## 1lbrea2026001

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### EXECUTIVE SUMMARY — context, recent developments, outlook, risks, and policy imperatives
- Context and program:
  - 40-month program supported by the Extended Credit Facility (ECF) aiming to regain fiscal credibility, restore debt sustainability, and enhance financial sector stability.
  - Targeted reforms to mobilize additional domestic and external resources to address large infrastructure gap.
  - Liberia highly vulnerable to climate-related and pandemic risks; recent climate shocks caused significant loss of lives and property, displacements, crop destruction, and worsening food security.
  - Decline in external donors’ support constrains development prospects.
  - Legislature approved the 2026 budget in December 2025 aligned with program targets.
- Recent macro outcomes:
  - Real GDP growth: 2024: 4.0 percent; 2025: 5.1 percent (estimated).
  - Inflation: Q1 2025: 12.5 percent; Q4 2025: 4.4; projected 6.1 percent in 2026; decline towards 5.0 percent by 2028 (CBL objective).
  - LRD appreciated by 2.9 percent in the fourth quarter of 2025.
  - Current account deficit: 8.1 percent of GDP in 2024 → 6.5 percent of GDP in 2025.
  - Net international reserves (NIR): US$234 million at end-2024 → US$284 million at end-2025 (alternative figure US$286.6 million at end-December 2025 appears in another section).
  - Import coverage: around 1.8 months (end-2025) / 2 months (end-2025, Annex).
  - Primary surplus in 2025: 1.4 percent of GDP.
  - Revenue mobilization in 2025: projected at 15.9 percent of GDP.
  - Government-funded capital spending in 2025: 1.4 percent of GDP.
  - Banking sector: aggregate capital and liquidity ratios above minimums; NPLs declined to 16.5 percent (September 2025) but remain elevated.
- Outlook and risks:
  - Growth: 2026: 5.1 percent; medium term: accelerate to 5.6 percent.
  - Gross international reserves projected to increase to 3.0 months of imports by end-2027 (noted as lower than aimed at program approval in one section).
  - Balance of risks: tilted to the downside (commodity price volatility, declining international aid, climate disasters, delays in policy reform).
- Policy imperatives:
  - Strengthen domestic revenue mobilization; support domestic production and export diversification.
  - Establish institutional and legal foundations for climate-resilient investments; integrate pandemic preparedness.
  - Accelerate governance reforms to safeguard macro stability and attract donor-funded investments.
  - Expand social protection programs given limited buffers amid declining external assistance.

*Source: EXECUTIVE SUMMARY, 1lbrea2026001*

### FISCAL OUTTURNS, 2025 EXECUTION, AND 2026 BUDGET FRAMEWORK
- 2025 fiscal execution:
  - Preliminary end-December 2025 performance broadly in line with program objectives; primary balance (excluding grants), tax revenues, government-funded capital spending, and social expenditures estimated in line with program objectives.
  - EU budget-support grant disbursed: US$25 million (December 2025).
  - Planned World Bank budget-support disbursement delayed: US$40 million, expected Q2 2026.
  - Final fiscal data for 2025 available after 90-day reconciliation period (April 1, 2026).
- Revenue performance (2025):
  - Tax revenue: 15.9 percent of GDP in 2025 (up from 13.4 percent in 2023 and 14.5 percent in 2024).
  - Drivers: overperformance in direct taxes (PIT and CIT) and international taxes; GST increase (from 10 to 12 percent) yielded below expectations; royalties strong due to higher gold prices.
- 2026 budget and contingent items:
  - Budget envelope: US$1.25 billion, including contingent revenues US$256 million (about 5 percent of GDP).
  - Primary balance (excluding grants) expected to stay at 1.4 percent of GDP in 2026.
  - Contingent revenues largely linked to: expected US$200 million concessional agreement bonus from Arcelor Mittal; US$28 million in bonuses from three agreements signed in 2025.
- Identified fiscal gap and fiscal measures:
  - Potential fiscal gap identified: about US$10 million (0.2 percent of GDP) for 2026; closed via measures.
  - Prior actions to close US$10 million gap:
    - Increase GST standard rate from 12 to 13 percent — Yield: 5.4 (In US$ million); Yield: 0.10 (Percent of 2026 GDP).
    - Increased excise rate section 1108 — Yield: 1.5 (In US$ million); Yield: 0.03 (Percent of 2026 GDP).
    - Recurrent spending cuts from selected MACs — Yield: 3.1 (In US$ million); Yield: 0.05 (Percent of 2026 GDP).
    - Total — Yield: 10.0 (In US$ million); Yield: 0.18 (Percent of 2026 GDP).
  - Deferred fuel excise increase (US$0.05 per liter) postponed; remaining gap US$3.1 million closed by reducing goods and services allocations.
- Social and capital spending:
  - Social spending expected to increase substantially—by 50 percent relative to the 2025 outturn—to finance critical programs previously financed by USAID.
  - Government-funded capital expenditure to continue rising, though slower than ARREST Agenda envisaged.
- DRM and DRM-related fiscal reforms:
  - Advance VAT rollout preparations (SB for June 2026); VAT planned for 2027.
  - Mining fiscal regime reforms proposed (new SB for December 31, 2026) — harmonize royalty rates for gold and iron ore; raise withholding taxes; allow indefinite carryforward of tax credit under minimum turnover-based CIT (no effect on existing concessions until stability clauses expire).
- PFM reforms and transparency:
  - From 2027 budget onward: align presentation with international practices; classify PSIP project costs per GFS 2014 (new proposed SB for October, 2026).
  - Publish financial statements for FY2025 budget execution by March 31, 2026; GAC audit report by September 2026 (new proposed SB).

*Source: Fiscal outturn and financing (2025) and related sections, 1lbrea2026001*

### MONETARY, EXCHANGE RATE, AND RESERVE MANAGEMENT
- Monetary policy stance and operations:
  - CBL policy rate lowered by 100 basis points to 16.25 percent (October 2025).
  - Reserve requirements maintained at 25 percent (LRD) and 10 percent (USD).
  - Monetary policy objectives: keep real policy rate positive; MPC (January 2026) reaffirmed stance appropriate; ready to reduce policy rate further if low and stable inflation persists.
  - Operational targets: narrow interest rate corridor from 10 to 5 percentage points by December 2026; harmonize RRRs on LRD and USD by end-2027; reduce frequency of 1-month and 3-month CBL bill auctions from weekly to monthly by December 2027.
- FX intervention and reserves:
  - High dollarization: about 80 percent of banks’ assets denominated in USD.
  - CBL to develop comprehensive FXI policy with IMF TA; commit to market-determined exchange rate with FXIs used only exceptionally.
  - CBL considering a gold purchase program; staff expressed reservations.
  - Reserve positions and projections:
    - Gross official reserves: 2022: 644; 2023: 487; 2024: 475; 2025: 595 (Table values vary by section); gross official reserves (months of next year's imports): 2025: 2.6; projected end-2027: 2.9 months; staff recommended target ~3.1 months.
  - Banknote supply:
    - Remaining stock in CBL vaults end-December 2025: LRD5.1 billion (about 11 percent of currency in circulation).
    - CBL Board adopted three-year currency printing plan for submission to Legislature with approval expected by end-May 2026; emergency order for first batch.

*Source: Monetary and exchange rate policy highlights, 1lbrea2026001*

### FINANCIAL SECTOR, NPLs, BANK RESTRUCTURING, AND SUPERVISION
- Banking sector soundness and NPLs:
  - NPL ratio reduced to 16.5 percent in September 2025, from 19.1 percent at end-2024.
  - Prudential rules: full provisioning for NPLs older than one year; write-off for NPLs classified as “loss” for over two years (SB end-October 2025, converted to Prior Action).
  - Recurring monitoring of NPL ratios and enforcement on a monthly basis since November 2025.
- Recapitalization and state-owned bank (SOB):
  - MFDP injected US$20 million into Liberian Bank for Development and Investment (LBDI) in September 2025; committed additional US$10 million each in 2026 and 2027.
  - A small private bank recapitalized by existing shareholders with total US$15 million in 2025 (AQR recommendation).
  - One weak bank failed to complete capital injection scheduled for December 2025; stronger supervision and corrective measures being prepared.
- Bank resolution framework and supervisory tools:
  - Dedicated resolution unit with four staff (SB for December 2025).
  - Drafting of regulations and operational guidelines delayed; adoption to be completed by May 2026 (proposed SB with test date May 31, 2026).
  - CBL to develop monitoring dashboard per BFIA (new proposed SB for April 2026).
- Mitigating contingent-liability risks:
  - CBL compiled inventory of outstanding guarantees; planned measures include transparent disclosure in CBL financial statements and coordination with MFDP to prevent materialization of contingent liabilities.
  - MFDP to begin monthly payment of GoL’s share of pension and disability contribution to NASSCORP to discontinue promissory-note practice.
- Governance, audits, and institutional reforms:
  - GAC and Kroll audits: about half of recommendations addressed; CBL to submit proposed CBL Act amendments to Legislature by September 2026.
  - LACC and asset declarations: as at end-December 2025, 92 percent of eligible public officials had submitted asset declarations (up from ~89 percent at end-March 2025); proposed legal amendment to remove publication restriction to be submitted by May 2026 (proposed new SB).
  - Work toward collateral registry (movable and immovable) by end-April 2026 (World Bank-supported LIFT project).
  - National Biometric Identification Registration System to be rolled out by June 2026.

*Source: Financial sector policies and bank restructuring; NPL sections, 1lbrea2026001*

### RSF ARRANGEMENT REQUEST, REFORM MEASURES (RMs), AND STAFF VIEWS
- RSF request and objectives:
  - Requested RSF arrangement: SDR 193.8 million, 75 percent quota.
  - Objective: integrate climate-related and pandemic risks into economic and social policies; strengthen BoP prospects through climate-resilient investments and policies; enhance pandemic preparedness leveraging external financing and TA.
  - RSF priority areas agreed: (i) disaster risk management and pandemic preparedness; (ii) climate finance and governance; (iii) water and food security.
- RSF disbursement modalities and schedule highlights:
  - Total RSF: 193.8 Million SDR, 75 percent of quota.
  - Proposed RSF disbursement entries typically 17.62 Million SDR (6.82 percent of quota) across reviews (June 1, 2026; Dec 1, 2026; June 1, 2027; Nov 26, 2027 entries noted).
  - Part of RSF disbursements will replace projected non-concessional financing up to US$20 million and US$30 million to the GoL in 2026 and 2027 respectively.
- Fund staff views:
  - Support completion of third review under ECF (disbursement SDR 19.3 million).
  - Support authorities’ RSF request.
  - Proposed modification: PC on change in CBL’s net international reserves to reflect expected RSF disbursements.
- Selected RSF Reform Measures (timelines preserved):
  - RM1 — disaster-related cost database (publish summary covering at least two past disaster events; data entry within six weeks after disbursement).
  - RM2 — national climate risk assessment methodology (incorporate into fiscal risk analysis starting with draft 2027 budget; deadline Oct 31, 2026 / Dec 1, 2026 referenced).
  - RM3 — transform AAID Development Plan 2025-2029 into sector-specific plans and publish on Liberia Development Dashboard (deadline Dec 1, 2026).
  - RM4 — Disaster Risk Financing implementation plan (ministerial order; deadline June 1, 2027).
  - RM5 — enact comprehensive climate change law (deadline June 1, 2027).
  - RM6 — climate integrated project tracking and sector planning (dashboard, project lists; deadline June 1, 2027).
  - RM7 — establish Water Management Council and draft Water Management Law (submit draft law by end-June 2027).
  - RM8 — regulatory framework for groundwater and irrigation abstraction (deadline June 1, 2027).
  - RM9 — regulation on budgetary mechanisms for disaster response (deadline Nov 27, 2027).
  - RM10 — climate-responsive project appraisal criteria (deadline Nov 27, 2027).
  - RM11 — LWSC operational efficiency: average operating ratio first three quarters of 2027 targeted at or below 1.25 (reference ratio 1.57); strategic plan target operating ratio of 1 by 2029.
- RSF eligibility and capacity:
  - Liberia meets RSF eligibility based on per-capita income; placed in Group A for interest charges.
  - Proposed RSF would double Liberia’s total Fund Credit Outstanding; projected peak stock of Fund credit: SDR 424.7 million in 2027 (equivalent to 9.7 percent of GDP, 23.4 percent of exports of goods and services, 58.2 percent of gross international reserves).
  - RSF’s 10.5-year grace period delays repayments until after current ECF repayment completion.
  - Risks: RSF could constrain scope for future UCT borrowing; mitigants include authorities’ reform commitments.

*Source: RSF arrangement request and staff views, 1lbrea2026001*

### DEBT SUSTAINABILITY ANALYSIS (DSA) — key projections, risks, and policy implications
- Public debt and composition (end-2025 / baseline):
  - Total public debt 2025: US$2,863 million (54.9 percent of GDP).
  - External debt (total external debt 2025): US$1,868 million.
  - Domestic debt 2025: US$995.8 million.
  - IMF credit to the CBL recorded as external debt: US$251.4 million at end-2025 (up from US$197.0 million end-2024).
- DSA risk ratings and outlook:
  - External debt distress risk: Moderate.
  - Total public debt risk rating: High but on a declining path.
  - PV public debt-to-GDP ratio (end-2025): 45.7 percent (DSA table).
  - Total debt-service in 2025: US$196.1 million (3.8 percent of GDP).
- Key DSA projections and indicators:
  - Projected total obligations (selected years, in millions of SDRs / US$):
    - Total obligations (SDR millions): 2026: 30.7; 2027: 30.4; 2028: 33.1; 2029: 33.2; 2030: 30.5.
    - Total obligations (US$ millions): 2026: 42.2; 2027: 41.8; 2028: 45.6; 2029: 45.9; 2030: 42.2.
  - Outstanding Fund credit (SDR millions): 2025: 183.5; 2026: 268.3; 2027: 424.7; 2028: 400.4; 2029: 376.2; 2030: 354.7.
  - Gross official reserves (US$ millions, selected projections): 2025: 595 (other table: 572); 2026 (Second Review Est.): 572; 2027 (Proj.): 679; 2028 (Proj.): 744; 2029 (Proj.): 1,005; 2030 (Proj.): 1,062.
  - Gross official reserves (months of next year's imports): 2025: 2.6; 2026: 2.0; 2027: 2.9; 2028: 2.4; 2029: 3.0; 2030: 2.9.
- Financing plan and public borrowing:
  - Public borrowing plan (Millions USD, selected): Gross financing needs 2026: 414; 2027: 521; 2028: 356. Financing sources align with these needs with external financing projected 2026: 314; 2027: 428; 2028: 217.
  - RSF Disbursement (selected entry): 2026 shows RSF Disbursement of 73.1 (table formatting noted).
- Stress tests and vulnerabilities:
  - Standard sensitivity and tailored DIGNAD stress tests show vulnerability to adverse growth, commodity price shocks, and climate-related disasters; contingent liability stress test modeled one-off debt-creating flows totaling 19.7 percent of GDP.
  - DIGNAD scenario: one-off natural disaster shock calibrated to cause cumulative GDP loss ~4 percent over three years; alternative extreme scenario assumed a 2.5 percent decline in real GDP, 3.5 percent decline in export growth, and additional public spending financed by debt equivalent to 6 percent of GDP—several sustainability thresholds breached.
- Policy recommendations from DSA:
  - Adopt strong medium-term fiscal framework underpinned by enhanced revenue mobilization and improved spending efficiency.
  - Prioritize concessional borrowing; refrain from non-concessional commercial borrowing.
  - Strengthen debt management capacity, update MTDS annually, maintain comprehensive debt and contingent liability database, and enhance SOE oversight.
  - Build gross official reserves toward around 3 months of imports.

*Source: Debt sustainability, Public Sector Debt and DSA excerpts, 1lbrea2026001*

### CLIMATE RISK PROFILE, RESILIENCE PRIORITIES, AND RSF PILLARS
- Climate vulnerability and impacts:
  - Since 1995 Liberia experienced 21 climate-related disasters; EM-DAT-based IMF estimates: over 148,000 people affected/injured/homeless; over 5,000 lives lost.
  - Coastal exposure: nearly 60 percent of population lives in vulnerable coastal zones; World Bank estimate by 2050 coastal flood incremental loss of 0.75 percent of capital vs baseline.
  - Agriculture and livelihoods: agriculture employs around 41 percent of population (one section 75 percent cited in another) and accounts for about a third of GDP (other sections vary); potential GDP losses up to 15 percent by 2050 without adaptation.
  - Estimated investment needs to build climate resilience: US$422 million — about 8 percent of 2025 GDP (one section); NDC 2.0 financing needs to 2025: US$491 million (World Bank estimate).
- Health, food security, and social impacts:
  - Chronic malnutrition: approximately 30 percent of children under five.
  - Climate-sensitive disease burdens: malaria 15.4 percent of deaths (2019), diarrheal diseases 7.9 percent, neonatal disorders 7.7 percent.
  - Floods in 2024 affected around 50,000 people; NDMA estimates more than 800,000 Liberians face climate-related risk each year.
- RSF pillars and intended reforms:
  - Pillars: (i) disaster risk management and pandemic preparedness; (ii) climate finance and governance; (iii) water and food security.
  - RSF aims to catalyze donor financing, integrate climate risk into PIM, strengthen National Disaster Risk Financing strategy, and improve WASH and LWSC financial viability.
- Key climate-related reform measures (see RSF section for RM1–RM11 and deadlines).
- Institutional and governance gaps:
  - Climate legal and policy framework exists but weak implementation, overlapping mandates, and limited enforcement capacity.
  - Carbon Market Authority created in November 2025.
  - Water governance: hydrological monitoring degraded; lack of dedicated water law; LWSC operating ratio reference 1.57; target average ≤ 1.25 in first three quarters of 2027.
- Climate finance and mobilization:
  - Development finance 2010–2023 mainly grants (76 percent); sector distribution: energy 41 percent; agriculture 20 percent; general environmental protection 12 percent.
  - Public debt-to-GDP above 50 percent limits fiscal space for climate investments.
  - Recommendations: institutionalize ex-ante financial tools (parametric insurance, regional risk pools, microinsurance), costed NDCs and sectoral plans, strengthen green PFM and project appraisal criteria, rehabilitate water monitoring, and mobilize concessional and blended finance.

*Source: Annex III. Climate Risk Profile; Pillars I–III and related sections, 1lbrea2026001*

### PROGRAM PERFORMANCE, MONITORING FRAMEWORK, AND CONDITIONALITY
- Performance to date:
  - All quantitative performance criteria (PCs) for end-June 2025 were met.
  - Three of five end-June Indicative Targets (ITs) met; two ITs missed (non-accumulation of new domestic debt arrears; minimum share of public wage payment in Liberian dollars).
  - Domestic arrears cleared by end-December 2025.
  - Authorities committed to increase LRD share of wage bill from 30 percent to 35 percent.
- Structural Benchmarks (SBs) and Prior Actions:
  - Ten applicable SBs: two met; four implemented with delays.
  - Two SBs established as prior actions and completed: provision of detailed borrowing terms for all external debt obligations; enforcement of NPL regulations.
  - Two remaining SBs re-proposed with test date May 31, 2026: (i) legal amendment to eliminate Code of Ethics provision restricting publication of asset declarations; (ii) CBL adoption of bank resolution regulations and operational guidelines.
- Monitoring cadence and conditionality:
  - ECF and RSF monitored concurrently semi-annually; TMU defines PCs, ITs, SBs, and reporting.
  - Semi-annual ECF reviews (fourth review on/after June 1, 2026; fifth review on/after Dec 1, 2026).
  - Extensive data reporting requirements for MFDP and CBL (monthly, quarterly, weekly deliverables specified in TMU).
  - Quantitative PCs and indicative targets shown in program Table 1 with many exact numeric floors/ceilings (e.g., NIR change floor, primary balance floor, ceilings on PV of new external borrowing).
- Capacity development and partner collaboration:
  - IMF CD to focus on revenue mobilization, PFM, central bank operations, banking supervision, and macro statistics.
  - IMF TA to support disaster risk management and climate finance reforms; coordination with World Bank, WHO, GCA, and others.
- Safeguards and governance:
  - CBL Board fully constituted; ELA framework strengthened; meaningful progress on 2024 safeguards recommendations with outstanding gaps to be addressed in first half of 2026.
  - GAC special audits completed for NASSCORP and LEC; GAC audit of government domestic debt and claims covering 1980-2025 estimated total claims at about 1.5 percent of GDP and has been published.

*Source: Program performance, TMU, and monitoring sections, 1lbrea2026001*

*Source: IMF staff report chapter on Liberia (content unit 1lbrea2026001).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- The current 40-month program supported by the Extended Credit Facility (ECF) is helping Liberia regain fiscal credibility, restore debt sustainability, and enhance financial sector stability.
- Targeted reforms are bolstering the authorities’ efforts to mobilize additional domestic and external resources to address the country’s large infrastructure gap.
- Liberia remains one of the most vulnerable countries to climate-related and pandemic risks; recent climate-related shocks have caused significant loss of lives and property, population displacements, destruction of agriculture crops, and worsening food security.
- Liberia faces heightened pandemic vulnerabilities due to a fragile, underfunded health sector with limited coverage.
- A decline in external donors’ support continues to constrain Liberia’s development prospects.
- The political environment remains broadly stable; the Legislature approved the 2026 budget in December 2025, which is aligned with program targets.

### Recent economic developments and outlook
- Real GDP growth:
  - 2024: 4.0 percent
  - 2025: 5.1 percent (estimated)
- Inflation:
  - Q1 2025: 12.5 percent
  - Q4 2025: 4.4 (stated as "4.4 in the fourth quarter of 2025")
  - Inflation is expected to remain subdued throughout 2026; projected to rise to 6.1 percent in 2026 and decline towards 5.0 percent by 2028 (CBL’s inflation objective).
- Exchange rate:
  - LRD appreciated by 2.9 percent in the fourth quarter of 2025.
- External sector:
  - Goods imports growth in 2025: 52.3 percent
  - Goods exports growth in 2025: 56.6 percent (driven by higher iron ore production and strong gold prices)
  - Current account deficit: 8.1 percent of GDP in 2024 → 6.5 percent of GDP in 2025
  - Net international reserves (NIR): US$234 million at end-2024 → US$284 million at end-2025
  - Import coverage: around 1.8 months (end-2025)
- Fiscal outcomes:
  - Primary surplus in 2025: 1.4 percent of GDP
  - Revenue mobilization in 2025: projected at 15.9 percent of GDP
  - Government-funded capital spending in 2025: 1.4 percent of GDP
  - Recurrent spending broadly in line with budget; spending on goods and services exceeded budgeted amount.
- Banking sector:
  - Aggregate capital and liquidity ratios remained above minimum regulatory requirements (heterogeneity across banks).
  - NPLs declined but remain elevated; enforcement and supervision intensified; recapitalization of weak banks advancing.

### Outlook and risks
- Growth projections:
  - 2026: 5.1 percent
  - Medium term: accelerate to 5.6 percent
  - Drivers: strong mining production, recovery in manufacturing, steady growth in agriculture and services.
- Reserves projection:
  - Gross international reserves projected to increase to 3.0 months of imports by end-2027 (noted as at a lower level than aimed at program approval).
- Balance of risks: tilted to the downside due to global political and economic uncertainties.
- Key external risks: commodity price volatility, declining international aid, climate-related disasters.
- Domestic risks: delays in implementing key policy reforms.
- Specific shock assessment:
  - Deterioration in global conditions (higher oil and commodity prices) expected to weaken current account by about 1 percent of GDP in 2026.
  - Offsetting factors: stronger export prices for gold and iron ore, additional private capital inflows, expected full operation of hydropower generation during upcoming rainy season.
  - Protracted war in the Middle East could cause persistently higher energy and global food prices and fertilizer shortages—downside for growth and balance-of-payments, with disproportionate impact on vulnerable households.
- Policy imperatives to mitigate risks:
  - Strengthen domestic revenue mobilization.
  - Support domestic production and export diversification.
  - Establish institutional and legal foundations for climate-resilient investments.
  - Accelerate governance reforms to safeguard macroeconomic stability and attract donor-funded investments.
  - Expand social protection programs given limited buffers amid declining external assistance.

