on-lending to the GOL of IMF disbursements converted to U.S. dollar at the program exchange rate.

### Data reporting and coordination
- The Ministry of Finance and Development Planning (MFDP) and the Central Bank of Liberia (CBL) will coordinate and regularly report the information requested in Tables 4–6 to IMF staff.

### Reporting architecture (high-level)
- Reporting agencies: MFDP, CBL, LRA.
- Reporting frequencies include: Daily, Weekly, Monthly, Quarterly.
- Standard timing requirements (examples preserved verbatim):
  - Within three weeks after the end of the month
  - Within five days after the end of the week
  - Within one week after the end of month
  - Within 45 days after the end of the quarter
  - Within six weeks after the end of the quarter

### Key data items and reporting responsibilities (selected)
- MFDP (monthly, within three weeks after the end of the month):
  - Report on status of implementation of performance criteria and structural benchmarks specified in [Tables 1, 3, and 4] of the MEFP.
  - Monthly fiscal reconciliation reports reconciling cash revenue and expenditure with spending commitments.
  - Detailed reports on monthly revenue and expenditure on both a cash and a commitment basis by budget line and a completed summary table on central government operations.
  - Detailed report on disbursements of budget support, grants and budgeted and off-budget loans, by donor and by project.
  - Detailed report on monthly social spending lines monitored for the program purpose on commitment and cash basis.
  - Table providing the end-of-period stock of domestic arrears accumulated and payments made on arrears during the program period, by budget category (wages, goods and services, etc.), including payment and stock of existing arrears from the previous ECF Arrangement.
  - Outstanding appropriations, allotments and commitments, and disbursements for line ministries and agencies.
  - Detailed reports on new external debt contracted or guaranteed by the Government, projects in the pipeline or cancelled (monthly).
  - Detailed report on monthly disbursement of external debt by loan, category and creditors; distinguishing between loan and grant components (monthly).
  - Detailed report on monthly payments of interest and principle on external debt by loan instrument, category and creditors and the stock of external debt (monthly).
  - Detailed report of debt service due date and actual payment date throughout the corresponding fiscal year by loan instrument and creditor (monthly).
  - Detailed report on monthly payments on domestic debt by category and the domestic debt stock (monthly).
  - Quarterly reports of state-owned enterprise financial operations submitted to the Ministry of Finance and Development Planning (Quarterly; within 45 days after the end of the quarter).

- LRA:
  - Daily LRA unreconciled revenue performance report (Daily; Within three days).

- CBL (selected items):
  - Monthly sweeping reports showing end-of-month balances of the GoL accounts at the CBL and of all operations and other accounts at the CBL of the M&As (Monthly; Within three weeks after the end of the month).
  - Monthly CBL claims on and liabilities to Central Government by account: end-of-month balances of all operating and other accounts at the CBL of the line ministries and agencies receiving budgetary appropriations (Monthly; Within three weeks).
  - Monthly CBL claims on and liabilities to Public Nonfinancial Corporations by account (Monthly; Within three weeks).
  - End-of-month balance sheet of the CBL (1SR) and the Central Bank Survey (1SG) (Monthly; Within three weeks).
  - End-of-month balance sheet of the other depository corporations (ODCs) (2SR) and the Other Depository Corporations Survey (2SG) (Monthly; Within three weeks).
  - The Depository Corporations Survey (3SG) (Monthly; Within three weeks).
  - CBL cash and budget weekly outturn relative to forecast following the template provided (Table 5) (Weekly; Within five days after the end of the week).
  - CBL commitment-based budget monthly outturn relative to forecast following the template provided (Table 6) (Monthly; Within three weeks after the end of the month).
  - A full set of monthly Financial Soundness Indicators (FSIs) regularly calculated by the CBL, including capital adequacy, profitability and liquidity ratio (Monthly; Within three weeks).
  - Income statements of ODCs as reported to the CBL (Monthly; Within three weeks).
  - Detailed table of commercial banks’ loans and advances by sector (Monthly; Within three weeks).
  - Daily reporting of net international reserves and components; reporting frequency listed as Weekly with timing Within five days after the end of the week.
  - Daily reporting of gross foreign exchange inflows and outflows and their components; memo items; reporting frequency listed as Weekly with timing Within five days after the end of the week.
  - Daily foreign exchange transactional level data (Weekly; Within five days after the end of the week).
  - Internal Audit Department (IAD)’s verification report on foreign exchange (random check on the accuracy of the daily data at least five times a month, plus on the last day of each month) (Monthly; Within five days after the end of the month).
  - Daily reporting for monetary operations and accounts of the ODCs at the CBL: Standing Deposit Facility (SDF) (outstanding, requested, recalls, SDF interest rate); Standing Credit Facility (SCF) (outstanding, SCF interest rate); CBL bills (outstanding, maturing, and the amount, tenor and average interest rate of new CBL bill issuances); ODC accounts at the CBL (the average reserve maintenance period (RMP), reserve requirement for RMP, and excess reserves in foreign currency and those in local currency); and currency in circulation (CIC) (currency issuance, currency redemption, USD withdrawal, USD deposit) (Weekly; Within five days after the end of the week).
  - CBL FX auctions summary of bids and bidders, including number of participants; maximum bid rate and volume; minimum bid rate and volume; average bid rate; largest transaction size and smallest transaction size (Weekly; Within five days).
  - Amounts offered, demanded and placed in Government of Liberia Treasury bill/ Treasury bond auctions; including minimum bid rate and amount, maximum bid rate and amount, and weighted average bid rates (Monthly; Within one week after the end of month).
  - Interest rates: average monthly interest rates on loans and deposits (Monthly; Within three weeks after the end of month).
  - A detailed report on liquidity forecasting up to 6 months ahead, including: (i) projected government’s cash flows by currency; (ii) projected flows to the CBL’s net exchange position, including planned U.S. dollar sales in the foreign exchange auction and planned foreign exchange transactions with the Government; and (iii) projected flows of Liberian dollar liquidity, including planned CBL Notes issuance (Monthly; Within three weeks after the end of month).
  - Production data in value and volume (Quarterly; Within six weeks after the end of the quarter).
  - CBL FX auctions summary and daily transactional reporting aggregated on a Weekly reporting timing (Within five days after the end of the week).