### Policy discussions (priority areas)
- Fiscal:
  - Implement revenue mobilization measures, including transition to VAT adoption for the 2027 budget.
  - Accelerate public financial management reforms to improve transparency and accountability of the budget.
  - Safeguard gains in fiscal sustainability by implementing the 2026 budget in line with program targets.
- Financial sector:
  - Strengthen financial stability by supporting CBL efforts to implement restructuring measures for weak banks in a timely manner.
  - Finalize initial recapitalization for weak banks; implement adopted restructuring plans; advance NPL strategy including full provisioning, write-off of legacy NPLs, and close monitoring using the NPL database.
- Governance:
  - Address remaining governance gaps by ensuring integrity institutions are fully operational.
  - Prepare priority policy measures to implement the Governance Diagnostic (GD) recommendations.
- RSF-related:
  - Formulate policy measures to advance reforms under the RSF arrangement focused on climate-related and pandemic risks.
  - RSF priority areas agreed with authorities: (i) disaster risk management and pandemic preparedness; (ii) climate finance and governance; (iii) water and food security.

### Program performance (implementation status)
- Quantitative targets:
  - All quantitative performance criteria (PCs) for end-June 2025 were met.
  - Three out of five end-June Indicative Targets (ITs) met; two ITs missed:
    - Missed ITs: non-accumulation of new domestic debt arrears; minimum share of public wage payment in Liberian dollars.
  - Domestic arrears were cleared by end-December 2025.
  - Authorities committed to increase LRD share of wage bill from current 30 percent to 35 percent (historical level around 20 percent before the program).
- Structural Benchmarks (SBs):
  - Ten applicable SBs: two met; four implemented with delays.
  - Two SBs were established as prior actions and completed (provision of detailed borrowing terms for all external debt obligations; enforcement of the NPL regulations).
  - Two remaining SBs proposed as new SBs with test date May 31, 2026 (modified SBs):
    - (i) legal amendment to eliminate from the Code of Ethics the provision restricting publication of asset declarations to cases authorized by judicial order;
    - (ii) CBL adoption of regulations and operational guidelines on bank resolution.
  - Delays reflect need for coordination between Liberia Anti-Corruption Commission (LACC) and the Ombudsman’s Office, and time required to finalize bank resolution regulations and guidelines.

### RSF arrangement request and staff views
- RSF request:
  - Requested RSF arrangement: SDR 193.8 million, 75 percent quota.
  - Objective: integrate climate-related and pandemic risks into economic and social policies; strengthen balance of payments prospects through climate-resilient investments and policies; enhance pandemic preparedness by leveraging additional external financing and technical assistance.
  - Three priority reform areas agreed: (i) disaster risk management and pandemic preparedness; (ii) climate finance and governance; (iii) water and food security.
- Fund staff:
  - Support completion of the third review under the ECF arrangement, which would result in a disbursement of SDR 19.3 million.
  - Support authorities’ request for an RSF arrangement.

*Source: EXECUTIVE SUMMARY, 1lbrea2026001*

### 12. The 2025 budget, including the tax measures adopted during the year, was executed

### 12. The 2025 budget, including the tax measures adopted during the year, was executed as planned.

### Fiscal outturn and financing (2025)
- Preliminary data suggests end-December 2025 fiscal performance remained in line with the program objectives.
- The primary balance (excluding grants), tax revenues, government-funded capital spending, and social expenditures are all estimated to have remained in line with the program objectives.
- Budget financing:
  - Strong domestic revenue performance and successful domestic debt rollover.
  - EU budget-support grant disbursed: US$25 million (December 2025).
  - Planned World Bank (WB) budget-support disbursement delayed: US$40 million, currently expected Q2 2026 due to slower-than-expected legislative process to complete required prior actions.
- Final fiscal data for 2025 to be available after the 90-day reconciliation period (April 1, 2026).

### Revenue performance (2025)
- Tax revenue reached 15.9 percent of GDP in 2025, up from 13.4 percent in 2023 and 14.5 percent in 2024.
- Revenue drivers and shortfalls:
  - Overperformance: Direct taxes (PIT and CIT) and international taxes—supported by strong withholding taxes from SOEs and introduction of new electronic clearance devices at the ports.
  - Underperformance: Property tax collection despite the President’s enforcement directive.
  - GST increase (from 10 to 12 percent) yielded below-expectations.
  - Royalties from commodity production performed above budget projections, reflecting higher-than-anticipated gold prices.
- Budget reconciliation ongoing; additional revenue gains were directed to goods and services and grants (described as unproductive spending).
- The approved 2026 budget substantially reduced such outlays.

### 2026 budget envelope, contingent revenues, and primary balance
- Budget envelope: US$1.25 billion, including contingent revenues totaling US$256 million (about 5 percent of GDP).
- Primary balance (excluding grants) expected to stay at 1.4 percent of GDP in 2026.
- Contingent revenues largely linked to:
  - Expected disbursement of a US$200 million concessional agreement bonus from Arcelor Mittal.
  - US$28 million in bonuses from three agreements signed in 2025 and anticipated for 2026.
- Contingent expenditures (primarily public investment projects) will be executed only if associated revenues materialize.
- Monthly monitoring of revenue and expenditure will be used to preserve the primary balance target.
- The 2026 budget will benefit from EU grants and concessional loans from AfDB and WB.

### Expenditure composition and social spending
- Shift from recurrent to capital expenditure progressing slower than envisaged.
- Recurrent spending (wages, grants and subsidies) expected to remain broadly constant in real terms.
- Spending on goods and services expected to decline.
- Social spending expected to increase substantially—by 50 percent relative to the 2025 outturn—to finance critical and targeted programs previously financed by USAID.
- Authorities face challenges scaling up social spending in health and education.
- Government-funded capital expenditure will continue to rise, albeit slower than envisaged in the ARREST Agenda.

### Fiscal gap identified and fiscal measures (2026)
- Preliminary 2025 outturns identified a potential fiscal gap of about US$10 million (0.2 percent of GDP); to be closed through additional revenue measures to meet the primary surplus target of 1.4 percent of GDP while financing new priority social spending.
- Prior actions implemented to close the US$10 million gap:
  - Increase GST standard rate from 12 to 13 percent.
  - Raise excise tariffs on selected imported goods, largely beverage and tobacco.
- Table of new fiscal measures (yields preserved from source):
  - Increasing GST rate from 12 to 13 percent universally — Yield: 5.4 (In US$ million); Yield: 0.10 (Percent of 2026 GDP)
  - Increased excise rate section 1108 — Yield: 1.5 (In US$ million); Yield: 0.03 (Percent of 2026 GDP)
  - Recurrent spending cuts from a few selected MACs — Yield: 3.1 (In US$ million); Yield: 0.05 (Percent of 2026 GDP)
  - Total — Yield: 10.0 (In US$ million); Yield: 0.18 (Percent of 2026 GDP)

### Deferred measures and closing the remaining gap
- Planned fuel excise increase of US$0.05 per liter was deferred because domestic fuel prices have already been fully adjusted in line with elevated global oil prices.
- Remaining projected fiscal gap of US$3.1 million stems from:
  - Postponement of the fuel excise increase: US$2.5 million.
  - Delayed legislative approval of the GST rate increase: US$0.6 million.
- Authorities decided to reduce the 2026 budget allocation for goods and services by an equivalent amount across a limited number of public administration institutions to close the US$3.1 million gap, while protecting productive and social spending.

### Contingency planning and domestic revenue mobilization (DRM)
- Contingency plan focuses on expenditure prioritization, close monitoring of cash management to guide budget allotments, and alignment of total spending with available resources, particularly domestic revenues.
- If significant revenue shortfalls arise, authorities committed to rationalizing recurrent spending and reprioritizing capital expenditures to safeguard program targets.
- DRM priorities to support the ARREST Agenda:
  - Advancing preparations for VAT roll-out:
    - Two tax experts (EU and ECOWAS financed) supporting LRA in VAT adoption.
    - Key workstreams: upgrading tax administration IT infrastructure with WB support, establishing a VAT refund system, amending secondary legislation to facilitate VAT implementation (SB for June 2026).
  - Reforming the fiscal regime for the mining sector:
    - Submit amendments to transfer fiscal provisions from the Minerals and Mining Law into the Revenue Code.
    - Additional measures (to be included in amendments; new proposed SB for December 31, 2026):
      - Increase mineral royalty rates by harmonizing rates for gold and iron ore.
      - Raise withholding tax rates on interest and dividend payments.
      - Allow tax credit under the minimum turnover-based CIT tax to be carried forward indefinitely instead of the current 5-year limit.
    - Changes would not apply to existing mining concessions until expiration of stability clauses.

### PFM reforms to improve planning, execution, and monitoring
- Key reforms and timelines:
  - Enhancing national budget presentation:
    - Starting with the 2027 budget, align presentation with international practices by distinguishing domestic revenues from external grants and loans (new proposed SB).
    - Move away from consolidated “envelope”; present fiscal balances and financing items more transparently.
    - 2027 budget to classify PSIP project costs in line with the GFS 2014 (new proposed SB for October, 2026).
  - Strengthening public investment management (PIM):
    - Address weaknesses from the C-PIMA assessment, including project selection, planning, and ex-post auditing.
    - Reforms supported under the RSF arrangement will complement PIM reforms.
  - Improving transparency in budget execution:
    - Publication of financial statements for FY2025 budget execution due March 31, 2026.
    - General Auditing Commission (GAC) audit report to be published by September 2026 (new proposed SB).
    - GAC audit report to include reconciliation of total revenues recorded in the Tax Administrative System (TAS) and amounts deposited into government’s consolidated revenue accounts at the CBL.

### Monetary and exchange rate policy highlights
- Monetary policy stance:
  - CBL lowered policy rate by 100 basis points to 16.25 percent (last October).
  - Reserve requirements on LRD and USD deposits maintained at 25 and 10 percent, respectively.
  - CBL intensified liquidity management to contain excess LRD liquidity.
  - MPC (January 2026) reaffirmed current stance appropriate; CBL should be ready to further reduce policy rate if low and stable inflation persists.
- Priorities to enhance monetary policy effectiveness:
  - Narrow interest rate corridor from current 10 to 5 percentage points by December 2026.
  - Harmonize reserve requirement ratios (RRRs) on LRD and USD deposits.
  - Reduce frequency of long-term monetary policy operations (1-month and 3-month CBL bills auctions) from weekly to monthly by December 2027.
- FX intervention (FXI) policy development:
  - Need for comprehensive FXI policy with IMF TA to articulate objectives, scope, modalities, instruments, and governance consistent with flexible exchange rate and reserves accumulation objectives.
  - CBL strengthening FX market oversight by formalizing FX dealer operations; commit to market-determined exchange rate with FXIs used only exceptionally.
- Reserve accumulation and currency management:
  - High dollarization: about 80 percent of banks’ assets denominated in USD.
  - CBL has relied on direct purchases from GoL to build reserves; authorities committed to de-dollarizing government operations by increasing LRD share of public wage bill to 35 percent.
  - CBL considering a gold purchase program; staff expressed reservations due to valuation and governance risks.
  - Import coverage of GIR projected to be lower at end-2027 due to adjustments and valuation effects; CBL should reassess reserve accumulation strategy.
  - CBL to expedite procurement and delivery of new LRD banknotes; Board adopted a three-year currency printing plan for submission to Legislature with approval expected by end-May 2026; emergency order placed for first batch of new banknotes.

### Financial sector policies and bank restructuring
- Banking sector status:
  - Reforms under ECF-supported program strengthening sector though some challenges remain.
  - Banks generally meet regulatory minimums for capitalization and liquidity; some weaker institutions still face difficulties.
  - Priorities: complete full recapitalization, address persistently high NPLs, implement restructuring measures approved by Executive Boards.
- Recapitalization progress:
  - MFDP injected US$20 million into Liberian Bank for Development and Investment (LBDI) in September 2025; committed additional US$10 million each in 2026 and 2027.
  - Plans to strengthen LBDI risk management and governance: amend related-party transaction regulation, complete independent assessment of corporate and risk governance, adopt governance framework to curb MFDP’s excessive Board influence.
  - A small private bank recapitalized by existing shareholders with total of US$15 million as recommended in recent AQR; progressing on alternative resolutions for legacy NPLs excluding those guaranteed by CBL.
  - Another weak bank failed to complete capital injection scheduled for December 2025; authorities increased supervision and are preparing corrective measures while working to contain fiscal costs within the resolution plan.
- Monitoring and supervision:
  - CBL to develop a dedicated monitoring framework in line with the Bank Financial Institutions Holding Act (BFIA):
    - Monitoring dashboard assessing progress against predefined benchmarks, including planned capital injections.
    - Proportional remedial and corrective actions linked to each benchmark (new proposed SB for April 2026).
    - Regular reviews to guide supervisory actions and policy decisions.

*Source: IMF staff summary of Liberia fiscal, monetary, and financial sector developments as presented in the 2025–2026 program documents.*

### 27. Addressing the elevated stock of NPLs remains critical to strengthening the banking

### 27. Addressing the elevated stock of NPLs remains critical to strengthening the banking sector and safeguarding financial stability.

### Non-performing loans (NPLs) and banking-sector stability
- A comprehensive assessment of the NPL stock was completed with support from Fund staff (LEG and MCM); the CBL developed bank-by-bank tailored NPL resolution strategies and is enforcing the related NPL regulation.
- Prudential regulations enforced by the CBL require:
  - full provisioning for NPLs older than one year; and
  - write-off for NPLs classified as “loss” for over two years (SB for end-October 2025, converted to PA).
- Outcomes:
  - NPL ratio reduced to 16.5 percent in September 2025, from 19.1 percent at end-2024.
  - Since November 2025, the CBL has been monitoring NPL ratios and enforcing asset classification and provisioning requirements on a monthly basis (new proposed recurring SB).

### Regulatory enforcement and bank resolution framework
- The CBL is strengthening enforcement of banking regulations through closer monitoring of reserve requirements and timely imposition of penalties on delinquent banks.
- Regulatory forbearance:
  - Remaining regulatory forbearance granted to a small bank under restructuring will be removed given the bank’s improved liquidity after recent capital injections and stronger deposit mobilization.
- Emergency Liquidity Assistance (ELA):
  - The revised ELA regulation—defining the exceptional nature of ELA, its maximum duration, and eligible collateral—is now fully operational.
- Bank resolution framework progress and timeline:
  - A dedicated resolution unit with four staff members has been set up (SB for December 2025).
  - Drafting of necessary regulations and operational guidelines has been delayed.
  - Terms of Reference for the new resolution function prepared; a Resolution Manual is being developed to guide implementation in accordance with the BFIA.
  - Adoption of outstanding regulations—an unimplemented part of the December SB—will be completed by May 2026 (SB for December 2025, proposed new SBs with the test date of May 31, 2026).
  - Resolution plans have been developed for the two weak banks (SB for December 2025).

### Mitigating balance-sheet and contingent-liability risks
- Recent actions:
  - The CBL provided guarantees to facilitate the selling of private bank and the MFDP’s promissory notes held by NASSCORP.
  - Legacy uncollateralized loans previously extended to some banks have been fully eliminated.
- Planned measures to assess and monitor balance-sheet risks:
  - (i) compile a complete inventory of all outstanding guarantees, including supporting documents;
  - (ii) transparently disclose these guarantee operations in CBL financial statements and monetary statistics;
  - (iii) work closely with the MFDP to prevent the materialization of contingent liabilities.
- To discontinue promissory-note practice:
  - The MFDP will begin paying, on a monthly basis, the GoL’s share of pension and disability contribution to NASSCORP.

### Governance, audits, and institutional reforms
- CBL governance and internal control:
  - Full implementation of main recommendations from GAC’s compliance audit and Kroll's forensic audit is taking longer than envisaged; about half of the recommendations have been addressed; authorities remain committed to expediting remaining actions.
  - The CBL is identifying CBL Act areas for amendment to strengthen integrity and autonomy, with the goal of submitting proposed amendments to the Legislature by September 2026.
- Liberia Anti-Corruption Commission (LACC) reforms:
  - Draft amendments to remove Code of Conduct (Section 10.3) restriction (publication of asset declarations only when authorized by court orders) are being prepared jointly with the Ombudsman Office and the Law Reform Commission; amendments are expected to be submitted to the Legislature by May 2026 (proposed new SB for May 31, 2026, reset from December 31, 2025).
  - The LACC has made progress digitalizing the asset declaration process.
  - Enforcement status: as at end-December 2025, 92 percent of eligible public officials had submitted asset declarations, up from about 89 percent at end-March 2025.
- GAC special audits:
  - Special audits of NASSCORP and LEC completed, revealing multiple instances of non-compliance with laws and regulations, weak internal controls, poor financial reporting, limited transparency, and recurring financial irregularities.
  - GAC finalized an audit of all government domestic debt and claims covering 1980-2025, estimating total claims at about 1.5 percent of GDP; the audit report has been published.
  - Other special audits being finalized include the one on the Tax Administrative System (TAS) and reconciliation with the consolidated revenue account held at the CBL.
- Governance Diagnostic (GD):
  - The GD is expected to be finalized in March 2026; it confirms severe governance weaknesses and will be published along with a detailed time-bound Action Plan to implement priority recommendations (new proposed SB for September 2026).

### Public procurement and macroeconomic statistics
- Electronic public procurement rollout:
  - PPCC confirmed that 94 percent of MACs submitted their annual procurement plans in 2025.
  - Use of the electronic procurement system remains limited to five major spending MACs and the PPCC.
  - Competitive bidding accounts for less than half of awarded contracts.
  - The authorities are expanding the electronic procurement system to 50 additional MACs, with the goal of full adoption by all government entities by 2028.
- Macroeconomic statistics improvements:
  - LISGIS completed the compilation of the 2010-24 GDP series, with IMF TA, and began regular publication in January 2026.
  - The quarterly GDP series currently cover the period from 2016Q1 onward.
  - Efforts to expand the coverage of the consumer price index beyond Monrovia and to strengthen external sector statistics are ongoing (DSA ¶51).

### Resilience and Sustainability Facility (RSF) — reform focus and risks
- RSF pillars: (i) disaster risk management and pandemic preparedness; (ii) climate financing and governance; (iii) water and food security.
- Vulnerability and preparedness metrics:
  - Liberia ranks 30th among 187 countries for vulnerability and 166th among 192 countries for preparedness.
  - Without decisive adaptation, potential GDP losses of up to 15 percent by 2050.
  - Agriculture employs around 41 percent of Liberia’s population and accounts for about a third of GDP.
  - The COVID-19 pandemic led to a GDP contraction of about 3 percent in 2020, with an estimated income loss of roughly US$140 million.
  - NDMA estimates more than 800,000 Liberians face climate-related risk each year.
  - Investment needs to upgrade environmental policies and build climate resilience are estimated at US$422 million—equivalent to about 8 percent of the 2025 GDP.
- Reform sequencing and aims:
  - RSF-supported reforms emphasize adaptation measures, integration of climate assessment into public investment planning, strengthening National Disaster Risk Financing strategy, and improving water and food security via SOE financial viability.
  - Timely implementation of RSF Reform Measures (RMs) is expected to catalyze donor financing and generate synergies with the ongoing ECF-supported program.

### Pillar I: Disaster Risk Management and Pandemic Preparedness — selected Reform Measures (RMs)
- RM1 — Establishing a disaster-related cost database:
  - MFDP, in coordination with NDMA and other agencies, will establish a database to track fiscal costs of climate-related and natural disaster responses.
  - Data entry to occur within six weeks after disbursement.
  - An executive summary of the initial version—covering at least two past disaster events—will be published on the MFDP website.
- RM2 — Adopting a climate risk assessment methodology:
  - MFDP will develop, adopt, and publish a national climate risk assessment methodology.
  - Results will be incorporated into fiscal risk analysis starting from the draft 2027 budget to be submitted to the Legislature by October 31, 2026.
- RM4 — Implementing the Disaster Risk Financing strategy:
  - MFDP, in coordination with NDMA, will issue a ministerial order adopting and publishing an implementation plan for the Disaster Risk Financing strategy, consistent with IMF recommendations.
  - The plan will include time-bound actions, clear institutional responsibilities, annual public reporting requirements through the national budget, and periodic reviews at least every three years.
- RM9 — Regulation on Budgetary Mechanisms for Disaster Response:
  - MFDP will adopt and publish a regulation defining guidelines for use of budgetary mechanisms in response to disasters, including triggering criteria for accessing contingency funding, in line with IMF recommendations.
  - The GAC will conduct special ex-post audits of the use of disaster-response funding.

*Source: IMF staff report chapter on Liberia (content unit 1lbrea2026001).*

### 48. This pillar aims to strengthen climate governance framework, align public investment

### This pillar aims to strengthen climate governance framework, align public investment

### Climate governance and public investment planning
- RM3 — Developing Sector Plans for Climate-Resilient Investment (MFDP through PIU)
  - Transform the AAID Development Plan 2025-2029 into sector-specific plans covering road, energy, water, and sanitation for the same time horizon.
  - Identify priority investment projects aligned with Liberia's NDC and publish annually on the Liberia Development Dashboard.
  - Objective: ensure public investment decisions are climate-aligned, strategically prioritized and transparent; strengthen ability to attract concessional climate finance and private investment.
  - RM3 provides the strategic foundation for RMs 5, 6, and 10 by ensuring sector planning is coherent and climate-informed.

- RM5 — Enacting a comprehensive climate change law
  - Enact a comprehensive climate change law incorporating planning, implementation, monitoring, climate finance, decentralization, and roles and responsibilities of institutions.
  - Objective: establish a coherent legal framework, reinforce accountability, support project pipeline and dashboard reforms, and provide a stable regulatory basis for mobilizing long-term climate finance.
  - RM5 formalizes the institutional environment needed to implement RM3 and RM6 effectively.

- RM6 — Climate Integrated Project Tracking and Sector Planning (MFDP PIU)
  - (i) Establish and maintain a systemic internal procedure, regularly updated, to track approved government and donor-funded projects on the Liberia Development Dashboard; ensure climate-relevant projects are clearly identified with financing source information.
  - (ii) Publish a sectoral ARREST Agenda development plan organized by projects; transform and publish the AAID Development Plan 2025-2029 into sector-specific plans and project lists for three additional key sectors identified by the government in line with RM3 commitments.
  - Objective: integrate climate-risk assessment into project planning, strengthen transparency, enhance coordination with development partners, and attract external concessional financing.

- RM10 — Climate-Responsive Project Appraisal (MFDP)
  - (i) Develop climate-related criteria for project appraisal in line with IMF recommendations.
  - (ii) Incorporate specific climate-related requirements into the public investment management manual for investment project appraisal.
  - Objective: ensure projects listed on the Liberia Development Dashboard are rigorously assessed for climate resilience and prioritized; completes the sequence from strategic planning (RM3/RM6) through legal foundation (RM5) to appraisal.

### Pillar III — Enhancing water and food security
- RM7 — Establishing a Water Management Council (WMC) and drafting a Water Management Law
  - Establish and operationalize a WMC tasked with drafting a comprehensive Water Management Law aligned with international good practices.
  - WMC to submit the draft to the Legislature by end-June 2027.
  - WMC to sign a memorandum of understanding with all relevant stakeholders during the transition to ensure governance clarity.
  - Objective: streamline mandates, reduce institutional overlaps, and create a coherent governance framework for climate-resilient water management and investment planning; foundation for RMs 8 and 11.

- RM8 — Regulatory framework for groundwater and irrigation abstraction
  - Introduce a regulatory framework governing groundwater and irrigation-water abstraction through permits or licenses, including a legal basis for a tariff structure based on abstraction volumes, in line with IMF recommendations.
  - Target large commercial users including mining, rubber, and agribusiness operations.
  - Objective: promote sustainable water use, strengthen oversight, and generate predictable revenue streams; translates WMC mandate into enforceable rules and economic incentives.

- RM11 — LWSC Operational Efficiency and Financial Sustainability
  - LWSC to reduce its operating ratio, with the average ratio for the first three quarters of 2027 targeted at or below 1.25, compared to the current reference ratio of 1.57.
  - LWSC’s strategic plan aims at reaching an operating ratio of 1 by 2029. LWSC computes and reports the ratio on a quarterly basis.
  - If tariff adjustments are used to achieve cost recovery, implement a well-tailored social tariff to protect vulnerable households.
  - Objective: improve operational efficiency and financial sustainability to enhance credibility and attract domestic and external financing; builds on RMs 7 and 8.

### Debt sustainability, financing strategy, and program financing
- Debt outlook and recommendations
  - External debt distress risk: assessed as moderate; total public debt risk rating: high but on a declining path.
  - All external debt indicators projected to remain below applicable thresholds.
  - Total external debt service-to-revenue ratio projected to decline from 14.6 percent of GDP this year to 8.6 percent by 2036.
  - Recommended authorities’ actions: (i) adopt a strong medium-term fiscal framework underpinned by enhanced revenue mobilization and improved public spending efficiency; (ii) maintain a prudent borrowing strategy prioritizing concessional borrowing; (iii) reinforce oversight of SOEs to mitigate fiscal risks and contingent liabilities; (iv) implement climate-related reforms.
  - Under the ECF arrangement, comply with the ceiling on the present value (PV) of new public and publicly guaranteed (PPG) external borrowing.

- Debt management capacity and operational plans
  - Commitments: (i) regularly update comprehensive database of all public debt and contingent liabilities; (ii) enhance assessment and monitoring of fiscal risks from contingent liabilities.
  - Medium-term plans: (i) update the Medium-Term Debt Strategy (MTDS) annually; (ii) conduct market surveys on appetite for Treasury bonds and publish a quarterly calendar for meetings with banks; (iii) ensure all debt securities issued through auctions; (iv) refrain from accepting T-bill or T-bond bids at rates inconsistent with maintaining a sustainable debt position.
  - Goal: ensure timely repayments while lengthening average maturity of domestic debt.

- Disputed external obligations and creditor dialogues
  - At end-December 2025, three external obligations were under dispute.
  - In January 2026, authorities confirmed intention to resume servicing one obligation, reinstating the original repayment schedule.
  - Authorities initiated bilateral dialogues with creditors on the two remaining disputed claims.
  - As of December 2025, disputed claims against two official creditors (the Netherlands and Israel) and one commercial creditor (Afreximbank) totaled about US$71.8 million, including US$14.4 million in arrears.
  - In January 2026, resuming servicing of the debt with Israel led to a new emergency of arrears estimated at US$ 2.5 million.

- Program financing and RSF modalities
  - The program is fully financed for the next 12 months; prospects for remainder of program remain strong.
  - The EU disbursed US$25 million in December 2025.
  - The WB is now expected to disburse US$40 million as budget support—initially scheduled for December 2025—only in the second quarter of 2025, due to slow progress in meeting several prior actions.
  - Continued reserve accumulation to adequate levels could require higher post-program financing than currently projected.
  - Liberia meets RSF eligibility based on per-capita income, placing it in Group A for interest charges.
  - Proposed RSF access: SDR 193.8 million (75 percent of quota).
  - RSF disbursement schedule across the 4th-7th ECF-supported program reviews: 6.82, 13.64, 34.09, and 20.45 percent of quota.
  - Part of RSF disbursements will replace projected non-concessional financing up to US$20 million and US$30 million to the GoL in 2026 and 2027 respectively.

- Capacity to repay and Fund exposure
  - The proposed RSF would double Liberia’s total Fund Credit Outstanding.
  - Projected peak stock of Fund credit: SDR 424.7 million in 2027—equivalent to 9.7 percent of GDP, 23.4 percent of exports of goods and services, or about 58.2 percent of gross international reserves.
  - RSF’s 10.5-year grace period means repayments begin only after repayment of the current ECF arrangement is complete.
  - Most indicators of debt service to the Fund projected to peak in 2025, one indicator peaks in 2028, and gradually converge towards the PRGT median by end-2035.
  - Risks: proposed RSF could constrain scope for future UCT borrowing; mitigants include authorities’ reform commitments and strong track record of servicing Fund obligations.

### Program modalities, monitoring, and capacity development
- Monitoring and conditionality
  - ECF-supported program monitored through semi-annual reviews based on six quantitative PCs and five ITs (MEFP Table 1) set for end-June and end-December 2026.
  - Prior actions for these reviews and SBs through December 2026 are presented in MEFP Tables 3 and 4; new SBs proposed for the fourth and fifth review.
  - Proposed modification: PC on change in CBL’s net international reserves to reflect expected disbursements under the RSF arrangement.

- Capacity development and partner collaboration
  - IMF CD strategy to focus on revenue mobilization, public financial management, central bank operations, banking supervision and regulation, and macroeconomic statistics.
  - Under the RSF, IMF TA will support disaster risk management and climate finance and governance reforms; coordinate closely with WB experts on (i) a comprehensive database to track fiscal costs related to climate and natural disasters responses, and (ii) development of a climate risk assessment methodology to evaluate fiscal exposures.
  - Other CD providers (WHO, GCA) will support food and water security pillar reforms.

- Safeguards and central bank governance
  - CBL Board is fully constituted; ELA framework strengthened with IMF TA.
  - CBL has made meaningful progress on 2024 safeguards recommendations but remaining gaps in internal control systems and potential balance sheet risks from outstanding guarantees persist.
  - CBL committed to accelerating implementation of outstanding safeguards recommendations, with priority actions to be completed over the first half of 2026.

### Macro-fiscal outlook and reform priorities
- Growth, inflation, and risks
  - Economic growth remains robust, supported by increased mining production, newly operational mines, elevated commodity prices (particularly gold), expansion in agriculture, and investment projects.
  - Inflation has fallen significantly and is projected to remain close to the CBL’s medium-term target.
  - Current account balance expected to continue improving under prudent fiscal policy.
  - Downside risks: significant global slowdown, protracted war in the Middle East raising oil and commodity prices, declining external assistance; limited buffers underscore need for more ambitious domestic revenue mobilization and safeguarded social protection programs.

- Fiscal stance and structural reforms
  - Prudent fiscal policy—reduced recurrent spending and robust recovery in tax revenues—helped sharply reduce fiscal deficits while increasing capital expenditure allocations and rebuilding international reserves.
  - Maintain fiscal stance focused on enhanced revenue mobilization and continued restraint in recurrent spending to finance priority public investments without undermining debt sustainability.
  - Important reforms to boost public investment and preserve macro stability:
    - Gradual increases in the GST rate, successful VAT roll‑out preparation, and reduced mining‑sector tax exemptions to enhance revenue.
    - Implement C‑PIMA recommendations to improve public investment management and support climate-resilient infrastructure.
    - Continue PFM reforms including stronger expenditure controls and transition to a coherent multi‑year budget framework.

*Source: IMF staff report content provided in the supplied PDF excerpt.*

### 62. Liberia’s debt vulnerabilities require prudent debt management and higher‑quality

### 62. Liberia’s debt vulnerabilities require prudent debt management and higher‑quality

### Debt vulnerabilities and debt management
- Recent efforts to enhance capacity within the Debt Management Unit, along with active domestic debt reprofiling and maturity extensions, will help to mitigate rollover risks.
- Authorities must intensify their efforts to improve debt service data by clearly identifying SOE guarantees and non-guaranteed debts.
- On external borrowing, the authorities should continue prioritizing grants and highly concessional financing while refraining from borrowing at commercial terms.
- Higher‑quality debt data remain critical to prevent payment delays.

### Monetary policy stance and exchange rate management
- Monetary policy stance could be eased further if the current low and stable inflation continues.
- Building on the recent notable decline in inflation, the CBL should remain vigilant and ready to take action to ensure inflation remains stable.
- Over the medium-term, the CBL’s actions should ensure that inflation does not deviate substantially from the 5 percent target.
- Despite the sizable dollarization, the exchange rate should be allowed to fully reflect market forces, with CBL interventions strictly limited to smoothing volatility and supporting orderly market conditions.
- To facilitate a gradual and market-driven de-dollarization, the reserve requirement ratios and remuneration on both USD- and LRD-denominated deposits should be harmonized to encourage a greater use of Liberian dollars.

### Financial-sector regulation and oversight
- Financial-sector regulation and oversight should be strengthened.
- While the banking sector remains robust, implementing restructuring plans for weak banks remains essential to reduce both financial and fiscal risks.
- Continued modernization of the regulatory framework is also critical to preserve financial stability.
- Recent strict enforcement of the regulatory requirements, including those related to ELA, reserve requirements, and NPL regulations, will help enhance resilience across the banking system.

### Governance reform priorities
- Advancing the governance reform agenda is essential.
- Recent progress in asset declaration and publication is welcome.
- Continued efforts to digitalize the procurement system will strengthen transparency and accountability in public spending.
- Addressing remaining governance and transparency gaps will require a fully operational LACC.
- Steadfast implementation of outstanding recommendations to enhance the CBL’s governance and internal control, as well as the GSD recommendations, remains a key priority.
- A credible, time-bound action plan will help ensure timely implementation of these reforms.

### Climate resilience and the RSF arrangement
- Integrating climate resilience into Liberia’s policy framework, supported by the RSF arrangement, is critical for mitigating macroeconomic and social risks.
- Climate-related shocks and pandemics pose significant threats to Liberia’s macroeconomic stability, social development, and livelihoods, given its high vulnerability to natural disasters and their potential to weaken the fiscal position, heighten debt vulnerabilities, and intensify BoP pressures.
- Mainstreaming climate considerations across policy reforms will require stronger coordination across government agencies and with development partners, as well as strengthened public investment management in line with C-PIMA recommendations.
- Mobilizing donor resources and private capital will also be essential to develop climate-resilient infrastructure.
- The RSF arrangement provides an effective platform to integrate climate priorities into the policy framework, and the authorities should leverage RSF-supported reforms to advance their adaptation agenda and catalyze additional financing for climate-resilient investments.

### Economic statistics and data quality
- Improving the quality and availability of Liberia’s economic statistics remains critical.
- While progress has been made in enhancing data quality with Fund’s technical assistance, substantial improvements are needed in external sector statistics to better align identified external financing needs with financing sources.
- Recorded services do not fully reflect service debits associated with activities financed through current and capital transfers.
- Net remittances are unusually high relative to peers, suggesting significant underreporting of outflows.
- Authorities should intensify their efforts to fully adopt IMF TA recommendations, including by improving cooperation between CBL and other data producing entities, such as the LRA, MME and MFDP, to increase data coverage.

*Source: 1lbrea2026001 - 62. Liberia’s debt vulnerabilities require prudent debt management and higher‑quality*

### 68. Staff support the completion of the third review under the ECF arrangement and the

### Staff support the completion of the third review under the ECF arrangement and the authorities’ request for an RSF arrangement

### Program support and financing arrangements
- Staff support completion of the third review under the ECF arrangement.
- Staff support the authorities’ request for an RSF arrangement to be implemented concurrently with the ECF arrangement, with an access level of 75 percent of Liberia’s quota, justified by:
  - strength of the authorities’ reform measures;
  - Liberia’s strong track record of repayment to the IMF;
  - projected adequate capacity to repay.
- Staff support the proposed change in the net international reserves performance criterion (PC) reflecting expected disbursements under the RSF arrangement.
- Authorities temporarily postponed a fuel excise increase and will offset the projected revenue shortfall through a reduction in the 2026 budget allocation for goods and services to a limited number of public administration institutions.

### ECF disbursement schedule (selected items)
- Total for the ECF arrangement: 155.0 Million SDR, 60.0 percent of quota.
- Selected availability dates and amounts:
  - September 25, 2024: 4.30 Million SDR, 1.66 percent of quota.
  - February 5, 2025: 34.30 Million SDR, 13.27 percent of quota.
  - June 1, 2025: 19.30 Million SDR, 7.47 percent of quota.
  - December 1, 2025: 19.30 Million SDR, 7.47 percent of quota.
  - June 1, 2026: 19.30 Million SDR, 7.47 percent of quota.
  - December 1, 2026: 19.30 Million SDR, 7.47 percent of quota.
  - June 1, 2027: 19.60 Million SDR, 7.59 percent of quota.
  - November 26, 2027: 19.60 Million SDR, 7.59 percent of quota.

### Proposed RSF disbursement schedule (selected items)
- Total for the RSF arrangement: 193.8 Million SDR, 75 percent of quota.
- Proposed disbursements (each line largely 17.62 Million SDR or 17.60 Million SDR, 6.82 percent of quota per disbursement):
  - April, 2026: 0 (Board Approval of the RSF).
  - June 1, 2026: 17.62 Million SDR, 6.82 percent of quota (Completion of ECF 4th Review and RM1 completed).
  - December 1, 2026: three entries of 17.62 Million SDR, 6.82 percent of quota (Completion of ECF 5th Review and RM2/RM3 completed).
  - June 1, 2027: multiple entries of 17.62 Million SDR, 6.82 percent of quota (Completion of ECF 6th Review and RM4–RM8 completed).
  - November 26, 2027: entries of 17.62 and 17.60 Million SDR, 6.82 percent of quota (Completion of ECF 7th Review and RM9–RM11 completed).

### Indicators of capacity to repay (summary highlights from Table 10)
- Total obligations based on existing and prospective credit (in millions of SDRs):
  - 2026: 30.7
  - 2027: 30.4
  - 2028: 33.1
  - 2029: 33.2
  - 2030: 30.5
- Total obligations in millions of US$:
  - 2026: 42.2
  - 2027: 41.8
  - 2028: 45.6
  - 2029: 45.9
  - 2030: 42.2
- Outstanding Fund credit (in millions of SDRs):
  - 2025: 183.5
  - 2026: 268.3
  - 2027: 424.7
  - 2028: 400.4
  - 2029: 376.2
  - 2030: 354.7
- Outstanding Fund credit (of which : RSF) shows increase from 0.0 in 2025 to 52.9 in 2026 and 193.8 in 2027–2030 (SDR).
- Net use of Fund credit (in millions of SDRs):
  - 2025: 33.4
  - 2026: 84.8
  - 2027: 156.3
  - Thereafter negative net use reflecting repayments (e.g., -24.2 in 2028).
- Total obligations as percent of Gross International Reserves:
  - 2025: 6.0 percent
  - 2026: 5.7 percent
  - 2027: 4.2 percent
  - 2028: 4.3 percent
  - 2029: 4.0 percent

### Balance of Payments and external outlook (selected projections from Table 3)
- Trade balance (US$ millions; selected years):
  - 2022: -504
  - 2023: -807
  - 2024: -207
  - 2025: -276
  - 2026 (Second Review Est.): -258
  - 2027 (Proj.): -231
  - 2028 (Proj.): -309
  - 2029 (Proj.): -336
  - 2030 (Proj.): -356
- Exports, f.o.b. (US$ millions, selected years):
  - 2022: 1,027
  - 2023: 1,112
  - 2024: 1,310
  - 2025: 1,613
  - 2026 (Second Review Est.): 2,052
  - 2027: 1,724
  - 2028: 2,182
  - 2029: 2,352
  - 2030: 2,574
- Notable export components (US$ millions, selected years):
  - Gold: 2022: 543; 2023: 681; 2024: 896; 2025: 1,170; 2026: 1,297.
  - Iron ore: 2022: 286; 2023: 243; 2024: 191; 2025: 212; 2026: 500.
  - Rubber: 2022: 101; 2023: 105; 2024: 146; 2025: 147; 2026: 128.
- Current account balance, incl. official current transfers (US$ millions):
  - 2022: -632
  - 2023: -882
  - 2024: -387
  - 2025: -732
  - 2026 (Second Review Est.): -341
  - 2027 (Proj.): -741
- Net remittances (part of secondary income):
  - 2022: 705 (part of secondary income 769)
  - 2023: 741 (secondary income 840)
  - 2024: 823 (secondary income 885)
  - 2025: 293 (secondary income 433)
  - 2026: 889 (secondary income 979)
- Gross official reserves (US$ millions):
  - 2022: 644
  - 2023: 487
  - 2024: 475
  - 2025: 595
  - 2026 (Second Review Est.): 572
  - 2027 (Proj.): 679
  - 2028 (Proj.): 744
  - 2029 (Proj.): 1,005
  - 2030 (Proj.): 1,062
- Gross official reserves (months of next year's imports):
  - 2022: 3.0
  - 2023: 2.6
  - 2024: 1.9
  - 2025: 2.6
  - 2026: 2.0
  - 2027: 2.9
  - 2028: 2.4
  - 2029: 3.0
  - 2030: 2.9

### External financing requirement and sources (selected items from Table 7)
- Total Financing Requirement (US$ millions):
  - 2022: -748
  - 2023: -925
  - 2024: -558
  - 2025: -637
  - 2026: -938
  - 2027: -962
  - 2028: -1,019
  - 2029: -1,119
  - 2030: -1,181
- Total Financing Sources (US$ millions):
  - 2022: 667
  - 2023: 857
  - 2024: 512
  - 2025: 539
  - 2026: 786
  - 2027: 848
  - 2028: 970
  - 2029: 1,070
  - 2030: 1,132
- RSF Disbursement (selected entry): 2026 shows RSF Disbursement of 73.1 (implied in table row “RSF Disbursement 000073194000” formatting in source).

### Recent economic developments (figures and narrative)
- Growth picking up largely supported by strong mining activities; gold exports growth remained strong, iron ore exports rebounded strongly, while rubber stayed subdued.
- Exchange rate: Daily exchange rates (L$ per US$) showed stabilizing somewhat following a sharp appreciation in September 2025.
- Inflation: Headline inflation eased to single digits with broad-based declines in food and non-food prices (Price Developments, 2019–25, 12-month percent change).
- Monetary operations: The CBL scaled up liquidity management operations to contain excess liquidity and LRD monetary aggregates growth; aggregate excess reserves and outstanding CBL bills (2019–25) and gross/net international reserves (2019–25) are tracked in figures.
- Monetary aggregates: Broad LRD monetary aggregates eased somewhat, though currency in circulation remained strong. Private sector credit remained subdued and largely denominated in US$.

### External sector dynamics (figures)
- Goods exports surged in 2025 on higher gold prices and capacity gains; imports initially grew faster but exports caught up toward year-end, leading to some widening of the trade balance.
- Rice imports picked up after two years near threshold; petroleum import volumes increased benefiting from low international oil prices.
- Fuel prices at the pump follow international trends and remain below the regional average.
- Quarterly remittances surged, contributing to narrowing the current account deficit.

### Fiscal performance (selected highlights and projections)
- Total revenue increased in 2024 compared to 2023; revenue clearly improved in 2025.
- Revenue composition and domestic revenue tracked 2021–25 as percent of GDP; 2025 figures are projections.
- Trade taxes improved over time. In 2024, total expenditures rationalization materialized as expected.
- On-budget capital expenditure remained low due to limited capacity.
- With substantial reduction in recurrent spending, the central government fiscal position improved, which is expected to continue in 2025.
- The authorities will reduce the 2026 budget allocation for goods and services for a limited number of public administration institutions to offset postponed fuel excise revenue.

### Financial sector soundness (selected indicators, Table 6)
- Regulatory Capital to Risk-Weighted Assets: Jun-22 24.7; Jun-25 38.6.
- Non-performing Loans to Total Gross Loans: Dec-22 17.7; Jun-25 15.2.
- Provisions to nonperforming loans: Dec-22 83.5; Jun-25 88.4.
- Return on Assets: Jun-22 2.9; Jun-25 4.7.
- Liquid Assets to Total Assets: Jun-22 35.9; Jun-25 38.3.
- Net Open Position in Foreign Exchange to Capital: Jun-22 49.2; Jun-25 65.8.
- Staff note: CBL should revise its risk-weights and risk-weighted asset calculation to reflect credit risk appropriately; there may be inaccuracies in data reporting and in revaluation of paid-in capital measurement.

*Source: IMF staff report and associated tables and figures as provided in the content unit.*

### Annex I. Risk Assessment Matrix, August 2025

### Annex I. Risk Assessment Matrix, August 2025

### External Risks: key sources, likelihood, impacts, and policy responses
- Commodity price volatility
  - Likelihood: High
  - Potential Impact: High. "Liberia’s exports revenues might be affected by commodity price volatility, posing more challenges to economic stability, and to the government budget already constrained by the effect of the US aid termination. Also, rising petroleum prices negatively impact Liberia’s import bill"
  - Policies to Minimize Impact: "Prioritize domestic revenue mobilization, exports diversification, and adoption of export price smoothing mechanisms to mitigate the economy against the effect of price volatility. Maintain adequate international reserve cover"
- Escalating Trade Measures and Prolonged Uncertainty
  - Likelihood: High
  - Potential Impact: Low. "Liberia’s integration into international supply chains is minimal, but inflationary pressures disruption could push up inflation and exacerbate social hardship."
  - Policies to Minimize Impact: "Maintain adequate international reserve buffers. Make room for social support by reprioritizing expenditure, mobilizing domestic revenues, and seeking additional donor funding."
- Natural disasters related to climate-induced shocks
  - Likelihood: Medium
  - Potential Impact: High. "Heavy rainfall and floods can erode and inundate agricultural land surfaces as well as coastal zones. It can also spread vector-borne disease."
  - Policies to Minimize Impact: "Invest in climate adaptation, including resilient sanitation systems, protection of coastal zones, and extension services."
- Fiscal Vulnerabilities and Higher Long-Term Interest Rates
  - Likelihood: High
  - Potential Impact: High. "Higher global long-term interest rates would not affect Liberia directly, given its limited access to international markets. However, they would raise U.S.-dollar borrowing costs, tighten financing in a highly dollarized economy, and heighten macro-financial risks for a country with very limited buffers"
  - Policies to Minimize Impact: "Mobilize more domestic revenues, prioritize concessional financing, strengthen bank supervision given the highly dollarized system, and build foreign exchange reserves."
- Decline in International Aid
  - Likelihood: High
  - Potential Impact: High. "A further sharp reduction in international financial assistance, including development aid and humanitarian support, could severely affect low-income and fragile countries like Liberia."
  - Policies to Minimize Impact: "Accelerate tax and PFM reforms to increase DRM, donor diversification and strategic partnerships, strengthen anti-corruption policies and budget planning and realignment."

Note on RAM methodology:
- Likelihood categories: "low" (below 10 percent), "medium" (10-30 percent), and "high" (30-50 percent).
- RAM reflects staff views at the time of discussions; conjunctural shocks = shorter-term risks (12-18 months); structural risks = more persistent.