### Templates provided
- Table 5: Reporting Requirements for the CBL’s Cash Budget (weekly template) — columns for Week 1, Week 2, ... with Budget and Actual for Income (Interest income, o/w from GOL, Other income) and Expenditure (Current expenditure: Personnel costs, o/w in Liberian dollar; Other expenses; Capital expenditure: o/w currency printing, In Liberian dollar).
- Table 6: Reporting Requirements for the CBL’s Cash Budget (monthly template) — columns for Month 1, Month 2, ... with Budget, Committed, Actual for Income and Expenditure breakdowns mirroring Table 5 items.

### Communication and additional reporting
- The above data and reports will be provided electronically to the IMF Resident Representative to Liberia, with copies to the local IMF economist, Mr. Deline (adeline@imf.org) for further transfer to the African Department of the IMF in Washington, D.C.
- The government will provide the Fund with such information as the Fund requests in connection with progress in implementing the policies and reaching the objectives of the program.
- In addition to the summarized table, the CBL will provide detailed balance sheet data to IMF staff when requested.

### Selected IMF-related numeric and timeline facts (preserved verbatim from content)
- Quota 258.40 100.00
- Fund holdings of currency 226.08 87.49
- Reserve Tranche Position 32.33 12.51
- Net cumulative allocation 123.98 100.00
- Holdings 136.88 110.41
- RCF loans65.25 25.25
- ECF arrangements 116.31 45.01
- Latest Financial Arrangements (ECF Dec 11, 2019 Dec 10, 2023 155.00 17.00)
- Projected Payments to Fund (SDR Million): Principal 2.81 22.97 26.28 27.32 24.36; Total 2.81 22.97 26.29 27.32 24.36
- HIPC assistance committed by all creditors (US$ Million) 2,739.20
- Of which: IMF assistance (US$ Million) 721.10 (SDR equivalent in millions) 440.90
- 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
- Debt relief (SDR Million) 548.53; Liberia Administered Account 116.20; Remaining HIPC resources 432.33
- Delivery Date June 2010: Eligible Debt GRA PRGT Total June 2010 342.77 205.76 548.53
- CCR disbursements: Feb 23, 2015 25.84 25.84; Apr 13, 2020 11.63 11.63; Oct 2, 2020 11.19 11.19

*Source: IMF staff content from the provided document.*

### 2016. February-April, July, November, and December

### 1lbrea2021001 - 2016. February-April, July, November, and December

### Technical assistance, capacity building, and missions (selected)
- Public Financial Management Reform: January, February, November 2016, May-June, July-August, September, October, November, December 2017, April 2018, June 2019.  
- Natural Resource Revenue: January and March, and December 2016, February, and April 2017, April 2018, February 2019.  
- Fiscal Decentralization: December 2015.  
- Capacity Building and Sector Audit Training, including Computer assisted Audit Techniques in Telecommunications: April 2014.  
- Fiscal Framework for a New Model Petroleum Production Sharing Contract and Revenue Modeling: June 2014, August 2018, October 2020.  
- Budget Formulation and Public Sector Investment Plan: June 2015, June 2019.  
- Public Investment Management Assessment: July 2016, July, September 2017, January 2018.  
- Tax Policy: February 2017, May 2019.  
- Cash Management: September 2017, April 2018, September 2018, October 2019.  
- Statistics Department: Balance of Payments missions July 2014 and January–February, June–July 2016, January, July 2017, Feb 2018, September 2018, April 2019, February 2020; Government Financial Statistics missions September 2016, October 2017, March 2019, November 2020.  
- Monetary and Capital Markets: Central Bank Governance November 2017, May 2020; Banking Supervision missions across 2014–2020; Monetary Policy July 2018, October 2018, February-March 2019, April-May 2019, August 2019.  
- Additional technical areas: Basel II/III Training Workshop November 2016, July 2017; Liquidity Forecasting May 2014, August 2015, and January–February 2016; Crisis Preparedness and Management Framework October–November 2015, January 2017, March 2017, August-September 2018.  
- Resident Representative: a resident representative posted in Monrovia since April 2, 2006; Mr. Abdychev in this role since August 1, 2020.

### Statistical issues and data adequacy (as of November 4, 2020)
- 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 use their own estimates of GDP for surveillance.  
  - LISGIS progressing on rebasing with base year 2016; National Accounts Annual Survey (NAAS) for 2016 carried out and survey results available.  
  - 2016 Household Income and Expenditure Survey (HIES) data are being analyzed and used for measuring informal activities and estimating GDP by the expenditure approach. Results of the rebased GDP are expected to be published in 2021.  
- Price Statistics:
  - LISGIS introduced an updated CPI for the January 2019 publication using expenditure weights and an updated market basket from the 2016 HIES.  
  - Currently prices are collected only in Monrovia; LISGIS plans national collection once enhancements are sustained.  
  - Price of Education and Health services had breaks in July and September 2020, leading to an upward jump in CPI.  
  - No PPI compiled because an Economic Census is required.  
- Government Finance Statistics:
  - GFS largely aligns to GFSM 2001/14 but gaps remain in comprehensiveness of transactions and institutional coverage.  
  - Not all external flows on grants and loans and associated expenditure are comprehensively captured. Data coverage limited to budgetary central government.  
  - Expenditure transactions recorded on commitment basis; other transactions largely on cash basis; no adjustment bridging timing differences.  
  - IMF technical assistance will continue; coordination and data sharing improvements required.  
- Monetary and Financial Statistics (MFS):
  - CBL completed compilation of monetary data based on STA Standardized Report Forms (SRFs). Implementation of remaining recommendations of January 2019 TA mission and regular SRF-based compilation are critical.  
  - CBL reports some data to the Financial Access Survey (FAS), including commercial bank branches per 100,000 adults and ATMs per 100,000 adults.  
  - FSI workbook established April 2019; follow-up with banks needed before FSI publication.  
- External Sector Statistics:
  - BOP statistics compiled quarterly since August 2016 on BPM6 basis and submitted to the Fund since 2017. CBL started compiling preliminary annual IIP data.  
  - 2018 implementation of an International Transactions Reporting System (ITRS) and a Direct Investment survey. Improvements needed in collaboration with other data producers and expansion of ITRS coverage to all banks and CBL cross-border transactions. Formal collaboration between LRA and CBL crucial for Direct Investment statistics.  
- Data Standards and Reporting:
  - Participant in e-GDDS since October 2005 (no National Summary Data Page). Metadata updated November 2013. No Data ROSC mission conducted.  
  - Authorities report quarterly BOP and annual IIP data to STA. Liberia does not submit FSIs to STA and annual GFS submissions for the GFSY have lapsed. CBL expected to begin reporting monetary data based on SRFs in coming months.

### Common Indicators Required for Surveillance (table highlights)
- Exchange Rates: Date of Latest Observation 10/2020; Date Received 11/2020; Frequency of Data D; Frequency of Reporting M; Frequency of Publication M.  
- International Reserve Assets and Reserve Liabilities: Date of Latest Observation 9/2020; Date Received 11/2020; Frequency of Data D; Frequency of Reporting M; Frequency of Publication Q.  
- Reserve/Base Money, Broad Money, Central Bank Balance Sheet, Consolidated Balance Sheet of the Banking System, Interest Rates, Consumer Price Index: Latest Observation 9/2020; Date Received 11/2020; Frequency of Data M; Frequency of Reporting M; Frequency of Publication Q.  
- Revenue, Expenditure, Balance and Composition of Financing – Budgetary Central Government: Latest Observation 9/2020; Date Received 11/2020; Frequency of Data WM; Frequency of Reporting WM; Frequency of Publication Q.  
- Stocks of Central Government and Central Government-Guaranteed Debt; External Current Account Balance; Exports and Imports of Goods and Services: Latest Observation 9/2020; Date Received 9/2020; Frequency and reporting frequencies vary as MQ, M, Q.  
- GDP/GNP: Date of Latest Observation 2017; Date Received 11/2018; Frequency A; Frequency of Reporting A; Frequency of Publication I.  
- Gross External Debt: Latest Observation 9/2020; Date Received 11/2020; Frequency M; Frequency of Reporting M; Frequency of Publication Q.  
- International Investment Position: Latest Observation Q1/2019; Date Received 9/2019; Frequency Q; Frequency of Reporting Q; Frequency of Publication Q.