### Liberia-specific risks: likelihood, impacts, and policy responses
- Rising Political tensions
  - Likelihood: Low
  - Potential Impact: High. "Political tensions in Liberia could erode investor confidence, disrupt fiscal planning, and slow economic growth. This uncertainty may deter aid and investment, strain public finances and hinder job creation and service delivery."
  - Policies to Minimize Impact: "Accelerate governance and institutional reforms and prioritize politically less sensitive fiscal reforms to minimize impacts, focusing on stability, transparency, and inclusive growth."
- Rising inflationary pressures
  - Likelihood: Low
  - Potential Impact: High. "Deterioration of already low consumers’ purchasing power, risks for the most vulnerable segments of the population especially for access to food items."
  - Policies to Minimize Impact: "The CBL needs to stand ready to tighten its monetary policy, and the GoL may implement sector-specific measures if pressures stem from supply shocks."
- Delays in putting all banks on a sound economic footing
  - Likelihood: Medium
  - Potential Impact: Medium. "Financial sector instability, reduce availability of credit, and slowdown in economic activity."
  - Policies to Minimize Impact: "Strengthening credit administration and underwriting standards, strict implementation of restructuring and NPL recovery plans, and enforcement of reserve requirements."
- Delays in implementing new tax measures
  - Likelihood: Medium
  - Potential Impact: Medium. "Delays in domestic revenue mobilization might pose challenges in budget execution, especially on social expenditure given the current juncture where foreign aid is decreasing."
  - Policies to Minimize Impact: "The government needs to stay on track regarding all planned tax reforms, including the GST increase, mining sector minimum tax and VAT implementation."

---

### Annex II. External Sector Assessment (selected findings and policy implications)

### Overall assessment (2025)
- Assessment: "Liberia’s external position in 2025 is assessed as weaker than the level implied by fundamentals and desirable policies, although stronger than its historical trend."
- Current account deficit in 2025: 6.5 percent of GDP (narrowing from 8.1 percent of GDP in 2024).
- Reserves: assessed to be below adequate levels.
- NIIP: "The large negative net international investment position (NIIP) reflects the private sector’s reliance on intercompany borrowing from foreign affiliates and the public sector’s predominantly external debt-based financing."
- REER-based models: "REER gaps remain substantial, although staff assesses that the exchange rate adjustment alone would have limited short-term impact on improving the BoP due to Liberia’s dual currency system, high dollarization, and narrow, commodity-oriented, export base."
- Data caveat: "Data gaps and BoP compilation issues add uncertainty to the estimated current account gap and the overall External Sector Assessment (ESA)."

Potential policy responses:
- "Remaining on the path of fiscal consolidation is crucial for sustaining the recent improvements in the current account and supporting external sector sustainability."
- Structural priorities: "development of a competitive and diversified export sector, reduce reliance on imports, and better position the economy for a potential decline in concessional financing and foreign direct investment over the medium term."
- De-dollarization: "To enhance external sustainability, it is critical to gradually move toward de-dollarization, as previously recommended, alongside continued efforts to improve the business environment, governance, and infrastructure—particularly roads and electricity."
- Data improvements: "Further improvements in BoP statistics would materially strengthen the ESA by reducing uncertainty around the estimated current account gap and the overall assessment of Liberia’s external position."

### Foreign assets and liabilities (end-2024)
- NIIP: -50.2 percent of GDP
- Gross Asset: 33.6 percent of GDP
- Debt Assets: 12.6 percent of GDP
- Gross Liab: 83.8 percent of GDP
- Debt Liab: 93 percent of GDP
- Key points:
  - Gross external liabilities dominated by direct investment through intercompany loans (53.8 percent of GDP) and other debt liabilities.
  - Gross foreign assets ~33.6 percent of GDP; CBL gross reserves account for nearly one third of gross foreign assets.
  - "Debt claims on affiliated enterprises abroad reflect intra-group financial positions and do not constitute liquid external buffers."
  - Assessment: "The large negative NIIP highlights the importance of sustained current account adjustment and structural reforms to strengthen external sustainability over the medium term."

### Current account (2025)
- Current account deficit (2025): 6.5 percent of GDP
- Goods trade deficit widened to 5 percent of GDP.
- Export and import composition and risks:
  - Over the past five years: food, petroleum, and mineral fuel and lubricants ~ half of total imports of goods.
  - Exports: iron ore, gold, and rubber comprised more than 90 percent of total exports of goods.
  - Gold reliance: increased from an average of about 20 percent of total goods exports over 2010-20 to an estimated 64 percent in 2025.
- Remittances: "Net remittances have continued to be a major contributor to the current account balance."
- Grants: "Development partner grant transfers have remained on a declining trend over the past decade, except for a temporary increase during the Covid-19 pandemic."
- EBA-Lite CA model results (2025):
  - Cyclically adjusted CA balance: -6.9 percent of GDP
  - CA norm: -1.8 percent of GDP
  - CA gap: 5.1 percent of GDP
  - Adjusted CA: -6.9 (with cyclical contributions 0.7; natural disasters and conflicts -0.3)
  - REER Gap (in percent): 18.9
  - Elasticity: -0.3
  - REER-related values: "Given Liberia’s dual currency system and high degree of dollarization... the CA’s responsiveness to exchange rate movements is low."
- Policy implication: focus on structural reforms, infrastructure, business environment, and de-dollarization rather than relying on exchange rate adjustment alone.

### Real and nominal effective exchange rates (2025)
- NEER: average nominal effective exchange rate depreciated by 0.8 percent in 2025.
- REER: average real effective exchange rate appreciated by 6.4 percent in 2025.
- Compared to past five-year average, REER is higher by about 14 percent.
- Assessment: "The EBA-Lite CA model indicates that Liberia’s REER remains substantially overvalued... closing the CA gap would require a REER depreciation of about 18.9 percent."
- Policy implication: promote structural measures and de-dollarization to make the exchange rate a more effective shock absorber.

### Capital and financial accounts (2025)
- Capital account: "primarily composed of development partner-project grants" and financed nearly 70 percent of the CA deficit in 2025.
- Financial account:
  - Net FDI inflows: 8.5 percent of GDP in 2025 (8.3 percent of GDP in 2024).
  - Medium and long-term official loan disbursements: 3.1 percent of GDP in 2025 (4.7 percent of GDP in 2024).
- Assessment: "Liberia has so far relied on substantial FDI and development partner support to finance its CA deficit without drawing down reserves or adding significantly to external debt. However, inflows from grants and concessional loans are uncertain and cannot be relied upon indefinitely."
- Policy implications: "development of a competitive and diversified export sector; advancing structural reforms; scaling up investment in infrastructure; strengthening human capital development; improving governance and anti-corruption efforts; efforts to reduce dollarization should continue."

### FX intervention and reserves (end-2025)
- Reserves (2025): US$ 572 million, equivalent to 11.1 percent of GDP.
- Import coverage: 2 months of goods and services imports (reserves-import coverage).
- Adequacy benchmarks:
  - IMF reserve adequacy framework for credit-constrained economies: 3.2 months of imports.
  - Staff recommended reserve target: 3.1 months of imports.
- Authorities did not intervene in the FX market in 2025.
- Assessment and guidance:
  - "Reserves-import coverage (2 months) remained below the adequate level... Over the medium term, reserves are projected to gradually converge to around 3 months of imports."
  - "FX intervention should remain limited to addressing excess volatility arising from temporary shocks, while the authorities aim to rebuild reserve buffers."

---

### Annex III. Climate Risk Profile in Liberia

### Key overview and macro-development implications
- Contribution to global emissions: "less than 0.01 percent of global emissions."
- Vulnerability: "Liberia is highly vulnerable to [climate change] effects, which amplifies the development challenges the country faces."
- Channels of impact and development consequences:
  - Temperature increases, higher frequency of extreme weather events, and changing precipitation patterns could reduce output and productivity and lower potential growth.
  - Agricultural losses would raise food insecurity and increase dependence on imports, adding pressure on the balance of payments.
  - Increased coastal erosion would damage public infrastructure and contribute to internal migration.
  - Liberia's limited institutional and financial capacity to react to disasters "amplifies the persistence of the effects from external shocks."

### Overview of physical vulnerabilities
- Geography and climate:
  - Liberia situated on the West African coast along the Atlantic Ocean; predominantly low landscape with 560 km of coastline.
  - Tropical climate with extensive rivers and dense rainforests.
- Coastal erosion:
  - World Bank (2004) finding: "the coastline on areas like New Kru Town has been eroding by 2–3 meters annually over the past 30 years, leading to a 50- to 100-meter retreat over the same period."
- Flood and drought risks:
  - Inland regions: high risk of riverine floods during the rainy season across most of national territory.
  - Dry season: moderate drought risks across the country, with localized disruptions around the Mount Coffee Dam (main hydropower plant), affecting competing water uses for key social and economic activities.

*Source: Annex I. Risk Assessment Matrix, August 2025; Annex II. External Sector Assessment; Annex III. Climate Risk Profile in Liberia (from the provided IMF content).*

### 3. Since 1995, Liberia has experienced 21 climate-related disasters. According to IMF

### 3. Since 1995, Liberia has experienced 21 climate-related disasters. According to IMF

### Historical impacts and disaster record
- Since 1995, Liberia has experienced 21 climate-related disasters.
- IMF estimations based on EM-DAT (2005) indicate:
  - Over 148,000 people have been affected, injured, or made homeless.
  - Over 5,000 lives have been lost due to climate-related disasters, particularly floods, epidemics and storms.
- Floods observed in 2024 alone affected around 50,000 people.
- Note: Total affected includes people injured, affected, or made homeless (IMF Staff calculations based on EM-DAT (2025)).

### Recent changes in extreme climate indices
- Number of hot days (maximum temperature above 35°C) has risen over the last two decades.
- Intensity of maximum daily precipitation events has increased since the mid-eighties:
  - Annual maximum rainfall over one or five days has increased.
- Incidence of droughts, measured by the maximum number of consecutive dry days, appears to have experienced little change.
- Figures referenced: Annex III. Figure 3 (3A–3D) and methodological notes on 30-year moving averages and trends.

### Projected flood and coastal risks
- Coastal flooding poses the greatest long-term threat:
  - Nearly 60 percent of the population lives in vulnerable coastal zones, including informal settlements like West Point in Monrovia (World Bank, 2024a).
  - Estimations suggest that by 2050 coastal flood could lead to an incremental loss of 0.75 percent of capital versus baseline projections, undermining long term potential GDP (World Bank, 2024b).
- Greatest short-term risks: seasonal droughts and inland floods disrupting farming cycles, worsening water and electricity shortages, and damaging critical infrastructure.
- In the Greater Monrovia area, available reports suggest average annual direct capital losses of about US$20 million as a result of flooding (World Bank, 2024a).

### Socio-economic vulnerability and readiness
- IMF-Adapted Notre Dame GAIN Index for 2022:
  - Liberia ranked 30th most vulnerable among 187 countries and 147th in readiness out of 192 countries.
- Key socio-economic indicators and exposures:
  - Agriculture accounts for about 61 percent of GDP.
  - Agriculture employs 75 percent of the population.
  - Nearly half of citizens live below the national poverty line (World Bank, 2024b).
  - Rapid population growth around 3 percent annually.
- High vulnerability combined with low preparedness constrains absorption and adaptation to climate stresses.

### Health impacts and food security
- Climate change worsens health challenges, increasing risks of disease, malnutrition, and infrastructure damage.
- Chronic malnutrition affects approximately 30 percent of children under five (World Bank, 2024b).
- Climate-sensitive diseases expected to rise with warming and shifting rainfall:
  - Malaria, diarrheal diseases, and neonatal disorders accounted for 15.4, 7.9, and 7.7 percent of deaths in 2019, respectively.
- Floods and storms damage health infrastructure and transportation networks, restricting access to care in remote areas.

### Economic channels and quantified impacts
- Heat stress effects on labor due to projected increased temperatures could lead to economic losses of up to 7.5 percent of GDP by 2050 (World Bank, 2024a).
- Weather-related passenger delays could reach up to 12.5 million hours by 2050 (World Bank, 2024b).
- Potential crop revenue losses estimated in a range of 6 to 22 percent by 2050 (World Bank, 2024b).
- Climate impacts on electricity generation could increase reliance on imports or heavy fuel oil, stressing the trade balance and development objectives.

### Current policies, institutional gaps, and governance
- Disaster risk management is largely reactive with limited financial tools for ex-ante risk retention or transfer:
  - National Disaster Risk Reduction Strategy exists but implementation limited by capacity and funding constraints of relevant agencies, including NDMA.
  - Instruments such as parametric insurance, regional risk pools, and microinsurance remain largely untapped.
- Health sector frameworks and procedures have been developed (National Health Policy; Health Financing Strategy) but face persistent challenges:
  - Financial sustainability, timely disbursement mechanisms for emergencies, shortages in essential medical supplies, supply chain and logistics problems, limited trained personnel, high reliance on volunteer work, and data management issues (WHO, 2024).
- Climate legal and policy framework in place (UNFCCC, Paris Agreement, National Adaptation Plan, National Policy and Response Strategy on Climate Change 2018, Environmental Protection and Management Law 2002, Climate Change Act) but implementation is weak due to:
  - Incomplete integration across sectors, unclear institutional roles, overlapping mandates, and limited enforcement capacity.
- Sectoral responsibilities remain unclear despite updated NDC (NDC 3.0 submitted in September 2025):
  - In 2019 total emissions were approximately 16 million tons of CO2 equivalent, less than 0.1 percent of global emissions.
  - NDC 3.0 prioritized adaptation actions and included mitigation measures (vehicle regulation, energy sector decarbonization, climate-smart agriculture, improved water management).
- AAID development agenda and updated NDC provide guidance but lack sectoral costed investment needs and centralized guidance on integrating mitigation and adaptation within public investment decisions.

### Water management and infrastructure
- Hydrological monitoring systems and water quality laboratories are largely degraded or inactive; data platforms lack integration and interoperability.
- Climate data and risk projections insufficiently incorporated into water resource planning and investment decisions.
- Institutional fragmentation and unclear mandates undermine water management despite the 2007 National Integrated Water Resources Management (IWRM) Policy; absence of a dedicated water law.
- Liberia Water and Sewer Corporation (LWSC) achievements noted (new pipeline, additional sewer connections, reduction of non-revenue water), but LWSC relies on government subsidies and needs measures towards cost-recovery to reach financial sustainability.
- Medium-term investment needs include replacing sewer pipelines destroyed by erosion due to sea level rise.

### Climate finance: needs, flows, and institutions
- Estimated financing needs to achieve outstanding commitments from NDC 2.0 by 2025: approximately US$491 million (World Bank, 2024a):
  - US$401 million for mitigation actions and US$90 million for adaptation actions (World Bank estimation for NDC 2.0).
  - Financing needs for NDC 3.0 (September 2025) have not yet been estimated.
- Development finance trends (2010–2023):
  - Except for 2022, development finance received mainly took the form of grants, representing 76 percent of total funds received over 2010-2023.
  - Sectoral distribution over 2010-2023: energy 41 percent; agriculture, forestry and fishing 20 percent; general environmental protection 12 percent.
- To improve access to climate finance, the government created the Carbon Market Authority in November 2025 (Executive Order 155) to lead climate finance and carbon market activities and ensure compliance with international mitigation commitments.
- Liberia remains highly donor-dependent for climate investments; limited fiscal space constrains action:
  - Public debt-to-GDP stands above 50 percent, limiting fiscal space for adaptation and mitigation investments.

### Policy implications and priorities for building resilience
- Strengthen disaster risk management by developing ex-ante financial tools:
  - Institutionalize instruments such as parametric insurance, regional risk pools, microinsurance, reserves, and contingency funds.
  - Integrate these tools into national budgets with policy support and capacity building.
- Improve health sector preparedness and financial sustainability:
  - Ensure mechanisms for timely disbursement of emergency resources, strengthen supply chains, expand trained personnel, and improve data management.
- Enhance climate governance and legal clarity:
  - Undertake comprehensive climate change legal reform to define institutional roles and responsibilities and reduce overlap.
  - Clarify sectoral responsibilities for implementing NDC 3.0 and cost and prioritize investment needs.
- Strengthen water resource monitoring and governance:
  - Rehabilitate hydrological monitoring systems and water quality laboratories, integrate data platforms, and enact legal reforms (including a dedicated water law) to clarify mandates and improve coordination.
- Mobilize climate finance and improve fiscal space:
  - Prioritize costed NDC and sectoral investment plans to increase visibility for donors and partners.
  - Improve LWSC financial sustainability to reduce fiscal subsidies and create room for investment.
- Integrate climate risk into public investment decisions:
  - Provide centralized guidance to align national and sectoral plans, and assess projects for mitigation and adaptation objectives.

*Source: IMF Staff calculations and IMF (2025a, 2025b) material as presented in the supplied content unit.*

### 20. Liberia faces multiple, interconnected challenges that limit its ability to reduce climate

### 20. Liberia faces multiple, interconnected challenges that limit its ability to reduce climate vulnerability

### Major challenges and cross-cutting findings
- Financial constraints undermine service delivery in agriculture, health, and infrastructure, and social protection programs remain too small to shield vulnerable populations from climate shocks.
- Institutional fragmentation and weak coordination across key sectors lead to duplication and inefficiencies.
- Significant progress hinges on institutional reforms that provide improved governance; collect, update and share key information; and foster inter-agency coordination to enable long-term sector-specific changes.

### Climate data, hazard mapping, and disaster risk management (DRM)
- Findings:
  - Strengthening climate data systems and integrating real-time hazard mapping into decision-making will improve anticipation and response to climate shocks (e.g., floods and droughts).
  - Developing a robust DRM framework can guide resource management to mitigate economic impacts of disasters, reduce fiscal volatility, and safeguard public investments.
  - These reforms are critical for managing climate risks and health emergencies—including pandemics—within Liberia’s fiscal policy framework.
- Recommendations:
  - Implement comprehensive reforms focused on climate data management, hazard mapping, and DRM to improve transparency and fiscal efficiency.

### Integrating environmental considerations into public finance and budgeting
- Findings:
  - The financing gap for the implementation of Liberia’s NDC represents a significant barrier to resilient adaptation and mitigation actions.
  - Strengthening (green) PFM—especially budgeting, monitoring, and reporting of climate expenditures—will improve resource allocation efficiency, increase transparency and accountability, attract climate finance, and support strategic planning.
- Policy options:
  - Combine public resources, international climate finance, and private sector investment through blended structures to bridge the NDC financing gap.
  - Pursue tax and subsidy reforms—particularly related to fossil fuels—to create fiscal space for environmental investments and incentivize sustainable practices.
  - Align excise tax reform on fuels with climate objectives, while protecting vulnerable groups by adjusting exemptions and tax policy design.

### Climate governance and institutional arrangements
- Findings:
  - Liberia has legal foundations for environmental management (Environmental Protection Agency Act (EPA Act 2002) and the Environment Protection and Management Law (EPML 2002)) but lacks a dedicated climate change framework law to clearly mandate climate action.
  - The National Climate Change Steering Committee guides policy but lacks legal authority, creating overlaps and unclear mandates.
  - The 2025 NDC update did not define institutional responsibilities; the creation of a Carbon Market Authority in November 2025 further complicated the institutional landscape.
- Recommendations:
  - Improve climate governance to clarify mandates, enhance transparency for external agents, and help unlock additional climate finance.

### Water resource management
- Findings:
  - Adequate water resource management reduces adverse effects of changing rainfall patterns.
  - Liberia’s IWRM policy (2007) emphasizes resilience through efficient allocation, stakeholder participation, and protection of water sources.
  - A lack of a coordinating institutional body and a comprehensive water law has left resource management vulnerable to competing demands and changes in water availability.
- Recommendations:
  - Establish coordinating institutional arrangements and comprehensive legal frameworks for water resources to reduce vulnerability to shifting rain and dry spells.

### Agriculture and climate-smart agriculture (CSA)
- Findings:
  - Agriculture is Liberia’s largest and most climate-sensitive sector, heavily reliant on rainfall and subsistence farming techniques.
  - Liberia’s NDC 3.0 prioritizes scaling up CSA to boost resilience, productivity, and food security.
  - CSA interventions include drought-resistant crops, improved water management (small-scale irrigation and water harvesting), conservation agriculture, expanded extension and advisory services, and improved access to credit and inputs for smallholders.
  - CSA can generate mitigation co-benefits by reducing emissions and increasing carbon sequestration in soils and biomass.
- Constraints:
  - Scaling CSA requires significant investments in rural infrastructure, capacity building, and integrated policy support to address land tenure insecurity and market access.
- Recommendation:
  - Clarify governance of climate change matters to unlock implementation of NDC actions and facilitate preemptive and reparative actions.

### Social protection and shock responsiveness
- Findings:
  - Current social protection programs are limited in coverage and resilience orientation.
  - The Ministry of Gender, Children and Social Protection is developing a 2030 strategy to make safety nets more shock-responsive and expand the social registry, especially in underserved urban areas.
  - Existing programs rely heavily on donor funding; the recently ended Social Safety Nets Project supported over 100,000 people.
  - New initiatives like the REALISE project focus on jobs and income support, while school feeding programs face funding cuts.
  - The social registry currently covers about 20 percent of the population, mainly in rural areas, and is expanding with partner support to improve targeting despite funding challenges and gaps in urban coverage.
- Recommendation:
  - Strengthen social protection programs and expand shock-responsive mechanisms and the social registry to better cushion vulnerable populations from climate shocks.

### Energy transition opportunities and challenges
- Key statistics and findings:
  - Total electricity generation capacity is about 126 megawatts, with roughly two-thirds (88 MW) from the Mount Coffee hydropower plant, and the rest from imported heavy fuel oil and diesel-based units.
  - Electricity access remains very low at around 33 percent nationwide and under 10 percent in rural areas.
  - For 2023 imports of heavy fuel oil (Trade HS code 271019), mainly used for power generation, imports reached USD 351 million, while imports of lighter fuels, like gasoline and diesel (trade HS code 271012) were USD 317 million. Both more-than-doubled the imported values observed in 2020, namely USD 158 million and USD 147 million, respectively.
  - At an average price of 0.15 US$/kWh, the cost of imported electricity lies between the average variable cost of local generation through hydropower (0.06 US$/kWh) and heavy fuel oil (0.28 US$/kWh), yet it is constrained by neighboring countries’ generation capacity.
  - Biomass and hydro are the only two energy products supplied from domestic origin.
- Challenges:
  - High commercial and technical losses and weak management at the Liberia Electricity Corporation (LEC) undermine service reliability and financial sustainability.
  - Poor transmission and distribution networks and scattered low-income populations make grid expansion costly, highlighting the need for both grid and off-grid solutions.
  - LEC faces financial strain from inefficiencies, low tariffs, and unpaid bills—including by public institutions.
  - A recent audit revealed serious governance issues, including tax non-compliance, contract irregularities, and poor documentation, resulting in an adverse audit opinion.
  - Excise taxes on fossil fuels are not linked to carbon content, offering no incentive to shift toward cleaner energy.
- Engagement and policy implications:
  - The World Bank’s LESSAP project (Phase 2) and other donor-supported initiatives are expanding electricity access and launching tenders for solar plants in rural areas.
  - Reforming fuel excise taxes and tax bases—aiming for convergence toward regional averages—would help avoid cross-border smuggling and support cleaner energy transitions.
  - Because the energy sector is already the focus of multiple development partner projects, newly suggested reforms may overlap with ongoing efforts; reforms in the energy sector are suggested to be left outside the scope of the current RSF.

### Public infrastructure scaling-up: challenges and opportunities
- Findings:
  - Infrastructure deficits in electricity, clean water, roads, and internet access remain major growth constraints; public investment is low and heavily donor-dependent.
  - Weak project selection and fragmented budgeting cause delays and inefficiencies.
  - Poor WASH access heightens vulnerability to climate-related health risks.
- Recommendations:
  - Invest in climate-resilient infrastructure and combine disaster-proof design with better fiscal management to reduce losses from disasters and lower post-disaster recovery costs.
  - Complement infrastructure investments with stronger early warning systems, climate-smart farming, and social safety nets.
  - Mobilize international support and innovative funding to bridge financing gaps.