### Debt Sustainability Analysis (DSA) — key findings and coverage
- Overall DSA conclusion:
  - Risk of external debt distress: Moderate.  
  - Overall risk of debt distress: High.  
  - Granularity in the risk rating: Limited space to absorb shocks.  
  - Application of judgment: No.  
  - Date: December 8, 2020.  
- Debt-carrying capacity:
  - Composite Indicator (CI) score: 2.502 (based on October 2020 WEO and 2019 CPIA); assessed as weak.  
- Public debt coverage:
  - DSA covers central government debt, central government guaranteed debt, and central bank debt contracted on behalf of the government.  
  - Government borrowing from the CBL: US$487 million restructured and consolidated debt at inception of the ECF arrangement; included in DSA.  
    - Nearly half of US$487 million is legacy wartime debt denominated in U.S. dollars; the other half comprises bridge loans, suspense account, and on-lending of IMF budget support.  
    - This debt has interest rate at 4 percent with repayments starting in 2029.  
  - Included additional liabilities: $65 million sovereign bonds issued to banks in May 2019; about $10 million of direct liabilities with commercial banks; $45 million of contractors’ liabilities representing contractors’ defaulted payments with commercial banks for government contracts in the past; $10 million for the rubber plant association representing debt assumption by the government with expectation of repayment.  
  - Largest debt to SOEs noted: World Bank loan to the Liberia Electricity Corporation (LEC) for Mt. Coffee hydropower rehabilitation.  
  - Contingent liabilities shock from SOE debt set at default value of 2 percent (reflecting non-guaranteed SOE debt excluded from analysis due to data constraints).  
  - SOE reporting: SOERCU monitors and reports on 15 out of 39 registered SOEs but reports do not provide specific information on non-guaranteed SOE debt. Amended PFM Act strengthens reporting and monitoring of SOE debt going forward.  
- Public debt evolution and projections:
  - PPG external debt stock at end-FY2020 (June 2020): $1,161 million (37.2 percent of GDP), comprising mostly multilateral loans.  
  - Public debt increased from 41.4 percent of GDP in FY2019 to 56.6 percent of GDP in FY2020.  
  - Public debt projected to reach 64.9 percent of GDP in FY2022 before declining to 47.8 percent of GDP in FY2031.  
  - Public debt composed of medium- and long-term borrowing only.  
- Drivers and features:
  - High PV of public debt ratios largely reflect debt to the central bank; interest rate relatively low but not discounted in PV calculations.  
  - Rollover risk of domestic debt considered low as most domestic debt is government’s consolidated debt to the CBL.  
  - Debt coverage has remained the same as in the previous DSA.  
- Policy implications:
  - To keep debt distress vulnerabilities contained, important to maintain fiscal discipline and rely on concessional financing.  
  - Under the ECF-supported program, authorities committed to: closely monitor debt path; refrain from additional central bank financing and buildup of arrears; remain below the ceiling on non-concessional borrowing; refrain from nontransparent collateralized agreements; ensure new debt contracted transparently; give due consideration to country’s low absorption capacity.

### Background, recent shocks, and assumptions
- Context:
  - DSA prepared in context of combined first and second reviews of a four-year arrangement under the Extended Credit Facility (ECF).  
  - Last Low-Income Country DSA considered by Executive Board in June 2020 as part of RCF request. Liberia subject to IDA Non-Concessional Borrowing Policy (NCBP) regardless of risk of debt distress.  
- COVID-19 impact:
  - Pandemic resulted in adverse impact on growth and revenue, additional spending needs, and larger BOP needs compared to program approval.  
  - High frequency indicators show economic activity is down from previous year by 3 percent. Imports in first half of 2020 are down by about 7 percent.  
  - Triggered recourse to emergency assistance, reducing external borrowing space compared to December 2019 DSA. Disbursement under RCF equivalent to 1.6 percent of GDP. Some pressure alleviated by debt relief from the Catastrophe Containment and Relief Trust (CCRT).  
- Underlying assumptions:
  - Macroeconomic assumptions revised since December 2019 DSA but broadly in line with June 2020 DSA accompanying the RCF request.  
  - Assumes fiscal and monetary policy adjustments remain on track under the ECF-supported program, while accommodating near-term measures to mitigate COVID-19.  
  - Fiscal policy adjustment path towards end of program anchored by debt-stabilizing primary deficit of 2.5 percent.  
  - Monetary policy adjustment frontloaded to bring the inflation rate down to a single digit by end- (text truncated in source).

*Prepared by the International Monetary Fund and the International Development Association.*

### 2020. Changes to the underlying assumptions are as follows (Text Table 3):

### 1lbrea2021001 - 2020. Changes to the underlying assumptions are as follows (Text Table 3)

### Macroeconomic outlook and fiscal stance
- Real GDP growth revisions:
  - 2019: revised from -1.4 percent in the 2019 December DSA to -2.5 percent.
  - 2020: revised from 1.4 percent in the 2019 December DSA to -3.0 percent.
  - 2021: expected to recover to 3.2 percent.
  - Medium term: projected to reach an average of 4.5 percent.
- Inflation:
  - Fell from 30 percent at program inception to 14 percent in September.
- Fiscal deficit (budgetary central government):
  - December 2019 DSA projected FY2019 to FY2020: decline from 6.1 percent of GDP in FY2019 to 4.7 percent of GDP in FY2020.
  - Current DSA: revised to go down from 6.2 percent of GDP in FY2019 to 3.6 percent of GDP in FY2020.
  - FY2021: revised down from 4.4 percent of GDP in December 2019 DSA to 3.2 percent of GDP in the current DSA.
  - Projection: fiscal deficit to decline to 1.7 percent of GDP by FY2024 (consistent with the medium-term fiscal anchor).
- Drivers of fiscal improvement:
  - Recent improvements in domestic revenue (excise tax on fuel and improvement in tax collection).
  - Better cash management and expenditure control.
  - Significant progress on civil service payroll reform.

### External sector and reserves
- Current account:
  - December 2019 DSA: projected increase from 21.4 percent of GDP in 2020 to 21.9 percent of GDP in 2021.
  - Current DSA: revised to increase from 21.4 percent of GDP in 2020 to 22.2 percent in 2021.
  - Terms of trade shock: COVID-19 associated shock so far positive as fuel prices declined much more than iron ore, rubber, gold.
  - Service receipts: projected deterioration (especially hotel and transportation services).
  - Medium term: current account deficit expected to remain high as stronger economic policies facilitate FDI and associated imports; net primary income remains large and negative due to investment income repatriation abroad.
- Gross official reserves:
  - December 2019 DSA: projected rise from US$308 million (2.3 months of next year’s imports) in 2020 to US$333 million (2.4 months of next year’s imports) in 2021.
  - Current DSA: revised to go up from US$331 million (2.5 months of imports) in 2020 to US$403 million (2.9 months of imports) in 2021.
  - Projection: increase modestly thereafter to 3.1 months of imports in 2023.
- External sector assessment: Liberia’s external sector position is substantially weaker than implied by fundamentals and desirable policies (IMF Country Report 19/169).

### Financing assumptions
- General:
  - DSA and macro-framework assume CCRT debt service relief through April 2022. The last 18 months of debt service relief is subject to the availability of CCRT resources.
  - Authorities decided not to participate in DSSI due to insignificant amounts involved.
- External borrowing:
  - DSA assumes new external borrowing of $774 million in the medium term (FY2021-FY2025), lower than the December 2019 DSA ($919 million).
  - Average grant element of new borrowing projected to increase to average 47.3 percent over the program period (versus 44.3 percent at the time of program approval).
  - Baseline assumes no non-concessional borrowing before FY2024 and non-concessional loans totaling $6.6 million in FY2024 and $20 million in FY2025 (compared to a total of $215 million between FY2021 to FY2025 envisaged at program approval).
  - SECREMP I: financing gap of $60 million due to private investment not materializing; no external borrowing assumed to fill this gap in this DSA. No external borrowing assumed for SECREMP II. Assumption: gap filled by reallocations of concessional resources and increased contributions to the National Road Fund from the budget.
- Domestic borrowing:
  - Baseline assumes central government no longer relies on central bank financing to fill budgetary needs but still borrows to repay past ECF and RCF budget support amounting US$107.8 million.
  - Baseline assumes repayment of US$65 million of bonds issued of the banking sector between FY2020-24.
  - Average real interest rate projected to remain positive in the medium term.
  - Rollover risk of domestic debt is low as most domestic debt is the government’s consolidated debt to the CBL.

### Realism of the baseline assumptions
- Realism tools:
  - Baseline scenario is credible compared to Liberia’s historical experience and cross-country experiences (Figure 3).
  - Current DSA shows small differences from the previous DSA; downward revisions to real GDP growth compared to the 2015 DSA (Ebola and commodity price shock) explain most of the increase in public and external debt-to-GDP ratios in previous and current DSAs.
- Historical shocks and residuals:
  - High contribution of unexpected current account deficits and a large unexpected residual in the opposite direction observed.
  - Unexpected increases in PPG external debt and public debt are about 10.8 and 21.2 percent of GDP, respectively (due to Ebola epidemic and commodity price shock), both above the median of LIC DSF countries.
  - Drivers of unexpected public debt accumulation: unexpected decline in growth and unexpected depreciation of the real exchange rate.
  - Change in public debt mainly due to recognition of restructured and consolidated government debt to the central bank (¶6).
- Fiscal realism:
  - Improvement in the primary balance in the next three years is in line with historical data on LIC adjustment programs.
  - Second DSF realism tool: anticipated adjustment in the primary balance of 1.5 percentage points of GDP (in line with other LIC programs).
  - Growth projection for 2021 and 2022 are optimistic relative to the fiscal multiplier realism tool due to expected economic rebound after attenuation of COVID-19 shock.