### Mobilizing climate finance and public investment management
- Findings:
  - Liberia’s climate finance system relies heavily on donor funding, has limited capacity, and weak integration of climate goals into fiscal and investment planning.
  - Readiness gaps limit the country’s ability to mobilize climate funds and align policies with Paris Agreement commitments.
  - The creation of a Climate Change Integration and Finance Office within the MFDP is a positive step toward mainstreaming climate action and improving coordination.
  - Climate considerations are not yet mainstreamed in project appraisal and budgeting procedures; better consideration occurs where donors provide technical assistance and financing.
- Recommendations:
  - Strengthen project pipelines, tag climate projects in planning tools, actively manage donor relationships, and map financing opportunities to optimize access to concessional and blended finance.
  - Improve both green and general PFM practices, including climate-sensitive appraisal and selection of projects.

### Engagement with development partners
- Development partner involvement highlights:
  - World Bank: Supporting Liberia Urban Resilience Project (LURP), Liberia Urban Water Supply Project (LUWSP), Project 300 (in cooperation with AfDB), and LESSAP Phase 2; expanding electricity access and launching tenders for rural solar plants serving health and education facilities.
  - World Health Organization (WHO): Partnered on WASH in Healthcare Facilities Roadmap (2024–2028) with the National Public Health Institute of Liberia and the Ministry of Health; supports water quality surveillance, emergency preparedness, infection prevention and control, and technical assistance for water resource management reforms.
  - UN/Global Center on Adaptation (GCA): UNDP engagements to enhance coastal community resilience and forest conservation; GCA collaboration under the Africa Adaptation Acceleration Program (AAAP) and technical assistance to LURP for community engagement, climate risk profiling, and nature-based solutions to mitigate flooding.
  - World Food Program (WFP): Support on distribution of food and medicine in rural areas and emergency food assistance.
- Role in RSF design:
  - Development partners (World Bank, WHO, WFP, GCA, etc.) contributed country experience and inputs that informed the RSF reform matrix, especially on water, energy access, climate finance, and pandemic preparedness.

### Key statistics and indicators (exact values preserved)
- Total electricity generation capacity: about 126 megawatts.
- Mount Coffee hydropower plant contribution: roughly two-thirds (88 MW).
- Electricity access: around 33 percent nationwide and under 10 percent in rural areas.
- 2023 imports of heavy fuel oil (Trade HS code 271019): USD 351 million.
- 2023 imports of lighter fuels (Trade HS code 271012): USD 317 million.
- 2020 imports of heavy fuel oil: USD 158 million.
- 2020 imports of lighter fuels: USD 147 million.
- Average price of imported electricity used in comparison: 0.15 US$/kWh.
- Average variable cost of local hydropower generation: 0.06 US$/kWh.
- Average variable cost of heavy fuel oil generation: 0.28 US$/kWh.
- Social registry coverage: about 20 percent of the population.
- Social Safety Nets Project supported: over 100,000 people.
- Key legal instruments cited: Environmental Protection Agency Act (EPA Act 2002); Environment Protection and Management Law (EPML 2002); Local Governments Act (2018).
- Institutional development: Carbon Market Authority created in November 2025.
- Reference to NDC update: NDC 3.0 (2025).

*Source: 1lbrea2026001 - 20. Liberia faces multiple, interconnected challenges that limit its ability to reduce climate vulnerability.*

### Annex III. Figure 7. Main Climate Data in Liberia (Continued)

### Annex III. Figure 7. Main Climate Data in Liberia (Continued)

### M3. Energy Mix
- Liberia imports all its fossil fuels and part of its electricity.
- Renewable energies make up for most of the share in the domestic energy mix, yet it being mainly from biofuels and waste.
- Energy consumption has more than doubled in the last twenty years, with energy production increasing but at a slower pace.
- Source: IEA World Energy Balances.

### A3. Food Security and Adaptation
- Liberia holds similar scores as the most vulnerable countries in terms of food security.
- Water access resources are among lowest scored criteria in terms of contributors to food security.
- Source: Global Food Security Index 2022 from the Economist Impact and Corteva.

### M4. Explicit Consumer Fuel Subsidies
- Liberia’s fuel prices are all above the supply cost, reflecting no explicit subsidy for consumers.
- Sources: IMF Climate Change Dashboard (2021) and IMF Fossil Fuel Subsidies database.

### A4. Historical and Simulated Number of Hot Days
- Over the past 20 years, the average number of heat days per year has shown a significant upward trend.
- Sources: FADCP Climate Dataset (Massetti and Tagklis, 2024), using CMIP6 data (Copernicus Climate Change Service, Climate Data Store, 2021).

*Source: Annex III. Figure 7. Main Climate Data in Liberia (Continued) — extracted from the supplied IMF content unit.*

### 19.30 million (about US$26.4 million). We consider the policies outlined in the MEFP adequate to

### 1lbrea2026001 - 19.30 million (about US$26.4 million). We consider the policies outlined in the MEFP adequate to

### A. Introduction and Program Scope
- The IMF-approved 40-month Extended Credit Facility (ECF) Arrangement was approved by the IMF Executive Board on September 25, 2024.
- Program objectives: (i) create fiscal space for essential public investments while enhancing fiscal and debt sustainability; (ii) safeguard macro-financial stability through stronger financial supervision and enforcement of regulations; and (iii) advance macro-critical structural reforms, including improved governance.
- The memorandum reports progress since the second ECF review approved on October 1, 2025.
- Request for a Resilience and Sustainability Facility (RSF) arrangement to: (i) address climate- and pandemic-related vulnerabilities and improve long-term Balance of Payments (BoP) stability; (ii) advance policy reforms to tackle macro-critical risks and expand long-term policy space and financial buffers.
- RSF objectives include catalyzing concessional financing, enhancing institutional capacity, and building resilience against external shocks; it will complement the ongoing ECF-supported program, creating synergies particularly in fiscal and financial sector reforms.

### B. Recent Economic Developments and Program Performance
- Growth and inflation
  - Real GDP growth: 5.1 percent in 2025 (up from 4.0 percent in 2024).
  - Inflation: declined to an average of 4.4 percent in the fourth quarter of 2025 from 12.5 percent in the first quarter of 2025.
  - Central Bank policy rate: lowered by 100 basis points to 16.25 percent in October (2025).
  - Inflation projections: average of 6.3 percent in 2026; gradually declining to 5.0 percent by 2029.
- Exchange rate and reserves
  - Liberian dollar (LRD) appreciated by an average of 2.9 percent year-on-year in the fourth quarter of 2025.
  - Net international reserves: US$286.6 million at end-December 2025, from US$234 million at end-December 2024.
  - Gross international reserves at end-2027 expected to cover 3 months of imports, supported by RSF disbursements.
  - Excluding the RSF, reserves would stabilize at 2.4 months of imports by end-2030.
- Public finances
  - Primary surplus (excluding grants) for 2025 estimated at 1.4 percent of GDP, exceeding the target of 1.1 percent of GDP.
  - Preliminary 2025 fiscal data indicate overspending of recurrent spending (e.g., goods and services) partially offset by under-execution of capital budget; final data to be available by end-March 2026.
  - Reprofiling of domestic debt to local banks lowered the debt service burden.
- Banking sector
  - Non-performing loan (NPL) ratio: 16.5 percent at end-September 2025 (monthly asset classification; does not include bullets loans).
  - NPL remains above regulatory threshold of 10 percent.
  - System-wide liquidity and capital adequacy ratios are above regulatory minimums; three weak banks remain below minimum regulatory thresholds.
  - Private sector credit growth picked up in the first three quarters of 2025.
- External sector and financing
  - Goods exports surged by 57 percent in 2025, driven by higher gold prices and strong expansion in iron ore production.
  - Trade deficit widened to 5 percent of GDP in 2025 due to robust construction activity and increased rice imports.
  - Current account deficit estimated at 6.5 percent of GDP in 2025, supported by strong remittances and narrowing services deficit.
  - Re-engagement with U.S. government on second Millennium Challenge Corporation (MCC): potential grants of up to US$500 million over 2026-30 (agreement reached December 2025); Liberia scored favorably in 12 out of 22 criteria.
  - Swedish International Development Agency (SIDA) will discontinue operations in Liberia by August 2026; assessment of impact underway.
- Performance vs. program targets
  - All performance criteria (PCs) for end-June 2025 were met, including the continuous PC on new external arrears.
  - Three of five indicative targets (ITs) met—floors on revenue, capital spending, and social and other priority spending.
  - Continuous IT on non-accumulation of new domestic debt arrears and IT on share of public wage bill paid in LRD were missed by a small margin; all arrears cleared by end-December 2025.
  - Current share of public wage bill paid in LRD: 30 percent; target to increase to 35 percent in the medium term.
- Structural benchmarks and prior actions
  - Only two of ten applicable structural benchmarks (SBs) were met; four implemented with delay; four not implemented.
  - Two of the four unimplemented SBs were made Prior Actions (PAs) and completed: (i) compilation of borrowing terms of outstanding external debt obligations with repayment schedules and original contracts; (ii) report on enforcement of NPL regulations.
  - Two remaining SBs (legal amendment eliminating restriction on publication of asset declarations; CBL adoption of bank resolution regulations and operational guidelines) to be completed by end-May, 2026 (as modified Structural Benchmarks).

### C. Economic and Financial Policy Framework and Plans
- National Development Plan (NDP)
  - NDP (2025-2029) priorities: Agriculture, Roads, Rule of Law, Education, Sanitation & Tourism (ARREST).
  - First-year evaluation of NDP implementation will inform next steps; securing alternative financing sources is crucial.
- Fiscal policy stance and measures
  - 2025: primary surplus estimated to have exceeded the program target of 1.1 percent of GDP by 0.3 percent of GDP.
  - 2026 budget envelope: about US$1.25 billion approved by the Legislature (historically high).
  - 2026 budget includes contingent revenues and expenditures of about US$228 million (contingent revenues largely from projected concession bonuses).
  - Capital budget to grow while keeping recurrent expenditures largely constant in nominal terms; protect productive and social spending.
  - Tax policy actions: GST standard rate increased from 12 to 13 percent (Prior Action); excise tariffs on several goods (beverage and tobacco) revised upward.
  - Fuel excise increase of 5 cents per liter postponed due to elevated global oil prices (Prior Action). Estimated fiscal shortfall from postponement and delayed GST legislative approval: US$3.1 million (US$2.5 million from excise postponement; US$0.6 million from GST delay). Countermeasure: reduce 2026 goods and services allocation by US3.1 million to a limited number of public administration institutions while protecting productive and social spending.
  - Primary balance in 2026 expected to continue improving at 1.4 percent of GDP.
  - VAT transition: VAT to be implemented in 2027 with a standard rate of 15 percent; 2027 budget will ensure allocation for VAT refunds.
- Revenue administration and structural tax reforms
  - VAT implementation supported by EU and World Bank; technical support from a former USAID tax expert (financed by the EU).
  - Progress on: (i) upgrading tax administration IT infrastructure; (ii) establishing a VAT refund system; (iii) making remaining legal amendments by June 2026 (Structural Benchmark) to secondary legislation to facilitate VAT implementation.
  - Comprehensive VAT awareness campaign to be launched; 2027 budget to ensure adequate allocation for VAT refunds.
- Tax exemptions and mining sector fiscal regime
  - New subchapter to the revenue code adopted to define beneficiaries, control mechanisms, and mandatory fiscal assessment for tax exemptions.
  - Commitment to maintain an up-to-date inventory and publish an annual comprehensive tax expenditure report (recurrent SB); 2025 report published in September.
  - Mining sector reforms planned: amend Minerals and Mining Law (MML) to remove fiscal provisions and reference Liberia Revenue Code (LRC); amend LRC to (i) increase mineral royalty rates (especially for gold and iron ore); (ii) increase withholding tax rates for interest and dividend payments; (iv) allow indefinite carryforward of tax credits under the minimum tax instead of the current 5-year limit, in consultation with the Fund (new proposed SB for December 2026).
  - Publish a policy paper and legal documents to guide negotiation of new mining concessions by June 2027.
- Fiscal governance, reporting, and cash management reforms
  - Commitments include:
    - Publish a comprehensive supplementary budget document (recurrent SB).
    - Enhance annual financial statements by April 2026 (Structural Benchmark) including explanations of deviations for key categories (compensation, goods and services, grants).
    - Include Public Sector Investment Project (PSIP) costs in national budget book fiscal tables classified according to GFS 2014 economic classification (new proposed recurrent SB), with IMF expert support.
    - Improve liquidity and cash management: improve cash planning and accelerate Treasury Single Account (TSA) implementation per the 2021 concept note.
    - Hold joint CBL/MFDP/LRA liquidity working group (LWG) meetings at least once a month and share information consistently.
    - Improve budget execution and transparency by extending Integrated Financial Management Information System (IFMIS), granting access to remaining MACs and the Debt Management Unit.
    - Strengthen public investment management by swift implementation of key recommendations from the C-PIMA.
- Debt management and contingent liabilities
  - Comprehensive inventory of all government external debt and contingent liabilities finalized (Prior Action).
  - Plan to update domestic debt inventory including domestic contingency liabilities and address findings of the GAC special assessment covering 1980-2024.
  - Continue coordination among debt management stakeholders, strengthen institutional frameworks, and enhance fiscal risk monitoring and management related to contingent liabilities.
  - Active engagement with relevant creditors to resolve disputed external debt swiftly.
- State-owned bank capitalization
  - MFDP injected new capital of US$20 million into the state-owned bank (SOB) in 2025.
  - Additional capital of US$10 million will be injected in 2026 and US$10 million in 2027 each.

*Source: Attachment I. Memorandum of Economic and Financial Policies (ECF/RSF program memorandum and related text).*

### 19. We remain committed to maintaining monetary policy stance sufficiently tight to

### 19. We remain committed to maintaining monetary policy stance sufficiently tight to preserve price stability

### Monetary policy stance and tools
- Policy rate lowered by 100 basis points in October 2025 to 16.25 percent as inflation receded.
- Reserve requirements ratios (RRR) on LRD and USD deposits (liabilities) maintained at 25 percent and 10 percent, respectively.
- Intensified liquidity management operations to absorb excess LRD liquidity.
- Commitment to reduce the policy rate further if single-digit inflation and a relatively stable exchange rate environment are sustained.
- Objective to keep the real policy rate in positive territory and sufficiently high to keep inflation on a declining path toward the medium-term inflation objective of 5 percent.
- Main policy instrument: CBL Bills, complemented as required by adjustments to the RRR (particularly on LRD deposits).
- Recently established interest rate corridor system to improve monetary policy effectiveness.

### Strengthening the monetary policy operational framework
- Short-term operations being conducted: 2-week CBL bills auctions on a fixed-rate full-allotment basis; 1-month and 3-month CBL bills auctions using flexible rate fixed quantity auctions.
- Planned operational enhancements:
  - Gradually narrow the interest rate corridor from the current 10 percentage points to 5 percentage points by December 2026.
  - Harmonize reserve requirements on LRD and USD deposits by gradually reducing RRR on LRD and increasing it on USD by end-2027.
  - Gradually reduce frequency of long-term operations—1-month and 3-month CBL bills auctions—from weekly to monthly auctions by December 2027.
- Medium- to long-term consideration: introduce a differential reserve requirement regime with higher RRR on USD deposits than LRD to promote financial intermediation and deepen LRD, strengthen financial stability, and facilitate de-dollarization.
- Ongoing capacity strengthening to modernize the monetary policy framework and adopt an inflation-targeting framework in the medium to long term.

### Foreign exchange intervention (FXI) policy and FX market oversight
- Commitment to develop and implement an FXI policy clarifying objectives, scope, modalities, instruments, governance, and decision-making framework.
- FXI policy will ensure interventions are consistent with monetary policy objectives, reserve accumulation objectives, and financial stability considerations.
- FX auction guidelines will be enhanced for timely and efficient FXIs; IMF TA will be sought to support FXI policy development.
- Strengthening FX market oversight by requiring all FX dealers to be licensed or by formalizing FX dealers.
- Continued commitment to a flexible exchange rate regime and maintaining an exchange rate system free of restrictions and multiple currency practices.
- FX interventions will be limited to addressing disorderly market conditions, including excessive exchange rate volatility, to safeguard financial stability.

### Banknotes supply and currency management
- Remaining stock of banknotes in CBL vaults as at end-December 2025: LRD5.1 billion, about 11 percent of currency in circulation.
- CBL Board adopted a three-year currency printing plan for submission to the National Legislature and approval by end-May 2026, in accordance with the CBL Act.
- If legislative delays occur, other options to secure banknotes—including Presidential Executive Order—will be explored.
- Plan to expedite procurement and delivery of new banknotes, including emergency procurement for the first batch by November 2026 ahead of peak season.
- CBL will closely monitor demand for currency in circulation; MFDP committed to ensuring that MACs keep cash withdrawal at the CBL to a minimum per PFM legislation and CBL policy on over-the-counter encashment of GoL checks.

### Liquidity coordination and cash management
- Liquidity Working Group (LWG) to remain fully operational and effective; meetings to convene at least once a month to strengthen coordination among the CBL, LRA, and MFDP.
- LWG (technical staff of CBL, LRA, and MFDP) roles:
  - Support CBL liquidity management operations.
  - Support GoL effective liquidity and cashflow management to ensure timely GoL debt service and alignment of budget execution with available resources.
  - Ensure currency composition of government spending aligns with that of revenues to mitigate currency mismatch risks in the dual currency system.
- Treasury Management Committee (TMC) to meet at least once a quarter to support prudent government cash planning.

### Mitigating financial risks to the CBL balance sheet
- CBL compiled an inventory of all outstanding financial guarantees, with supporting documents.
- Commitment to properly record and disclose guarantees in financial statements and monetary statistics.
- CBL to work closely with MFDP to monitor performance of underlying GoL financial obligations—GoL Promissory Notes—guaranteed by the CBL.
- MFDP committed to continue timely servicing of Promissory Notes to prevent materialization of contingent liabilities.
- To avoid future contingent liabilities, GoL will start to pay, on a monthly basis, the GoL’s share of pension and disability contribution amounting to 6 percent of the employee’s wage, in addition to their share of 4 percent of the wage which has been paid regularly.

### Operational efficiency and revenue initiatives at the CBL
- Commitments to contain operational expenditures and execute capital spending prudently.
- Strengthen procurement processes and streamline selected functions to reduce costs.
- Enhance capacity in key policy departments to ensure adequate skills.
- Pursue initiatives to improve revenue generation, including exploring prudent active management of foreign reserves to generate higher returns and potentially increasing fee structure for services to financial institutions and the government.

### Reserve accumulation and de-dollarization efforts
- Continue to pursue prudent strategies to accumulate international reserves, including gradual and cautious purchases of surplus FX from the government.
- Key de-dollarization commitment: progressively increase the LRD share of the government wage bill from 30 to 35 percent by end-June 2026 (Indicative Target), provided this does not cause significant market disruptions.
- Strengthen coordination among CBL, LRA, and MFDP through monthly LWG meetings to facilitate LRD wage bill increase.
- Considering a gold purchase program to diversify FX portfolio; study tour of Ghana’s Gold Purchase Program undertaken.
- Gold purchase program to be phased and underpinned by comprehensive assessment of legal, financial, and operational risks; IMF TA sought on this initiative.
- Considering development of a formal and detailed de-dollarization plan with regulatory and administrative measures to promote LRD use.

### Banking sector regulation, supervision, and enforcement
- Continue rigorous enforcement of reserve requirement regulations and share with IMF staff a monthly compliance report detailing regulatory actions and penalties imposed on non-compliant banks (recurrent Structural Benchmark).
- Phase out remaining dispensation provided to a non-compliant bank regarding CRR compliance following liquidity improvement due to capital injection and deposit mobilization.
- Enforce guidelines on management of foreign exchange risk exposure and placements abroad by commercial banks.
- Tighten by end-March 2026 the cap on the ratio of aggregate liquid assets placed abroad to foreign currency deposits to discourage excessive foreign placements by banks.
- Prioritize enhancing risk-based supervision, introducing a bank resolution framework, and establishing a deposit insurance scheme following bank restructuring, in keeping with the BFIA.
- Created a specialized bank resolution unit (Financial Stability Unit) with 4 staff assigned (SB for December 2025) with separate reporting lines to CBL management.
- Drafted resolution plans for two small banks (SB for December 2025); preparing regulations and operational guidelines on bank resolution.
- Adoption of the regulations to be finalized by May 2026 (SB for December 2025, proposed as a new SB for May 2026).

### NPL stock resolution and enforcement
- Assessed obstacles to effective NPL resolution using the newly developed NPL database.
- Enforcing provisioning framework requiring full provisioning of NPLs after one year and write-off of NPLs classified as “loss” for more than two years (October 2025 SB and Prior Action).
- Identified NPLs to be written off in six out of nine banks amounting to US$42.3 million:
  - US$39.7 million has been written off.
  - Remaining US$2.65 million has been restructured, and NPLs in the loss category have been provisioned.
- Enforcement measures for non-compliant banks may include:
  - Non-approval of the audited financial statement.
  - Monetary penalties following non-approval.
  - Suspension of dividend payments.
  - Restriction of certain activities, including granting new loans, product approval, and branch expansion.
- Issued directives setting the minimum NPL ratio to 10 percent of total loans.
- CBL will rigorously enforce the maximum NPL ratio of 10 percent of total loans and will not approve any request for audited financial statement or dividend or bonus payment for any bank with NPL ratio above the threshold by end-December 2026.
- Recurring monitoring: NPL ratios, asset classification, and provisioning to be monitored monthly (recurring SB starting from November 2025).
- Work progressing toward a fully operational collateral registry system—covering movable and immovable assets—by end-April 2026 (World Bank-supported LIFT project).
- Government to roll out the National Biometric Identification Registration System by June 2026 to aid borrower identification and banking services delivery.

### Bank restructuring, resolution framework, and timelines
- CBL Board to adopt a formal framework aligned with the BFIA for remedial and corrective actions (new SB for April 2026) to ensure consistent implementation of restructuring plans.
- Framework will include:
  - A monitoring dashboard assessing progress against predefined benchmarks, including planned capital injections.
  - Proportional remedial and corrective actions linked to each benchmark, with alerts to trigger intensified corrective measures if thresholds or milestones are missed.
  - Dashboard milestones covering operational efficiency, governance reforms, and regulatory compliance.
- CBL will regularly review the framework to guide supervisory actions and policy decisions.

### State-owned bank (SOB) restructuring and governance actions
- SOB actions and progress:
  - Written off 64 percent of its NPLs—loans classified in the loss category for over 2 years (SB for October 2025).
  - MFDP injected US$20 million into the SOB and committed to additional capital injection of US$10 million each in 2026 and 2027 to ensure non-negative equity position by end-2026.
  - Progress resolving government-related asset impairments to the SOB totaling US$5.6 million.
- Commitments for SOB governance and risk management:
  - Initiate (by March 2026) an independent assessment of corporate and risk governance policies, procedures, and controls of the SOB in consultation with IMF staff, including: prepare TOR; develop shortlist of internationally recognized firms; complete tendering; start assessment with a view to completing it by May 2026.
  - Amend (by June 2026) the regulation on related party transactions to include: identification of ultimate beneficiary owner; mandatory independent review and documentation of arm’s length terms; remove exemptions for service-based loans and loans to public sector corporations; establish an independent board sub-committee to oversee related party transactions; reduce the aggregate lending cap to directors; establish procedures for investigation, burden of proof, and appeals in cases of non-compliance; improve disclosures in the bank’s annual report.
    - Until these amendments take effect, starting January 2026 and continuing until restructuring of weak banks is finalized, stricter caps on related-party lending will be applied. The cap will include exposures to individuals connected to the bank within the past three years, as well as accounts receivable.
  - Adopt (by September 2026) a governance framework for the SOB, informed by the independent assessment and in consultation with IMF staff, to be signed by the CBL and MFDP to include: roles and responsibilities for management board, supervisory board, and government as shareholder; principles to guide fit and proper tests of board members and senior management; requirements for robust internal audit, internal control and risk management systems; clear mandates and strategic visions with focus on commercial activities.
  - Following adoption of the governance framework, MFDP will nominate a non-executive Board member with no veto rights by October 2026.

### Two small banks and other restructuring measures
- One small bank recapitalized by existing shareholders with a total of US$15 million during 2025; making significant progress developing alternative resolutions for legacy NPLs outside the CBL guarantee.
- Ensure the CBL is fully protected from any direct financial obligations arising from guarantees related to one commercial bank’s legacy NPL resolution.
- CBL actively engaged with another small bank to ensure full completion of capital injections essential for viability, supported by proportional remedial measures.

### Audit quality and external auditors
- CBL assessing quality of audit processes performed by external auditors; will propose amendments to domestic regulations as needed to specify conditions for termination of external auditors.
- By March 2026, CBL will ensure external auditors found to have breached their duties in relation to audit quality for weak banks will be prohibited from providing audit services within the banking sector.

*International Monetary Fund — Liberia program chapter excerpt*

### 34. We remain committed to fiscal prudence and will continue to prioritize debt

### 34. We remain committed to fiscal prudence and will continue to prioritize debt

### Debt sustainability and fiscal framework
- The updated DSA assesses Liberia’s risk of debt distress as moderate for external debt and high for total public debt.
- Policy commitments and priorities:
  - Adopt a strong medium-term fiscal framework underpinned by enhanced domestic revenue mobilization and improved public spending efficiency.
  - Pursue a prudent borrowing strategy that prioritizes concessional borrowing and actively advance the development of the domestic debt market.
  - Use fiscal policy space created under the RSF to address climate- and pandemic-related vulnerabilities that threaten Liberia’s long-term BoP stability and debt sustainability.
  - Adopt a disciplined approach in selecting externally funded projects, including PPPs, ensuring maximum economic returns and strict adherence to program ceilings on the PV of new PPG external borrowing (see Table 1, QPC).
  - Strengthen oversight of SOEs to mitigate fiscal risks and prevent the materialization of contingent liabilities.

### Debt management operations and coordination
- FY2026 budget: adequate resources allocated to meet all debt-servicing obligations.
- Operational arrangements:
  - MFDP and CBL MOU executed in September 2025 authorizes the CBL to automatically service debt obligations as they fall due.
  - MFDP (DMU) commitments:
    - Provide detailed monthly projected external debt service schedule for the entire year at the beginning of the fiscal year, consistent with existing inventory and approved budget.
    - Provide the CBL with an updated schedule for upcoming external debt payments a month in advance.
  - CAG commitment: ensure sufficient funds are maintained in the GoL debt account at the CBL to cover all debt payments due each month and provide documentation for CBL execution.
  - CBL commitment: facilitate timely payments of GoL external debt obligations and promptly alert MFDP if account balances are insufficient.

### Implementation of IMF CD mission recommendations on debt management
- Commitments to strengthen debt management capacity:
  - Strengthen capacity to produce debt sustainability analysis annually, reflecting latest macro projections; requested a DSA training exercise from the IMF/WB in October 2025.
  - MFDP to prepare a medium-term debt strategy to guide debt financing limits during budget preparation and improve DSA quality.
  - Conduct impact analyses of all planned project loans and GoL guarantees to assess implications for debt sustainability and compliance with debt limit policy under the ECF arrangement before Presidential submission and legislative ratification.
  - Review existing legislation and regulations to clarify the DM’s mandate, particularly its role in decision-making on new borrowing and ratification processes.
  - Ensure the Debt Management Committee (DMC) meets regularly; DMU to review and approve all GoL borrowing or guarantees and serve as DMC secretariat.
  - Engage proactively with the Legislature early in the budget process to explain debt service projections to avoid reductions in budget allocations for debt service.
  - Develop and strictly adhere to the Debt Management Policy Manual, ensuring proper documentation and effective information flow.
  - Consider additional staffing and/or training to improve DMU effectiveness.

### Governance and central bank (CBL) reforms
- Completed and ongoing actions:
  - Majority of recommendations from the GAC compliance audit and the Kroll forensic audit have been implemented; outstanding recommendations—especially those related to upgrade of the CBL core banking application—are underway and will be completed by June 2026.
  - CBL engaging with GAC to resolve misunderstandings on corrective actions related to events between 2018 and 2022.
  - CBL to provide quarterly updates to the Board and submit quarterly progress reports to the Fund, including IMF safeguards assessment updates.
- Internal controls and operational limits:
  - Restrict clearing of government checks to a maximum of US$500,000 during system glitches.
  - Reject GoL-issued checks or payment instructions drawn against underfunded GoL accounts with a penalty.
  - Enforce over-the-counter cash withdrawals capped at US$25,000, except for national security agencies, in accordance with applicable regulations or policies.
- Core banking application (T24) and integration:
  - T24 will be fully operational at the CBL and integrated with the LRA revenue collection systems by June 2026.
  - T24 deployed at the National Port Authority (NPA) and MFDP; planned deployment at LRA headquarters, the Temple of Justice (TOJ), and the Liberia Business Registry (LBR).
  - Prohibit commercial banks from providing immediate value for GoL-issued checks before presenting them to the CBL for clearing.
- CBL Act amendments:
  - Comprehensive amendment of the CBL Act to be undertaken in consultation with Fund staff; proposed amendments to be submitted to the Legislature by September 2026.

### Integrity institutions, budgets, and asset declaration
- Increased allocations to integrity institutions:
  - Allocations increased by 41 percent to US$17.6 million in the FY2026 budget.
  - Allocations to the LACC and the FIA increased to US$4.4 million and US$4.7 million, from US$3.1 million, and US$1.9 million in 2025, respectively.
  - Commitment to endeavor to provide advance quarterly budget disbursements to LACC and GAC in 2026 and to consider legislative amendments in 2026 to safeguard LACC’s financial independence.
- Asset declaration enforcement and digitization:
  - Since the Presidential Order in February 2025, compliance strengthened further.
  - As of end-December 2025, 92 percent of 3,280 eligible public officials across the three branches of government had submitted asset declarations, up from about 89 percent at end-March 2025.
  - With World Bank funded GREAT Project, aim to digitize the asset declaration process by 2027; LACC is hiring a firm to develop the electronic declaration system.
- LACC implementing regulations and disclosure reforms:
  - Advance implementing regulations to (i) specify instances for public disclosure pursuant to section 5.2.o.iii of the LACC Act and (ii) establish a risk-based verification process pursuant to section 5.2.o.ii and v of the LACC Act by June 2026.
  - LACC will collaborate to submit a draft amendment to the Legislature to eliminate the provision in the Code of Conduct regulation of December 2022 (Section 10.2) by May 2026 (proposed new Structural Benchmark).
  - Modified asset declaration form to explicitly ask declarants whether they want to publish their asset declaration.
  - Requested IMF technical assistance to align asset declaration verification procedures with best practices.

### Governance diagnostic, audits, and procurement transparency
- Governance Diagnostic (GD):
  - Prepare and adopt a detailed time-bound action plan to implement priority GD recommendations by September 2026 (Structural Benchmark).
- General Auditing Commission (GAC):
  - Continuing special audits in addition to regular audits; as of end-December 2025 GAC conducted 33 audits of SOEs and other entities, including GOL domestic debt and arrears for 1980-2025.
  - Findings include non-compliance with domestic laws, weak internal control, inconsistent financial reporting; commit to vigorously address implementation of past audit recommendations.
- PPCC and e-procurement:
  - E-procurement system launched February 2025.
  - Five major spending entities and the PPCC have adhered to e-procurement, enabling national open bidding awards to increase to 46% of total procurement by those entities in 2025.
  - Registered about 600 vendors; improved supplier verification via NASSCORP and LRA database integration.
  - Rolling out electronic system to 50 more MACs, aiming for full adoption by all government entities by 2028.
  - Procurement plans submission rate about 94 percent for 2025.
  - Revised PPCC legislation passed by the legislature in December 2025 and published on January 12, 2026.

### Beneficial ownership (BO), National Biometric ID, and payments
- Beneficial ownership transparency:
  - Comprehensive BO workplan developed March 2025 (Structural Benchmark) and endorsed by the Cabinet in July, 2025.
  - Requested IMF TA to advance implementation covering corporate sector, extractive industry, financial institutions, and DNFBPs.
  - Aim to fully operationalize the online Beneficial Ownership Registry by June 2026.
  - CBL to supervise licensees and assess AML/CFT BO identification procedures; targeted training planned for capacity gaps.
  - Plan outreach before developing BO information regime for Liberian International Business Companies and Liberian Shipping Registry; bring DNFBPs under BO framework.
  - Intend to issue regulations in 2026 governing wire transfers to ensure compliance with relevant UN Security Council Resolutions.
- National Biometric Identification System (NBIS):
  - Executive Order issued April 2025 mandating NBIS implementation.
  - Roll-out suspended June 2025 due to limited infrastructure and long queues; about 14 percent of the population had registered as of last year.
  - Intend to start enrollment in the first quarter of this year following system upgrade.
  - Target to enroll 90 percent of the population by 2029 (budget constraints noted).
- Payments and financial inclusion:
  - Operationalize national switch to interface with Instant Inclusive Payment System (IIPS).
  - IIPS launched in December 2025, facilitating interoperability among two leading MMOs, financial service providers, and other financial institutions.

### Structural reforms to promote growth
- Reform priorities aligned with the ARREST Agenda for Inclusive Development (AAID):
  - Upgrade infrastructure including road and port facilities.
  - Streamline processing and issuance of import/export permits and customs clearance.
  - Improve business environment and access to finance via:
    - Enhancing judicial system and insolvency/resolution frameworks, including contract enforcement.
    - Further developing credit reference bureau and establishing a modern credit registry.
    - Modernizing the land cadastre.
    - Operationalizing the national switch and integrating with IIPS.

### Statistics and data improvements
- National accounts and GDP:
  - LISGIS completed compilation of the 2010-24 annual GDP estimates (at current and constant prices) and published these data in January 2026.
  - Started compiling quarterly GDP estimates; published a provisional set of quarterly GDP estimates for 2016Q1-2025Q2 in the second half of 2026 and revised estimates covering 2025Q3 in January 2026.
- Price statistics and CPI:
  - Preparatory activities underway to expand CPI coverage to include all counties.
  - Plan to finalize compilation of regional and national CPI in July 2026 and publish preliminary national CPI in the second of 2026, after completing the ongoing HIES.
  - Re-affirmed commitment to timely and regular publication of price and national accounts statistics.
- LISGIS funding:
  - Allocated US$2.6 million to LISGIS in the FY2026 budget, up from US$1.8 million in FY2025.
- Enhancing debt and fiscal statistics:
  - Improve DMU reports by:
    - Maintaining an updated registry with contracts and sovereign guarantees underlying conforming and disputed public and publicly guaranteed external debt.
    - Conducting debt reconciliation on semi-annual basis by communicating with external debt creditors on debt stock and debt service repayment schedule and cross-checking with debt inventory.
    - Ensuring DM’s inclusion in all debt-related discussions, processes and decisions.
    - Strengthening institutional setup and debt management frameworks.
  - IMF CD recommendations on monetary statistics and financial soundness indicators remain relevant and will be implemented to improve data quality and timeliness.

*Source: 1lbrea2026001 - 34. We remain committed to fiscal prudence and will continue to prioritize debt*

### 52.  We will continue to strengthen external sector statistics. We have improved coverage

### 52. We will continue to strengthen external sector statistics. We have improved coverage

### External sector statistics: current status and near-term actions
- Improved coverage and accuracy of the BoP statistics by implementing recommendations provided by IMF CD assistance.
- Acknowledgement that further improvement is needed.
- Near-term aims:
  - (i) further increase coverage, compliance, and accuracy of the quarterly international investment survey;
  - (ii) resume hotel survey;
  - (iii) increase banks’ compliance with reporting to the International Transactions Reporting System (ITRS);
  - (iv) improve the CBL framework for classification of external sector transactions.
- Data collection and processing improvements:
  - Improve data collection procedures, including data validation and follow-up actions with banks and enterprises reporting to the CBL.
  - Improve coordination between the CBL and other government institutions, including the LRA, MFDP, and Ministry of Mines and Energy, to obtain timely inputs for BoP compilation, including financial statements of the largest non-financial corporates (NFCs).
  - Consider amending the CBL act to clarify the reporting obligations of the NFCs to the CBL.
  - Working on a regulation to require the repatriation of exports proceeds.
  - CBL to implement the Python programs developed by IMF TA to improve the processing and compilation of BoP data.

### I. Climate-Related Risks and Pandemic Preparedness — exposure and recent experience
- Country exposures and impacts:
  - Repeated climate and pandemic shocks undermine long-term stability of the balance of payments.
  - Climate-related impacts on shelter, health, water supply, food and economic activity.
  - Agricultural output, infrastructure, and public services affected by prolonged dry spells, severe urban flooding, and coastal erosion.
- Past pandemics and lessons:
  - The 2014-2016 Ebola epidemic and the COVID-19 pandemic exposed health system weaknesses and caused economic losses.
- Emerging risks:
  - Rising temperatures, sea-level rise, more frequent extreme weather events, and potential pandemics pose risks to agriculture and public health with potential to increase import needs and reduce export capacity.

### II. Gaps, priorities, and strategic direction
- Preparedness gaps:
  - Pandemics preparedness gaps remain significant despite recent initiatives.
  - Institutional capacity and resource gaps constrain progress in climate and health resilience.
- Recent initiatives and diagnostic inputs:
  - Use IMF’s 2025 C-PIMA and Climate Policy Diagnostic assessments, and World Bank’s 2024 Country Climate and Development Report (CCDR).
  - WHO 2nd Joint External Evaluation: need to improve coordination, update national strategies, and establish a dedicated emergency preparedness budget line.
- Priority areas for long-lasting action:
  - Strengthen institutional capacity and climate data systems.
  - Integrate climate risk into national development and fiscal planning.
  - Establish robust legal framework for climate risk management.
  - Embed risk considerations in public investment decisions and reinforce social protection.
  - Invest in climate-resilient infrastructure, natural resource management, and energy transition.
  - Strengthen health system resilience via stronger institutions, resource mobilization, cross-sectoral coordination, expanded public health infrastructure, enhanced surveillance and early warning systems, and adequate emergency response capacity.

### III. RSF arrangement and program focus
- Commitment to implement macro-critical reforms proposed under the RSF arrangement.
- RSF complements ongoing ECF-supported program, prioritizing:
  - (i) disaster risk management and pandemic preparedness;
  - (ii) climate finance and governance;
  - (iii) water and food security.

### Pillar I: Disaster Risk Management and Pandemic Preparedness — reform measures and timelines
- Public disaster expenditure database (Reform measure 1, for June 1, 2026):
  - Create and maintain a public database to track fiscal costs of disaster responses.
  - Database contents: category, intensity and scale of event, date and location; direct public spending and budget reallocations for response and recovery; sources of financing (national, external, insurance); expenditures by ministry, program and economic classification; contingent liabilities and impact on revenue; periodic updates on audit methodology and references.
  - Database to include information for at least two past disasters as a first step.
  - MFDP responsible for management; NDMA provides disaster data; ministries that undertook expenditures to collect and share data.
  - Commit to updating database with entries within six weeks after disbursement, maintaining retrospective series, publishing on MFDP website, and requiring summary tables as part of fiscal risk statements.
  - IMF technical assistance to support database design, reporting templates, and integration into fiscal risk analysis.
- National climate risk assessment methodology and assessment (Reform measure 2, for December 1, 2026):
  - MFDP to develop methodology to identify key disaster risks and climate stresses, potential fiscal costs and impacts on GDP growth.
  - Methodology to build on historical data, stress test scenarios, and information from RM1 and other credible sources.
  - Assessment will cover at least two climate scenarios and two-time horizons with an agreed granularity.
  - Summary outputs to be integrated into fiscal risk analysis and reflected starting with preparation of the 2027 budget.
  - Commit to regular updates and use in public financial management.
- Disaster Risk Financing Strategy implementation plan (Reform measure 4, for June 1, 2027):
  - MFDP to issue ministerial order adopting and publishing an implementation plan with time-bound actions and responsibilities.
  - MFDP to coordinate development and implementation; NDMA coordination.
  - Plan to require annual public reporting in the budget on progress and mandate review/update at least every three years.
  - Work with MOH to domesticate latest update of the International Health Regulations (IHR).
- Regulation for contingency funding access and post-disaster audits (Reform measure 9, for November 27, 2027):
  - MFDP to adopt and publish regulation defining guidelines for use of budgetary mechanisms for disaster response and public health emergencies.
  - Define triggering mechanisms and criteria for access to contingency funding; determine adequate budgetary allocation.
  - Require post-disaster audits by the General Auditing Commission (GAC).
  - Together with the Disaster Risk Financing Implementation Plan, provide operational framework for disaster financing.

### Pillar II: Climate Finance and Governance — reforms and deliverables
- Transform ARREST National Development Plan (AAID) 2025-2029 into sector plans (Reform measure 3, for December 1, 2026):
  - MFDP (PIU) to create sectoral plans covering road, energy, water resources, drinking water, and sanitation for 2025-2029 horizon.
  - Each sector plan to include climate risk assessment, sector-specific risk profiles, identification of climate-hotspots, and costed and prioritized resilient investments consistent with the country's NDC.
  - Commit to publishing the sector plans and priority projects on the Liberia Development Dashboard by early December 2026.
- Enact a comprehensive climate change law (Reform measure 5, for June 1, 2027):
  - Law to set greenhouse gas emission reduction targets aligned with international commitments.
  - Establish institutional framework with designated authorities, integrate adaptive measures, sustainable financial mechanisms, transparent MRV systems, enforcement and accountability, stakeholder engagement, education and awareness, and regular review processes.
  - Climate law to establish a high-level central mechanism to coordinate between government agencies; to be prepared in consultation with the IMF.
- Track and publish key projects on the Liberia Development Dashboard (Reform measure 6, for June 1, 2027):
  - MFDP PIU to develop and adopt a procedure and calendar for regular updates to ensure timely tracking of government and donor-funded projects.
  - Include climate-relevant projects and information on climate risks as identified by PIU.
  - First publication to be by early June 2027.
  - Also transform AAID National Plan 2025-2029 into sectorial plans covering a second set of three additional key sectors to be identified by the government.
- Incorporate climate criteria into public infrastructure project appraisals (Reform measure 10, for November 27, 2027):
  - MFDP, in coordination with MPW and stakeholders, to develop climate criteria for project appraisal.
  - For adaptation projects: assess objective of reducing vulnerability, coherence with national adaptation priorities, climate risk exposures and management, and inclusion of climate-resilient plans.
  - For mitigation projects: address emission reduction, targets in NDC, alignment with sectoral policies, and carbon footprint assessment.
  - Include climate change in project appraisal requirements within the public investment management manual and require identification of climate risks and appropriate adaptation/resilience measures.

### Pillar III: Water and Food Security — governance, regulation, and utilities reform
- Water resource management law and Water Management Council (WMC) (Reform measure 7, for June 1, 2027):
  - Issue an executive order to establish and operationalize a Water Management Council (WMC) charged to draft a water management law and submit it to Parliament the Legislature by end-June 2027.
  - Executive order to identify key governmental members: Ministry of Mines and Energy (MME), Ministry of Agriculture (MOA), Ministry of Health (MOH), Liberia Water and Sewer Corporation (LWSC), Liberia Electricity Corporation (LEC), Rural and Renewable Energy Agency (RREA), Liberia National Water, Sanitation and Hygiene Commission (NWASHC), other relevant MACs, non-governmental, and development partner members.
  - Appoint a Presidential delegate to chair the WMC; WMC to meet monthly and prepare the draft law.
  - Draft law to define institutional framework, quantify and allocate water among users, define water rights and permit systems, regulate groundwater separately from surface water, set water quality standards, control water infrastructure including dams and irrigation, require flood and drought management, enforce water use efficiency, and mandate consistent monitoring of water quantity and quality.
  - WMC to issue an MOU to operationalize clarified mandates as a temporary measure until law enacted; WMC members to provide a public statement committing to enforcement.
- Groundwater abstraction regulatory framework (Reform measure 8, for June 1, 2027):
  - Develop regulations for groundwater and irrigation water abstraction via raw water abstraction permits/licensing.
  - Establish legal basis for tariff structure based on abstraction volume targeting large commercial users (e.g., mining, rubber, large agribusiness).
  - Drafting to be coordinated among EPA, MPW, Ministry of Mines and Energy, Ministry of Agriculture, National Water, Sanitation and Hygiene Commission, and other relevant MACs.
- LWSC operating ratio reduction (Reform measure 11, for November 27, 2027):
  - In line with Strategic Plan for 2025–2029, LWSC will reduce its operating ratio.
  - Benchmark: operating ratio of 1.57 as reported in the Strategic Plan.
  - Evaluation will consider operating ratios reported within the first three quarters of 2027; the average of which should be at or below 1.25.
  - If water tariffs deemed needed, ensure adoption of a social tariff to protect vulnerable consumers.
  - Sustain efforts to improve operating ratio and reduce need for fiscal support in the medium-term beyond commitments evaluated in this reform measure.

*Source: Excerpt from the Liberia IMF document provided.*

### 69. The ECF and RSF programs will be monitored in a concurrent semi-annual manner,

### 1lbrea2026001 - 69. The ECF and RSF programs will be monitored in a concurrent semi-annual manner

### Monitoring schedule and program reviews
- The ECF and RSF programs will be monitored in a concurrent semi-annual manner, based on quantitative performance criteria, structural benchmarks, indicative targets, and reform measures.
- The technical memorandum of understanding (TMU) defines performance criteria, indicative targets, structural benchmarks, and the scope and frequency of data reporting for program monitoring.
- ECF review timetable:
  - The ECF fourth review is expected to be completed on or after June 1, 2026, based on the end-December 2025 targets and relevant performance criteria.
  - The ECF fifth review is expected to be completed on or after December 1, 2026, based on the end-June 2025 targets and relevant performance criteria.
- RSF review synchronization:
  - The first, second, and third RSF reviews will be conducted at the time of the fourth, fifth, and sixth ECF reviews, respectively.
- LWSC operational target:
  - The operating ratio (OPEX / net sales) is measured quarterly; a lower ratio is preferred. LWSC’s strategic plan aims at reaching an operating ratio of 1 by 2029.