### Debt-carrying capacity and stress tests
- Composite Indicator (CI):
  - Liberia’s debt-carrying capacity based on the CI is assessed as weak.
  - CI score: 2.502.
  - CI rating: Weak.
  - CI capture: weighted average of World Bank’s 2019 CPIA score, country real GDP growth, remittances, international reserves, and world growth.
  - CI thresholds: weak if CI < 2.69; medium if 2.69–3.05; strong if > 3.05.
  - Liberia was downgraded to “weak quality of debt monitoring.”
- External DSA risk assessment:
  - Liberia remains at moderate risk of external debt distress with limited space to absorb shocks.
  - Under baseline, PV of debt-to-GDP and PV of debt-to-export ratios remain below thresholds of 30 and 140 percent in the medium- to long-term (Figure 1).
  - Debt-service-to-export and debt-service-to-revenue ratios remain below corresponding thresholds.
  - Residuals remain large and negative in the medium term mainly due to large identified net debt-creating flows driven by large current account deficits financed by net FDI and net private financing (including unrecorded remittances).
- Standard stress tests:
  - A one-standard deviation shock in real GDP growth, primary balance, exports, other non-debt creating flows, depreciation, or combination of all shocks will result in breaching the PV of debt-to-GDP threshold.
  - A shock to primary balance, exports, other debt-creating flows, or combination of shocks will breach the PV of debt-to-exports threshold.
  - A one-standard deviation shock in primary balance, exports, other non-debt creating flows, or combination will breach debt service-to-exports ratio thresholds.
  - A shock to real GDP growth, other non-debt creating flows, depreciation, or combination leads to breach of debt service-to-revenue ratio threshold.
  - Mechanical signal: Liberia is at moderate risk of external debt distress.

### Public DSA
- Public debt indicators and projections:
  - PV of public debt-to-GDP ratio evolves as follows:
    - FY2021 estimate: 44.8 percent.
    - FY2022: increases to 46.4 percent.
    - FY2031: declines to 31.8 percent.
  - PV of debt-to-revenue ratio: increases from 153.9 percent in FY2021 to [value truncated in source text].

_The source for this summary is the provided IMF PDF content unit: 1lbrea2021001 - 2020. Changes to the underlying assumptions are as follows (Text Table 3)._

### 160.7 percent in FY2022 and to 115 percent by FY2031, while the debt-service-to-revenue ratio

### 1lbrea2021001 - 160.7 percent in FY2022 and to 115 percent by FY2031, while the debt-service-to-revenue ratio

### Debt sustainability and baseline projections
- PV of public debt-to-revenue and grants ratio:
  - 160.7 percent in FY2022
  - 115 percent by FY2031
- Debt-service-to-revenue and grants ratio:
  - increases to 11.5 percent in FY2024
  - reaches 12.9 percent by FY2031
- Public sector debt (baseline projections, selected years, percent of GDP):
  - 64.9 in 2020
  - 64.5 in 2022
  - 58.8 in 2026
  - 47.8 in FY2031
- External debt (nominal, percent of GDP, selected years):
  - 43.1 in 2021
  - 46.2 in 2022
  - 45.9 in 2026
  - 40.9 in 2031
- Key macro assumptions (selected):
  - Real GDP growth: 0.1 in 2021; 3.7 in 2022; 5.7 in 2031
  - Government revenues (excluding grants, percent of GDP): 14.2 in 2021; 16.2 in 2022; 17.8 in projection years
  - Gross external financing need (Million of U.S. dollars): 454.0 in 2021; 479.8 in 2022; 584.6 in 2031
  - Nominal dollar GDP (Million of US dollars): 3,087 in 2021; 3,329 in 2023; 5,738 in 2031

### Risk rating, vulnerabilities, and outlook risks
- Assessment:
  - Given the extended breach of the PV of debt-to-GDP threshold and stress test results, Liberia is assessed to have a high risk of overall public debt distress.
- Drivers and vulnerabilities:
  - Sharp decline in GDP growth impairs debt sustainability.
  - Recent borrowing to dampen COVID-19 impact increases medium-term debt service pressure.
  - Two consecutive years of negative growth reduce borrowing space while financing needs rise.
- Downside risks highlighted:
  - A second wave of COVID-19 cases (domestic or overseas) slowing activity further.
  - Fiscal slippages leading to larger drawdowns on government deposits, putting pressure on the exchange rate and inflation.
  - Re-emergence of heightened U.S. dollar liquidity needs in the banking sector and Liberian dollar banknote shortages undermining banking sector confidence and the business climate.
  - Policy slippages reducing access to concessional financing.

### Sensitivity and stress-test findings
- Under standard sensitivity analysis, the PV of debt-to-GDP breaches the relevant benchmark.
- Bound tests ranking (largest to smaller breaches on PV of debt-to-GDP):
  1. Deterioration of other flows
  2. Shock to the primary balance
  3. Real GDP growth shock
  4. Combination of shocks
  5. Exports shock
  6. One-time depreciation
- Contingent liability stress test:
  - Estimated one-off increase in the debt-to-GDP ratio to 58 percent in FY2022 (around 13 percentage points increase), capturing combined shock of SOE external debt default, PPP distress, and financial market vulnerabilities not included in covered data.
- Stress-test outcomes illustrated in tables and figures:
  - Most extreme shock for PV of debt-to-GDP: Non-debt flows (figures and tables show scenario results through FY2031).
  - PV of PPG external debt-to-exports ratio reaches values above 110 in projection years (e.g., 116.5, 120.5 in mid-projection period).