### Key Quantitative Performance Criteria and Indicative Targets (selected items from Table 1)
- Performance Criteria (selected lines as shown in the source):
  - Floor on primary fiscal balance, excluding grants: 24.0 24.0 61.0 Met 31.0 31.0 68.0 Met 50.0 44.0 72.0
  - Ceiling on present value of new public and publicly guaranteed external debt contracted: 102.0 102.0 69.4 Met 226.0 226.0 172.8 Met 226.0 276.0 276.0
  - Ceiling on new external arrears of the central government (continuous): 0.0 0.0 7.7 Not met 0.0 0.0 0.0 Met 0.0 0.0 0.0
  - Ceiling on the CBL’s operational and capital expenses: 36.7 36.7 36.0 Met 17.5 17.5 10.2 Met 32.5 16.0 33.0
  - Floor on the change in the CBL’s net international reserves: 6.0 5.6 16.1 Met 15.0 6.3 18.1 Met 32.0 14.0 50.0
  - Ceiling on CBL's gross direct credit to central government: 740.1 740.1 740.1 Met 731.8 731.8 731.8 Met 731.2 714.6 718.0
- Indicative Targets (selected):
  - Floor on total revenue collection of the central government: 671.0 671.0 696.0 Met 380.0 380.0 395.0 Met 767.0 457.0 908.0
  - Ceiling on new domestic arrears related to GOL security repayments to banks (continuous): 0.0 0.0 9.5 Not met 0.0 0.0 7.8 Not Met 0.0 0.0 0.0
  - Floor on social and other priority spending: 76.0 76.0 78.8 Met 39.4 39.4 42.5 Met 83.2 46.5 90.3
  - Floor on on-budget capital spending: 53.0 53.0 69.0 Met 29.0 29.0 32.0 Met 67.0 49.0 107.0
  - Floor on the share of public wage bill paid in Liberian Dollars (percent of total public wage bill): 0.30 0.30 0.20 Not Met 0.35 0.35 0.31 Not Met 0.35 0.35 0.35
- Memorandum items (selected):
  - Floor on wage bill of school teacher and non-teacher staff: 33.0 33.0 37.2 Met 17.3 17.3 19.9 Met 38.3 21.4 40.2
  - Floor on wage bill of core and non-core clinical health workers: 43.0 43.0 41.6 Not Met 22.1 22.1 22.6 Met 44.9 25.1 50.1
- Notes and procedural specifications (as stated in Table 1 footnotes and nearby text):
  - The Standard Continuous Performance Criteria also apply: (i) not to impose new or intensify existing restrictions on payments/transfers for current international transactions; (ii) not to introduce new or intensify existing multiple currency practices; (iii) not to conclude bilateral payments agreements inconsistent with the IMF’s Articles of Agreement (Article VIII); and (iv) not to impose new or intensify existing import restrictions for balance of payments reasons.
  - 2024, 2025 and 2026 criteria and targets are cumulative from the beginning of the calendar year.
  - Excludes IMF loans. 2024 targets are cumulative from the beginning of the calendar year. Starting with the Jun 2025 test date, the targets are shown as cumulative from the date of ECF program approval.
  - Certain floors shall be adjusted for deviations of investment spending and budget support loans from the baseline (see TMU, ¶11).
  - 2024, 2025 and 2026 floors shall be adjusted for: (i) deviations of banks' deposits of unfit S$ banknotes at the CBL from the baseline, and (ii) deviations of the value of unfit S$ banknotes shipped to the Federal Reserve from the value credited to the CBL’s account (see TMU, ¶20).
  - Some CBL numbers exclude monetary policy costs.

### Prior actions and structural benchmarks (Tables 3 and RM matrix highlights)
- Prior Actions / Status (selected items):
  - Adopt and start implementing new revenue measures to generate at least US$10 million in 2026: Not met, fuel excise increase replaced by expenditure cuts.
  - Publish the Bank Financial Institutions Holding Act: Met.
  - MFDP to provide complete borrowing terms and copies of original contracts of all GoL external debt obligations: Met.
  - CBL to report enforcement of NPL regulations requiring full provisioning for NPLs older than one year and writing off NPLs older than three years: Met (in one instance), Not Met in another instance where it was to be implemented as a Prior Action.
- Structural Benchmarks (selected planned measures and target dates):
  - Enact/adopt necessary amendments required for VAT implementation (in consultation with the Fund): Jun. 30, 2026 — In progress.
  - Submit legal amendments to Minerals and Mining Law and Liberia Revenue Code to strengthen mining fiscal regime (increase mineral royalty rates, increase withholding tax rates for interest and dividend payments specific to mining sector, allow indefinite carryforward of excess tax credit under the minimum tax): Oct. 31, 2026 — New proposed.
  - MFDP to enhance annual financial statements with detailed explanations of deviations in spending and revenues vs. approved budget/supplementary budget: April. 30, 2026 — In progress.
  - Multiple CBL bank-resolution related benchmarks with target dates spanning Dec. 31, 2025 to May 31, 2026 — several marked Not Met or re-proposed/new.
  - Governance-related measures (LACC and Ombudsman Office legal amendments to eliminate limits on publication of asset declarations): target dates Dec. 31, 2025 and May 31, 2026 — Not Met or re-proposed.
  - GoL to publish Governance Diagnostic report and adopt a detailed time-bound action plan: Sept. 30, 2026 — New proposed.

### Recurrent structural benchmarks (Table 4, selected)
- Reporting and compliance benchmarks (selected items and status/comments):
  - Enhance reporting on foreign exchange withdrawals: Monthly (within six weeks after end of month) — Met.
  - Semi-annual external audits on foreign exchange reserves of CBL (within eight weeks after end of each half of the year): Semiannually — Not Met, implemented with a delay.
  - Submit quarterly compliance reports to CBL BoG with details of deviations from CBL policies and procedures (from 2024Q1; within 30 days after end of quarter): Quarterly — Not Met, implemented with a delay.
  - MFDP to prepare monthly fiscal reports and rolling cash plans (from June 2024): Fiscal report by the 15th and cash plan by the 30th or last day of month — Not Met (Fiscal report met, Cash plans not).
  - Expand and update domestic tax and customs duties exemptions database annually; comprehensive report included in government budget: Annually — Next tax expenditure report based on 2025 data to be completed by September 2026.
  - CBL to submit monthly report on enforcement of reserve requirements and regulatory actions/penalties (from February 2025): Monthly — Met.
  - CBL to submit monthly report for enforcement of NPL regulation (from November 2025): Monthly — New proposed.
  - MFDP to publish supplementary budget within 30 days following Legislature’s approval (starting October 30, 2025): No supplementary budget in 2025.
  - MFDP to develop and publish a fiscal table presenting interest expenditure separately from debt amortization, distinguishing external grants from loans, and present domestic/external borrowing and amortization separately starting with FY2027 National Budget (starting from October 31, 2026): New proposed.

### Technical Memorandum of Understanding (TMU): program exchange rates and definitions (selected)
- Program exchange rate conventions (Text Table 1 values, As of July 31, 2024):
  - US dollars: Currency Units Per SDR 1.33; Liberian Dollars Per Currency Unit 195.37; US Dollars Per Currency Unit 1.00
  - British Pound Sterling: Currency Units Per SDR 1.03; Liberian Dollars Per Currency Unit 250.89; US Dollars Per Currency Unit 1.28
  - Japanese Yen: Currency Units Per SDR 202.45; Liberian Dollars Per Currency Unit 1.28; US Dollars Per Currency Unit 0.01
  - Euro: Currency Units Per SDR 1.23; Liberian Dollars Per Currency Unit 211.55; US Dollars Per Currency Unit 1.08
  - SDR: Currency Units Per SDR 1.00; Liberian Dollars Per Currency Unit 259.54; US Dollars Per Currency Unit 1.33
  - XUA: Currency Units Per SDR 1.00; Liberian Dollars Per Currency Unit 259.80; US Dollars Per Currency Unit 1.33
  - RMB: Currency Units Per SDR 9.59; Liberian Dollars Per Currency Unit 27.06; US Dollars Per Currency Unit 0.14
- Definitions and measurement conventions (selected):
  - Government (for program purposes): the budgetary central government of Liberia (GoL), excluding extrabudgetary units, public nonfinancial corporations, public financial corporations, social security funds, and local government. Operations are presented in U.S. dollars; Liberian dollar-denominated amounts are converted at the period average exchange rate.
  - Budgetary central government coverage: central government entities with budgets covered by the main budget controlled by the Ministry of Finance and Development Planning (MFDP); includes on-budget operations and off-budget transactions managed by these entities.
  - Revenue collection of the budgetary central government: all tax and non-tax receipts transferred into GOL revenue accounts at the CBL for the fiscal year, including income/transfers from state-owned enterprises and public institutions, and budget support loans and grants. External loans and grants for off-budget projects managed by the budgetary central government are excluded unless otherwise stated. Revenue is measured in U.S. dollars.
  - Public sector definition: general government (central government, local government and social security funds), public nonfinancial corporations and public financial corporations.
  - Public external debt definition (program purposes): debt of the central government owed to non-residents; applies to commitments contracted or guaranteed for which value has not been received. External debt is considered contracted or guaranteed once conditions for entry into effect have been met (including legislative ratification and legal opinion as required).
  - Concessionality rule: For program purposes, a debt is concessional if it includes a grant element of at least 35 percent. The grant element is the difference between the net present value (NPV) of debt and its nominal value, expressed as a percentage of the nominal value. The NPV is calculated by discounting the future stream of payments of debt service at a discount rate of 5 percent. Loans from private entities are not concessional unless accompanied by a grant or grant element from a foreign official entity, and both components constitute an integrated financing package with a combined grant element ≥ 35 percent.

*Source: Attachment II. Technical Memorandum of Understanding and Tables 1–4, as provided in the supplied content unit.*

### 8. Non-concessional public external debt is external debt (as defined in paragraph 7)

### 8. Non-concessional public external debt is external debt (as defined in paragraph 7)

### Definitions and Measurement
- Non-concessional public external debt: external debt (as defined in paragraph 7) that does not meet the definition of concessionality defined in paragraph 8.
- Reporting and valuation: External debt and its concessionality will be reported by the Debt Management Unit of the Ministry of Finance and Development Planning and will be measured in U.S. dollars at current exchange rates.

### Quantitative Performance Criteria (QPCs)
Program performance will be assessed against the following quantitative performance criteria:
- Primary fiscal balance excluding grants (floor).
- New arrears on public external debt (ceiling).
- Present value of new public and publicly guaranteed external debt contracted (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 Excluding Grants
- Coverage: Cumulative flow of the primary fiscal balance excluding grants since the beginning of the fiscal year (January to December).
- Scope: Relates to revenue and expenditure of the budgetary central government (as defined in paragraph 4).
- Measurement for monitoring and QPCs: On-budget operations only. Primary balance = revenue, excluding budget-support grants and loans, minus expenditure net of interest payments (including on-budget gross investment in nonfinancial assets).
- Revenue definition: All revenue collected by the LRA.
- Expenditure measurement: Commitment basis.
  - Non-payroll expenditures: commitment when a purchase order (voucher) is issued.
  - Payroll expenditures: commitment when the payment is approved.
- Primary fiscal balance for debt sustainability analysis: Calculated using revenue and expenditure of the budgetary central government including budget support grants and off-budget transactions (loans) provided by multilateral and bilateral development partners.

Adjustors to the primary balance excluding grants:
- If cumulative budget support grants and concessional budget support loans received up to the relevant quarter exceed amounts in Text Table 2, the floor will be adjusted downward by the excess.
- If part of expenditure were for capital injections 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.
- The 2024 and 2025 floors shall be adjusted up by the sum of shortfalls in on-budget capital spending (as defined in paragraph 27). This adjustor shall not be negative and be capped at US$60 million for 2025. Shortfalls are relative to reference values shown in Text Table 2.

Text Table 2. Liberia: Adjustor to the Primary Balance Excluding Grants, 2025Q2-2026Q4 (Millions of U.S. dollars, Cumulative)
- 2025Q2: Budget support loans 0.0; On-budget Capital Spending 29.0
- 2025Q4: Budget support loans 60; On-budget Capital Spending 67
- 2026Q2: Budget support loans 0.0; On-budget Capital Spending 34
- 2026Q4: Budget support loans 52.5; On-budget Capital Spending 87

### New Arrears on Public External Debt
- Ceiling: Zero ceiling on payment arrears on public external debt.
- Definition of accrual: External payment arrears accrue when undisputed payments such as interest or amortization on debts of the Government (as defined in paragraph 3) to non-residents are not made within 30 days of the contractual due date or within the contractual grace periods, whichever is later; or for sovereign guarantees, when payments due by the Government are not executed within the terms established in the sovereign guarantee.
- Exclusions: Arrears arising from external payment obligations being renegotiated with creditors and arrears on debts in dispute on the due date of payment are excluded.
- Data source: Primarily the Debt Management Unit of the Ministry of Finance and Development Planning; where gaps arise, other fiscal and monetary sources will be used to reconcile the data.
- Monitoring: This performance criterion will be monitored on a continuous basis.

### Present Value (PV) of New Public and Publicly Guaranteed External Debt Contracted
- Ceiling: Applies to the cumulative PV of all new external debt contracted or guaranteed by the public sector, including commitments contracted or guaranteed for which no value has been received. Excludes debt contracted from the IMF.
- PV calculation: Using the IMF “PV Tool” based on loan amount, projected disbursements, maturity, grace period, payment schedule, and fees.
- Special cases: For debts with a grant element equal to or below zero, the PV will be set equal to the nominal value of the debt.
- Discount rate: Unified discount rate of 5 percent set forth in Executive Board Decision No. 15248- (13/97).
- Currency conversion: PV of external debts in currencies other than the U.S. dollar will be calculated in U.S. dollar terms at program exchange rates as specified in TMU Text Table 1.
- Reporting obligations: The MFDP must immediately report to IMF staff upon signing any new contracts for external loans or guarantees, informing the terms, conditions and assurances underlying those obligations; must immediately report when those contracts become effective by means of ratification and when disbursements are received.

Adjustor to the debt PV ceiling:
- The PV of the debt ceiling will be adjusted upwards by up to 5 percent in case deviations from the performance criterion on the PV of new external debt are prompted by a change in financing terms (interest, maturity, grace period, payment schedule, upfront commissions, management fees) of a debt or debts.

### CBL’s Operational and Capital Expenditure (Ceiling)
- Definition: Sum of total accrual based operating expenses and cash-based capital expenditure excluding the interest paid on CBL instruments and facilities.
- Measurement: Budget is measured in U.S. dollars, with all Liberian dollar expenditure converted at the monthly period-average exchange rate.

### CBL’s Net International Reserves (NIR) (Floor)
- Definition: Difference between gross official reserve assets and gross reserve liabilities. Presented in U.S. dollars.
- Valuation: Assets and liabilities denominated in SDRs are valued at a fixed rate of the U.S. dollar against SDR at the program exchange rate (Text Table 1). Other currencies are valued at cross rates against the U.S. dollar using program exchange rates (Text Table 1).

Gross official reserve assets include:
- (i) monetary gold holdings;
- (ii) holdings of SDRs in the IMF SDR Department;
- (iii) the 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;
- (viii) other unpledged convertible liquid claims on non-residents.

Gross official reserve assets exclude:
- (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 banknotes in vault and in transit;
- (vi) gross reserves that are in any way encumbered or pledged, including, but not limited to:
  - (a) assets blocked when used as collateral for third-party loans and third party payments or pledged to investors as a condition for investing in domestic securities;
  - (b) assets lent by CBL to third parties that are not available before maturity and are not marketable;
  - (c) assets blocked for letters of credit;
  - (d) assets ring-fenced in accordance with guarantees.
- Note: In the context of Liberia’s dual currency system, foreign currency includes US dollars.

Gross reserve liabilities of the CBL are defined as the 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 an original maturity of up to, and including, one year;
- (iii) all foreign currency deposits of the Government with the CBL.
- Exclusion: SDR allocations are excluded from gross reserve liabilities of the CBL.

Data and adjustments:
- For QPC calculation on NIR: end-of-the-month foreign exchange numbers audited by the Internal Audit Department of the CBL will be used, except for IMF accounts numbers (Reserve tranche position, SDR holdings, and Use of Fund resources will be taken from IMF records).
- Adjustor to the QPC on the floor on the change in NIR:
  - The QPC floor on the change in NIR shall be adjusted down by the difference between the value of unfit U.S. dollar banknotes shipped to the Federal Reserve and the value credited to the CBL’s account.
  - The QPC floor on the change in NIR shall be adjusted up (down) if banks’ actual deposits of unfit U.S. dollar banknotes at the CBL are less (greater) than the baseline projections in Text Table 3.

Text Table 3. Liberia: Adjustor to the Floor on NIR, December 2024 – June 2026 (Millions of U.S. dollars)
- 2025Q2: Deposits of unfit US$ banknotes by banks* 3.0
- 2025Q4: Deposits of unfit US$ banknotes by banks* 10
- 2026Q2: Deposits of unfit US$ banknotes by banks* 5
- *Cumulative from beginning of year.

Recognition rule:
- GOL deposits credited to the CBL’s accounts before or on the test date but whose liability is recognized by the CBL after the test date shall, for program purposes, be recognized as GOL deposit occurring on the test date.

### CBL’s Gross Direct Credit to Government (Ceiling)
- Definition: Sum of all claims on the government in local and foreign currency.
- Includes:
  - loans to the Government in local currency including all suspense accounts;
  - loans to the 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”;
  - all other claims on the government in local currency.

### Indicative Targets
The program sets indicative targets for:
- Total revenue collection of the budgetary central government (floor).
- New domestic arrears related to the GOL security repayments to banks (ceiling).
- Social and other priority spending (floor).
- Share of central government wage bill paid in LRD (LRD share in GoL compensation payments) (floor).
- On-budget investment spending (floor).

Total revenue collection:
- For the indicative target on revenue collection, total revenue = revenue collection of the budgetary central government (as defined in paragraph 5) excluding budget support loans and grants.

New domestic arrears related to GOL security repayments to banks:
- Ceiling applies on new domestic arrears of one type of government expenditure.
- For payment of interest and/or principal on government debt to banks: 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:
- Social spending is defined as education and health.
- Education and health spending consist of the cumulative payments up to the relevant quarter and/or semiannually in the fiscal year of the units listed in Text Table 4 (payment vouchers approved by the Ministry of Finance and Development Planning).

Text Table 4. Liberia: Social and Other Priority Spending
- Education: Total wage bill and workforce of teacher and non-teacher staff.
- Health: 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 investment spending:
- Definition: Gross investment in nonfinancial assets as stated in the budgetary central government statement of operations table.
- Consistent with Government Finance Statistics Manual 2014 transactions in nonfinancial assets, broadly in line with GOL public sector investment program excluding 60 percent of the transfers to the Road Fund.
- Excludes off-budget projects related to donor projects.
- Indicative target based on annual gross investment; assessment uses cumulative spending up to the relevant quarter in the fiscal year.

Share of central government wage bill paid in LRD (LRD share in GoL compensation payments)
- A floor applies to the share of central government wage bill (as a percent of total central government wage bill) paid in Liberian dollars to support de-dollarization efforts.
- Measurement: Based on quarterly central government gross wage spending (compensation of employees) on cash basis.
- Valuation: Central government gross wage bill measured in U.S. dollars, with all Liberian dollar wage bill converted at the monthly period-average exchange rate.
- Reporting: This share is provided by the authorities through the monthly fiscal monitor report.

### Data Reporting
- Coordination and reporting: The Ministry of Finance and Development Planning and the CBL will coordinate and regularly report the information requested in Tables 1-3 to IMF staff.
- Submission: 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.
- Additional reporting: The authorities will provide the Fund with such information as the Fund requests in connection with program implementation and objectives.
- CBL reporting: In addition to summarized tables, the CBL will provide detailed balance sheet data to IMF staff when requested.

### E. RSF Reform Measures
- (Section header present in source; no substantive content provided in the supplied text.)

*Source: 8. Non-concessional public external debt is external debt (as defined in paragraph 7), 1lbrea2026001 - Liberia IMF program documentation.*

### 33. For all reform measures (RMs), the authorities will share relevant materials with the

### 33. For all reform measures (RMs), the authorities will share relevant materials with the

### Reform measure protocol
- For all reform measures (RMs), the authorities will share relevant materials with the IMF at least 2 months before program reviews to allow for timely feedback on progress.
- The design and implementation of measures underpinning the agreed RMs will align with IMF staff technical recommendations and, where applicable, guidance from development partners such as the World Bank, the WHO, and the GCA.

### Data reporting requirements for program monitoring (selected highlights)
- Reporting cadence expectations:
  - Many MFDP and CBL reports: Monthly — Within three weeks after the end of the month.
  - Some MFDP reports (state-owned enterprise financial operations): Quarterly — Within 45 days after the end of the quarter.
  - Certain CBL reporting: Weekly (preliminary data) and Monthly (reconciled data) — Within five days after the end of the week (preliminary) and within three weeks after the end of the month (reconciled).
  - CBL production data: Quarterly — Within six weeks after the end of the quarter.
- Key MFDP deliverables (monthly, within three weeks after the end of the month unless otherwise stated):
  - Report on status of implementation of performance criteria, prior actions, and structural benchmarks (Monthly — Within three weeks after the end of the month).
  - Monthly fiscal reconciliation reports reconciling cash revenue and expenditure with spending commitments.
  - Detailed monthly reports on 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 program purposes on commitment and cash basis.
  - Monthly report on the amount of new domestic debt contracted or guaranteed by the Government, classified by creditor, instrument type, currency, and corresponding terms.
  - Detailed reports on monthly payments on domestic debt; end-of-period stock of domestic debt arrears and payments on arrears; outstanding appropriations, allotments and commitments, and disbursements for line ministries and agencies.
  - Weekly cash plan report (Monthly submission) detailing weekly revenue and expenditure cash flows and monthly cash plan for remainder of fiscal year — Within twenty-one days after the end of the week.
- Key CBL deliverables:
  - 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 — Within three weeks after the end of the month.
  - Monthly reports of CBL’s claims on and liabilities to Central Government and Public Nonfinancial Corporations — Within three weeks after the end of the month.
  - Detailed report on the Balance of Payments (Quarterly — Within 45 days after the end of the quarter).
  - Detailed report on International Investment Position (Semi-annually — Within 45 days after the end of the semester).
  - Full set of monthly Financial Soundness Indicators (FSIs) — Monthly — Within three weeks after the end of the month.
  - Loan classifications and provisioning tables, income statements of ODCs, commercial banks’ loans and advances by sector — Monthly — Within three weeks after the end of the month.
  - Daily/weekly reporting of net international reserves and components; gross foreign exchange inflows and outflows and components; and transactional level foreign exchange data — Weekly (preliminary) and Monthly (reconciled) — Within five days after the end of the week (preliminary) and within three weeks after the end of the month (reconciled).
  - CBL cash and budget weekly outturn relative to forecast (Weekly preliminary; Monthly reconciled).
  - CBL liquidity forecasting up to 6 months ahead — Monthly — Within three weeks after the end of month.
  - CBL FX auctions summary and Treasury auction details — Weekly or Monthly timing as specified.
- Debt reporting specifics:
  - MFDP monthly: detailed report on loans and sovereign guarantees in the pipeline; monthly disbursements of external debt by loan, category, creditor, and project; monthly payments of interest and principal on external debt by loan instrument, including due date, grace period, and confirmation number informed by CBL; detailed report with projections for conforming and disputed external debt service payments over the next five years (monthly frequency) and over the next 40 years (annual frequency).
  - MFDP quarterly: detailed report on the external debt inventory and reconciliation facts — Quarterly — Within 45 days after the end of the quarter.
  - CBL monthly: detailed report on external debt service payments and received external debt disbursements, including Swift transaction confirmation numbers — Monthly — Within three weeks after the end of the month.