### Policy implications and authorities' commitments
- Authorities’ commitments and views:
  - Importance of maintaining debt sustainability in the medium term agreed.
  - Commitment to refrain from central bank financing and buildup of arrears.
  - Will monitor the debt path closely and seek concessional financing given limited borrowing space.
  - Commitment to remain below the ceiling on non-concessional borrowing and refrain from nontransparent collateralized agreements; ensure new debt is contracted transparently.
- Policy measures recommended/expected to support recovery and sustainability:
  - Domestic revenue mobilization.
  - Rebuilding confidence in the banking sector.
  - Preventing further drains on the net international reserves (NIR).
  - Use of CCRT (Catastrophe Containment and Relief Trust) availability to free budgetary resources for public health and contain exceptional balance of payments needs from the pandemic.

### Selected fiscal and debt indicators from the DSA tables (exact values preserved)
- PV of PPG external debt-to-GDP ratio (selected projection values):
  - 21.7; 25.5; 27.7; 28.1; 27.8; 27.6; 27.6; 24.9; 21.9 (as shown in the external DSA table)
- PV of PPG external debt-to-exports ratio (selected):
  - 110.9; 111.0; 116.5; 120.5; 119.4; 119.1; 116.9; 97.2; 86.5
- PPG debt service-to-exports ratio (selected):
  - 3.0; 3.9; 7.4; 3.5; 4.0; 8.6; 9.1; 8.5; 7.6; 7.1
- PPG debt service-to-revenue ratio (selected):
  - 5.1; 6.2; 10.4; 5.6; 5.8; 11.8; 12.2; 11.0; 10.1; 10.2; 10.3
- Public DSA: PV of public debt-to-GDP ratio (selected):
  - 41.1; 44.8; 46.4; 45.6; 44.1; 42.3; 40.6; 31.8; 33.9
- Public DSA: Debt service-to-revenue and grants ratio (selected):
  - 6.9 in 2021; 7.6 in 2022; 11.4; 11.5; 11.2; 9.7; 12.9; 17.8 (table entries)

### Program updates and operational notes (staff statement highlights)
- Financial sector reform plan:
  - Central Bank of Liberia Board adopted a financial sector reform plan on December 15, 2020.
  - Authorities continue to seek remaining funding and work with U.S. Treasury experts; fiscal risks to the plan remain.
- Currency management:
  - CBL adopted a currency management plan; next step is legislative approval to secure the first batch to meet 2021 demand.
- Structural reforms:
  - Payroll Cleaning Taskforce verified 87 percent of public sector employees as of December 11, 2020.
- Macroeconomic developments noted by authorities:
  - Real GDP projected to contract by 3.0 percent in 2020; rebound to 3.2 percent in 2021; average 4.5 percent in the medium term.
  - Inflation at end-September 2020: 14 percent (down from 30 percent a year earlier).
  - Gross international reserves projected at 2.5 months of import cover at end 2020 (compared to 2.3 months in 2019).

*Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1lbrea2021001.pdf*

### 5. On the fiscal front, all but one end December 2019 performance criteria (PC) were met. The

### 1lbrea2021001 - 5. On the fiscal front, all but one end December 2019 performance criteria (PC) were met. The

### Fiscal performance and targets
- All but one end-December 2019 performance criteria (PC) were met.
- End-December 2019 targets met:
  - Primary fiscal balance excluding grants.
  - New external non-concessional debt of the public sector.
  - Ceiling on the CBL’s gross direct credit to the government.
  - Indicative targets met: floor on total revenue collection; floor on social and other priority spending; ceiling on net domestic assets of the CBL; floor on on-budget capital spending.
- End-June 2020 test dates: ceilings on contracted new non-concessional debt of the public sector, ceiling on the CBL’s operational and capital spending, and indicative target on the floor on total revenue collection were attained.
- Missed or delayed targets and causes:
  - End-December 2019 ceiling on new external arrears of the central government was met with a delay; outstanding obligations settled just after the test dates.
  - Floor on the change in NIR for end-December 2019 was missed due to additional US dollar emergency liquidity assistance (ELA) to the banking sector by the CBL and foreign exchange interventions to mop up excess liquidity and contain inflation, which limited foreign exchange reserve buffers.
  - PC on the ceiling on the central bank’s operational and capital spending was missed after some months delay because of an upfront unbudgeted payment to external auditors and compensation for laid-off personnel.
  - Due to the COVID-19 crisis, emergency expenditures led to missed end-June 2020 targets on the primary fiscal balance excluding grants, the ceiling on the CBL’s gross direct credit to government, and the ceiling on net domestic assets of the CBL; this reflected on-lending of RCF and CCRT resources to the government by the central bank.

### Measures taken to improve debt service and reserve management
- A special debt service account established, leading to quarterly debt service allotment.
- Direct debits are being recorded in the Integrated Financial Management Information System (IFMIS) to ensure timely settlement of debt service obligations and avoid re-accumulation of arrears.
- Debt management business processes have been streamlined.
- To bolster reserves, the central bank approved an increase in the Liberian dollar composition of spending on wages and salaries.
- CBL Board is working on a reform plan to help deter US dollar liquidity pressures in the banking sector.

### Structural benchmarks and institutional improvements
- Significant progress on structural benchmarks despite COVID-19, most notably on civil service reforms.
- SOEs’ quarterly reporting has improved.
- Steps taken to institutionalize the Treasury Single Account (TSA).
- Implementation of the CBL’s Action Plan impeded by COVID-19, but authorities are scaling up efforts to complete key actions, particularly those related to bank regulation and supervision.

### Authorities’ requests and remedial actions
- Authorities request waivers of the missed performance criteria and modification of the end-June 2020 indicative targets, citing strong commitment to the program and remedial actions to correct slippages.

### Fiscal policy and debt management (Policy objectives)
- Fiscal policy temporarily loosened for COVID-19 interventions; authorities remain committed to medium-term fiscal sustainability.
- FY 2021 budget is fully financed and in line with the program following rationalization of wages and salaries and streamlining of other cost centers; the budget has been adjusted for the revenue effects of COVID-19.
- Revenue collection improved relative to the ECF program target via introduction of excise tax on fuel and strengthening of compliance regime; revenue allocated to priority expenditure including financing the bank resolution plan and arrears clearance.
- Additional budget support from development partners helped improve the fiscal position.
- Public financial management (PFM) improved: requirement that all budget entities process payments through IFMIS; more regular fiscal reconciliation and reporting; allotments issued only based on available resources; Liquidity Management and Technical Management Committees support these efforts.
- Debt sustainability actions:
  - Continued prioritization of borrowing on concessional terms.
  - Review of options to finance development projects while remaining engaged with the Fund.
  - Development and implementation of a comprehensive Debt Management Manual facilitated overdue debt payments including to domestic financial institutions.
  - Debt database cleaned with support of development partners.
  - Internal capacity for near-term debt service projections has improved.
- Revenue administration reforms:
  - Amendments submitted to the Legislature to amend acts of Liberia Maritime Authority and Liberia Telecommunications Authority so that, when enacted in January 2021, the Liberia Revenue Authority (LRA) would collect all revenues from both agencies directly.
  - Plans to streamline tax exemptions and enhance customs administration.

### Monetary and financial sector policies
- Monetary stance anchored on reducing inflation and stemming the decline in the value of the Liberian dollar; inflation continues to wane and the exchange rate has stabilized.
- Authorities refining monetary policy framework and developing financial markets through active open market operations.
- Adoption of a currency management plan to ensure adequate Liberian dollar banknotes.
- Commitment to resume non-discriminatory foreign exchange auctions.
- CBL prioritized Fund CD in monetary policy operations.
- Financial sector challenges from COVID-19 necessitated measures to ensure liquidity in the banking sector.
  - Authorities requested technical assistance from the US Treasury for a financial sector reform plan.
  - CBL drafted a Crisis Management Framework with inputs from AFRITAC West II; framework to inform amendments to the Financial Institutions Act (1999) to address weaknesses in the supervisory framework, including the resolution regime.
  - Moratorium on asset classification and provisioning rules in response to COVID-19 has been reversed as CBL strengthens regulatory and oversight framework.

### Governance and structural policies
- Governance and institutional reforms remain central to development agenda.
- Government adopted resolutions from an anti-corruption conference convened in September 2020.
- The Act governing the Liberian Anti-Corruption Commission (LACC) is being revised to give the institution first tier prosecutorial jurisdiction on corruption, economic and financial crimes.
- Steps to legislate a Whistle Blower and Witness Protection Act to protect witnesses and victims consistent with relevant UN charter and best practice.
- Efforts to improve procurement transparency and accountability: legal ownership of contracts published on the Public Procurement and Concession Commission’s (PPCC) website; planned revisions to procurement regulations to advance accountability and transparency.
- Payroll and civil service reforms:
  - Enforcement of payroll regulation in March 2020 led to elimination of duplications and ghost workers and tracking of employees within statutory pension ages.
  - Information on 87 percent of public sector workers has been biometrically captured in the payroll database and corresponding identification cards issued.
  - Completion of the national identification card drive is being prioritized.
  - Hiring centralized and payrolls, including Presidential appointees, integrated within the payroll management system under the Civil Service Agency.
  - Inter-ministerial National Payroll Cleaning Taskforce continues to monitor payroll movements.

### Conclusion
- Liberian authorities consider Fund support crucial to build institutional and human capital and to implement growth-enhancing reforms.
- Authorities reiterate commitment to steadfast implementation of reforms under the ECF arrangement and seek Directors’ support in completing the current reviews.

*Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1lbrea2021001.pdf*

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_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1lbrea2021001.pdf_