### Debt Sustainability Analysis (DSA) — key findings
- Risk ratings:
  - 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 of assessment: April 7, 2026
- Assessment summary:
  - The DSA assesses Liberia at moderate risk of external debt distress and at high risk of total public debt distress, with limited space to absorb shocks.
  - Staff consider public debt to be sustainable.
  - The PV of external debt remains below the threshold over the entire projection period.
  - More than 90 percent of Liberia’s external debt is on highly concessional terms and held by multilateral lenders.
  - Domestic debt is mostly denominated in U.S. dollars but most of it is owed to the Central Bank of Liberia (CBL) at favorable terms.
  - Debt projections assume continued prudent fiscal policy that maintains the primary fiscal deficit below 1 percent of GDP over the projection horizon while avoiding non-concessional external borrowing in the nearer term.
- Vulnerabilities and risks:
  - Key downside risks include negative shocks to growth and terms of trade, declining international aid and foreign direct investment, and a potential reversal of prudent fiscal policy.
  - Liberia is highly vulnerable to climate and epidemic shocks, which could increase import needs, reduce export capacity, and worsen economic resilience and social stability.
  - The RSF financing is expected to improve the balance of risks by helping Liberia address climate-related and pandemic vulnerabilities and build resilience.
- Debt-carrying capacity:
  - Liberia’s Composite Indicator (CI) score: 2.59 based on the October 2025 WEO data and the 2024 Country Policy and Institutional Assessment (CPIA), indicating weak ranking.
  - To change the debt carrying capacity to medium, two consecutive signals are needed.

### Public debt coverage — headline statistics and specifics
- Coverage:
  - The DSA includes central government debt, central government guaranteed debt, and central bank debt contracted on behalf of the government.
  - The external and the domestic debt of the central government is fully covered in the DSA.
- External debt (2025):
  - Total external debt: US$1,868 million in 2025
    - Multilateral lenders: US$1,691 million
    - Official bilateral lenders: US$104.5 million
    - Commercial lenders: US$71.8 million
- Domestic debt (2025):
  - Total domestic debt: US$995.8 million in 2025
    - Government borrowing from the CBL: US$633 million
    - Sovereign bonds held by commercial banks: US$249 million
  - Of the debt owed to domestic banks, local currency debt accounts for about one-seventh.
  - The debt from the CBL largely reflects legacy debt that was restructured, securitized, and fully recognized in 2019.
- IMF credit to the CBL:
  - IMF credit to the CBL is recorded as external debt and reached US$251.4 million at end-2025, increasing from US$197.0 million as of end-2024 largely due to new disbursements under the current ECF-supported program.
- State-Owned Enterprises (SOEs) and contingent liabilities:
  - SOE debt is generally guaranteed by the government or reflects funds borrowed externally by the government and on-lent to SOEs and as such is captured by the DSA.
  - There could be SOE debt owed to domestic banks that is not covered in the DSA.
  - Authorities are undertaking measures to improve transparency of SOE debt, including a GAC audit of government domestic debt and arrears and financial audits of SOEs.
  - Under the current ECF program, the MFDP has committed to developing a comprehensive inventory of government domestic debt and contingent liabilities by June 2026.
  - Some SOE-guaranteed debt owed to domestic creditors reported in annual and quarterly Debt Management Reports was deemed unreliable by the June 2025 IMF mission; that data is excluded from the domestic debt stock.
- Other coverage notes:
  - On-lent funds that are repaid by the CBL but not yet reimbursed by the government are recorded as domestic debt.
  - Local governments have no access to external financing; hence, only domestic borrowing by SOEs and local governments, as well as private sector external borrowing, escape the DSA (amounts deemed to be small).

### Contingent liability stress test
- Approach:
  - The DSA includes a contingent liability stress test consistent with the Guidance Note on the Bank-Fund LIC DSF.
  - Due to concerns about the reliability and comprehensiveness of Liberia’s debt statistics—including those related to Public-Private Partnerships (PPP)—the stress test applies default shock values.
- Modeled shocks (one-off increases in the debt-to-GDP ratio totaling 19.7 percent of GDP):
  - Financial market disruptions: 5 percent of GDP
  - SOE guaranteed or non-guaranteed debt recognition: 2 percent of GDP
  - PPP distress or cancellations: 12.7 percent of GDP

_Prepared by the International Monetary Fund and the International Development Association._

### 2.        This DSA is being conducted in the context of the third review under the ECF-

### 1lbrea2026001 - 2. This DSA is being conducted in the context of the third review under the ECF-

### Context and framework
- DSA conducted in the context of the third review under the ECF-supported program approved in September 2024 and the request for an arrangement under the Resilience and Sustainability Facility (RSF).
- Last LIC-DSF considered by the Executive Board on October 1, 2025 under the second review of the ECF arrangement and the 2025 Article IV Consultation; published November 7, 2025.
- Liberia remains subject to the IDA Sustainable Development Finance Policy (SDFP).
- This DSA is prepared jointly by IMF and World Bank staff, in collaboration with the authorities of Liberia, following the revised Debt Sustainability Framework (DSF) for LICs and Guidance Note (2017) in effect as of July 1, 2018.

### Public debt levels and trends (key statistics)
- Total public debt:
  - 2025: US$2,863 million (54.9 percent of GDP).
  - 2024: US$2,693 (56.4 percent of GDP).
- Present value public debt-to-GDP ratio:
  - Rises by 1.6 percent of GDP to 45.7 percent in 2025, mainly due to higher financing needs.
- External debt (present value terms):
  - End-2025: 26.6 percent of GDP, up from 26.1 in the previous DSA projections.
- Domestic debt:
  - Fell by 1.3 percent of GDP in 2025.
  - In nominal terms, domestic debt increased by 2 percent in 2025.
- Debt service:
  - Total debt service in 2025: US$196.1 million (3.8 percent of GDP).
  - Nominal increase from 2024: 18.7 percent (0.3 percent of GDP).
  - External debt service shares 63.1 percent of total debt service.
- Creditor composition (end-2025 snapshot):
  - 59.1 percent of public debt held by multilateral lenders.
  - World Bank and IMF shares of total public debt: 35.4 percent and 8.8 percent, respectively.
  - Central Bank of Liberia (CBL) holds 22.1 percent of total public debt (largest domestic holder).
  - Domestic debt is entirely held by residents.
- Currency composition and vulnerability:
  - Most domestic debt is denominated in U.S. dollars, reflecting high degree of dollarization and higher vulnerabilities due to foreign exchange exposures.
- Memo items:
  - Nominal GDP: 2024 US$4,778; 2025 US$5,216.

### Data reconciliation and differences
- Main source of difference between DSA and World Bank DRS is treatment of debt to the IMF:
  - DRS includes SDR allocations as external debt, while the DSA does not.
- Text Table 2 shows DRS vs DSA comparisons (selected examples for 2024):
  - External (DRS): 2,089; (DSA): 1,717; Difference: -372.
  - Multilateral (DRS): 1,949; (DSA): 1,520; Difference: -429.
  - IMF (DRS): 727; (DSA): 197; Difference: -530.
  - IDA (DRS): 828; (DSA): 929; Difference: 101.
  - Bilateral (DRS): 112; (DSA): 111; Difference: -1.
  - China (o/w) (DRS): 50; (DSA): 46; Difference: -4.
- Sources for charts and tables: Liberian authorities and IMF staff calculations; 2025 values are projections.

### Recent public finance dynamics and drivers (2024–25)
- 2024 fiscal outcomes:
  - Fiscal balance (including off-budget external aid) improved from a deficit of 7.0 percent of GDP in 2023 to 2.0 percent of GDP in 2024.
  - Improvement driven by revenue collection increase of 1.2 percentage points of GDP and spending rationalization (goods and services spending reduced by more than 3.8 percentage points of GDP).
  - Lower-than-projected IDA disbursements in 2024 (postponement of two projects) contributed to better fiscal outcomes.
- 2025 preliminary fiscal outcome:
  - Deficit lower than projected at 1.1 percent of GDP, largely due to strong revenue collection and postponed disbursement of planned WB budget support.
- Government repayments:
  - Government repayments of non-bank financial obligations—especially those owed to NASSCORP—helped offset increases in domestic debt.
  - CBL’s direct claims on government were reduced due to the CBL’s repayment of previous IMF budget support on behalf of the government; under agreement the government is scheduled to begin repaying the CBL starting in 2029.
  - The 2019 restructured and consolidated loan agreement between the government and CBL allows CBL to repay IMF budget support obligations on behalf of the government; these repayments are then recorded by the CBL as direct claims on the government.

### Macroeconomic assumptions underlying DSA baseline
- The baseline assumes implementation of sound macroeconomic policies and structural reforms, including climate change adaptation measures supported by the RSF arrangement.
- Key macro assumptions and projections (selected figures preserved as presented in Text Table 4 and narrative):
  - Real GDP growth:
    - 2024 (current): 4.0 percent.
    - 2025 (current estimate): 5.1 percent (picked up from 4.0 percent in 2024).
    - Medium-term average projection: around 5.6 percent.
    - Long-term (2029-45) projection: 4.7 percent.
  - Real GDP growth per capita (current):
    - 2024: 1.8
    - 2025: 3.0
  - Current account balance (current):
    - 2024: -8.1
    - 2025: -6.5
  - Growth rate of exports of goods and services (current):
    - 2024: 17.2
    - 2025: 54.2
  - Inflation (end-of-period, current):
    - end-2024: 10.7 percent.
    - end-2025: 4.0 percent.
    - Average inflation in 2025: 8.3 percent.
    - Projected to decelerate to around 5.0 percent in 2029-30.
  - Primary fiscal deficit (current):
    - 2024: -0.8
    - 2025: 0.2
- Growth drivers and assumptions:
  - Ramp-up in iron ore mining investment and production: one mining company investing equivalent of over a quarter of GDP over 2023-25, aiming to increase production by more than five-fold in the medium to long term.
  - Sustained growth in the gold sector.
  - Continued recovery in agriculture.
  - Infrastructure investment via development partners, including a 20 MW solar plant by 2025 and planned expansion of Mount Coffee hydropower facility from 88 MW to about 130 MW by 2028.
  - Faster reform of the state electricity company and various reforms supported by WB DPOs and IMF programs, including under envisaged RSF-supported program.
  - Projections take a conservative approach to account for potential delays in reform implementation and operational/commodity price uncertainties.
- Risks to growth:
  - Failure to raise productivity growth back to post-civil-war average if reforms to education, public investment efficiency, and business environment falter.
  - Climate-related setbacks present additional downside risk.
- Current account dynamics:
  - CA deficit including grants declined in 2025 to 6.5 percent of GDP due to fiscal consolidation, sustained terms-of-trade gains (especially gold), expanded iron-ore production, and large net remittance flows.
  - Drop in donor grants reduced demand for services imports, narrowing the CA deficit.
  - Going forward, projected near-term widening of CA deficit due to projected terms-of-trade deterioration and import-intensive mining investments; long-term diversification expected to support more stable CA balance.
  - External position assessment: Liberia’s external position is weaker than level implied by fundamentals and desirable policies.
  - Financing of CA deficit expected from FDI, project grants, and concessional loans from IFIs and bilateral donors; risks include global policy uncertainty, tighter global financial conditions, shifts in donor priorities, and increased competition for concessional resources.
- External sector outcomes:
  - Exports of goods and services in 2025 increased by 54.2 percent in nominal terms, reaching 40.4 percent of GDP.
  - Imports of goods and services in 2025 increased by 34.1 percent in nominal terms, reaching 58.8 percent of GDP.
  - Near-term balance of goods and services trade stabilizes around 20 percent of GDP, gradually narrowing to around 18 percent by 2045.
- Reserves:
  - Gross official reserves increased from US$475 million (1.9 months of imports) at end-2024 to US$572 million (2 months of imports) at end-2025.
  - Authorities committed to gradually building reserves to around 3 months of imports in the medium term.

### Financing mix and borrowing assumptions
- External borrowing assumptions:
  - Liberia relies mostly on external borrowing to meet medium-term public gross financing needs due to underdeveloped domestic financial market.
  - External financing expected to come mostly from multilateral and official bilateral lenders.
  - External financing expected to remain predominantly concessional over the medium term; high grant element helps contain debt service and supports favorable debt dynamics.
  - IMF new disbursements under ECF and RSF:
    - 2026: US$152.3 million.
    - 2027: US$248.1 million.
  - New external borrowing in 2026-28 projected at US$959 million (corresponding to around 74.2 percent of total new borrowing in the period).
  - Grant-equivalent external borrowing projected to fall from 62.1 percent in 2026 to around 54 percent in 2045, implying a gradual shift toward less concessional financing over the long term.
- Text Table 5 (selected external borrowing projections, Millions of USD):
  - Total (2026): 314; (2027): 428; (2028): 217.
  - Multilateral (2026): 313.6; (2027): 428.1; (2028): 206.0.
  - IMF (2026): 152.3; (2027): 248.1; (2028): 0.0.
  - IDA (2026): 141.3; (2027): 159.9; (2028): 176.9.
  - Other multilaterals (2026): 20.0; (2027): 20.0; (2028): 29.1.
  - Bilateral (2028): 11.0.
- Domestic borrowing:
  - During 2026-28, new domestic borrowing is projected around US$333 million (text cut off in source; figure preserved where provided).

### Policy implications emphasized in the DSA
- Continued implementation of ECF-supported reforms and RSF-supported climate adaptation measures is central to the baseline and to maintain prudent debt dynamics.
- Maintain primary deficit below 1.0 percent of GDP over the long term through:
  - Continued domestic revenue mobilization (tax policy and administration reforms, tax base expansion, improved compliance).
  - Expenditure discipline and efforts to improve spending efficiency.
  - Growth-related revenue gains helping offset spending pressures.
- Manage shift toward less concessional external financing carefully to avoid worsening terms or accumulating non-concessional debt risks.
- Build gross official reserves toward around 3 months of imports to withstand external shocks and build external buffers.
- Prudently account for risks from commodity price volatility, implementation delays of large projects, and climate-related shocks in debt and macro projections; stress tests to capture adverse growth and export shocks that would weaken debt dynamics.

*Sources: Liberian authorities and IMF staff estimates and projections; Text Tables and Figures as presented in the DSA.*

### 25.8 percent of total borrowing needs.

### 1lbrea2026001 - 25.8 percent of total borrowing needs.

### Domestic borrowing, composition, and rollover risks
- Domestic borrowing is projected in the form of short-, medium-, and long-term foreign currency denominated treasury bills and bonds.
- This assumes no central bank financing, in line with the amended and restated CBL Act of 2020, which prohibits central bank lending to the government except for limited amount under exceptional circumstances (e.g., natural disaster, war, or famine).
- Due to the shorter maturity profile of domestic instruments, limited investor participation, and weak auction credibility following repeated arrears, the government faces significant constraints in rolling over maturing obligations on market terms.
- As a result, additional external borrowing may be required to mitigate refinancing pressures.
- These vulnerabilities underscore the importance of strengthening domestic debt management and restoring market confidence to support more reliable domestic refinancing over time.

### Arrears, disputed claims, and recent debt servicing developments
- The DSA is grounded in zero outstanding overdue debt payment obligations.
- As of end-December 2025, the GoL had cleared all outstanding, undisputed, external arrears.
- In January 2026, authorities recognized one of the three remaining disputed obligations, which reinstated the original repayment schedule, resulting in new emergence of arrears estimated at US$ 2.5 million.
- The authorities have initiated bilateral dialogues with the creditors holding the other two disputed claims.
- As of December 2025, Liberia had disputed claims with two official creditors and one commercial creditor totaling about US$71.8 million, including US$14.4 million in arrears. All but one of these three claims are incorporated in the stock of debt of this DSA, totaling US$70.2 million. Baseline projections also include repayments of those debt services.
- The GoL accumulated about US$4.9 million in domestic debt arrears, largely due to administrative coordination issues between the CBL and MFDP with respect to the timing of debt settlement processing. These domestic debt arrears were subsequently cleared in January 2026.
- The ongoing efforts to strengthen debt management capacity at the MFDP, together with the recently signed MoU between the CBL and MFDP that authorizes the CBL to execute debt service payments on their due dates, will significantly reduce the risk of future recurrence of debt arrears.

### Public borrowing plan (selected figures as presented)
- Text Table 6. Summary of Public Borrowing Plan (Millions USD) (gross financing needs are consistent with the DSA and macro framework for the third review of the current ECF arrangement; all external borrowings are long-term):
  - 2026 2027 2028
  - Gross financing needs 414 521 356
  - Financing sources 414 521 356
  - External 314 428 217
  - Concessional 173 180 206
  - Budget financing 52 40 40
  - Project financing 121140166
  - Non-concessional 14024811
  - Domestic 10093139
  - Other sources 000

### Role of RSF financing, concessionality, and realism of baseline
- The RSF arrangement significantly increases external financing in the medium term; its highly concessional terms limit debt service pressures and help preserve debt sustainability, despite raising debt stock in the near term.
- The scale of RSF financing reduces remaining borrowing space and underscores the need for prudent borrowing and continued prioritization of concessional resources.
- The baseline assumes RSF financing complements other concessional flows while supporting resilience and strengthening debt sustainability over time.
- The DSA keeps public investment about 6.0 percent of GDP, on average, throughout the projection period, while containing recurrent spending.
- The gaps left by the decline in concessional financing are assumed to be filled partly by external commercial financing in the longer run. The resulting rising share of non-concessional financing will narrow the margin of economic growth over interest rates on Liberia’s debt, but it will remain decisively positive, exerting a downward trend on debt ratios.
- Sensitivity analysis shows that higher borrowing costs or reduced concessionality would weaken debt dynamics, underscoring the importance of prudent borrowing and prioritizing concessional financing.

### Key debt and fiscal projections and thresholds
- External debt (level and PV):
  - External debt relative to GDP rises from its end-2025 level of 35.8 percent (26.6 in PV terms) to around 38.8 percent (27 in PV terms) in 2030, before gradually declining to 21.1 percent (18.2 percent in PV terms) by 2046.
- Total public debt:
  - Total public debt starts at 54.9 percent of GDP in 2025 in the current DSA (57.2 previously), with a PV value of 45.7 percent of GDP.
  - Public debt is projected to decline gradually to 23.7 percent of GDP in 2046; in PV terms the decline is less pronounced, crossing down the 35-percent-of-GDP threshold for moderate debt distress risk only in 2031 and stabilizing in the long-run around 21 percent of GDP.
- Fiscal consolidation and primary balance:
  - Achieving the debt path requires fiscal consolidation that brings the primary deficit ratio within a decade from 6.1 percent of GDP in 2023 (inclusive of off-budget operations) to much lower primary deficits in the near term while remaining below 1 percent of GDP throughout the projection period.
  - The gradual shift from grants and concessional to commercial external and domestic debt requires maintaining the primary balance at or below 1 percent of GDP to stabilize and then reduce the debt burden in terms of GDP.
- Debt-service and revenue indicators:
  - The debt-service-to-revenue and grants ratio is expected to increase in the short term from 17.9 percent in 2025 to 28.3 percent in 2028, due to the shortened GoL repayment profile of the US$83 million of CBL budgetary financing in 2023.
  - From 2029 onwards, this ratio will gradually decline and reach 9.9 percent by the end of the projection period.

### Risk assessment, stress tests, and country capacity
- Liberia’s debt-carrying capacity based on the Composite Indicator (CI) is assessed as weak. The CI score is 2.59, lower than in the previous DSA.
- Liberia remains assessed as “weak quality of debt monitoring” given the country’s debt-recording capacity.
- External DSA: Liberia’s risk of debt distress remains moderate in the baseline scenario. The PV of external debt-to-GDP stays below the threshold over the entire projection period. The debt-service-to-revenue ratio starts slightly above the threshold in the first year but gradually improves thereafter.
- Standard stress tests show that a deterioration of the macroeconomic outlook might push some external debt risk indicators above their thresholds. The alternative scenario with key variables at their historical averages highlights risks from a trend of weak external sector positions and high fiscal deficits.
- Granularity assessment: Liberia has limited space to absorb shocks. The PV of the debt-to-exports and debt service-to-export ratios remain in the region indicating substantial space to accommodate adverse shocks due to projected sustained exports growth, but PV of debt-to-GDP indicates limited space to absorb shocks.
- Important risks beyond standard stress tests: Liberia is highly vulnerable to climate and epidemic events that represent substantial challenges to economic growth, balance of payments sustainability, and social stability.

### Policy recommendations and institutional reforms emphasized
- Strengthen domestic debt management capacity at the MFDP to reduce rollover and refinancing risks.
- Restore market confidence and auction credibility to improve domestic investor participation and enable market-based rollover of maturing obligations.
- Prioritize concessional financing and prudent borrowing policies to preserve debt sustainability and make room for necessary public investment.
- Maintain fiscal consolidation to bring primary deficits down and keep the primary balance at or below 1 percent of GDP over the projection period.
- Improve debt transparency and debt-recording quality in line with ECF program Structural Benchmarks and Policy Commitments.
- Ensure timely debt settlement through institutional arrangements (e.g., the MoU between the CBL and MFDP authorizing the CBL to execute debt service payments on due dates) and continued bilateral dialogues with creditors over disputed claims.
- Continue strengthening external sector statistics and national accounts to reduce unexplained residuals in the debt dynamics framework and improve the realism of DSA projections.

*Source: 1lbrea2026001 - 25.8 percent of total borrowing needs.*

### 21.      The risks associated with domestic debt dynamics are assessed to be contained. However,

### 21.      The risks associated with domestic debt dynamics are assessed to be contained. However,

### Assessment of domestic debt dynamics
- Domestic public debt-to-GDP ratio temporarily exceeds the peer’s median for a brief period, but is projected to decline gradually over time.
- The projected reduction in domestic debt primarily reflects the government’s settlement of legacy obligations with the CBL.
- Solvency and liquidity indicators are expected to remain well below their historical averages and the corresponding medians for peer countries.
- Currently more than 90 percent of external debt is on highly concessional terms and held by multilateral lenders.
- The bulk of domestic debt is owed to the CBL on favorable terms.
- Primary deficit is projected to be below 1   percent of GPD throughout most of the projection period.

### Standard sensitivity analysis and stress-test results
- Under standard sensitivity analysis scenarios, Liberia would be rated at a high risk of public debt distress throughout the next decade.
- Among bound tests:
  - Shocks to real GDP growth generate the largest breaches of the benchmark on the PV of debt-to-GDP ratio; the PV of debt-to-GDP would remain well above the related benchmark.
  - Shocks to commodity prices lead to breaches of the threshold over the entire projection period.
  - Shocks to exports, FDI and concessional lending produce breaches throughout a large part of the projection horizon.
  - A contingent liability stress test (SOE external debt default, PPPs’ distress, and unrecorded financial market vulnerabilities) leads to a prolonged breach in the related threshold.
- The sensitivity tests illustrate vulnerability to less favorable financing conditions, including higher borrowing costs and reduced concessionality, which could significantly worsen debt dynamics relative to the baseline.

### Climate-related risks and DIGNAD analysis
- Liberia is highly vulnerable to climate change and climate-related natural disasters; natural disasters and changing climate patterns disrupt productivity, increase food insecurity and poverty, and add pressure on balance of payment needs.
- The DSA baseline implicitly assumes implementation of climate reforms supported by the proposed RSF arrangement and assumes that long-term growth potential of 4.5 percent is maintained.
- Complementary staff analysis using the IMF’s Debt Investment Growth Natural Disasters (DIGNAD) model shows:
  - A one-off natural disaster shock can significantly weaken growth and jeopardize debt sustainability.
  - Ex-ante public investment in disaster-resilient infrastructure can mitigate macroeconomic costs and reduce debt stress from post-disaster reconstruction.
  - Fiscal reforms to enhance domestic revenue mobilization and improve public investment efficiency reinforce these benefits and improve long-term debt sustainability.
  - DIGNAD analysis considers three scenarios; one is calibrated to cause a cumulative GDP loss of about 4 percent relative to the baseline in three years.
- A customized DSA stress test, calibrated to DIGNAD simulations, assumes:
  - An extreme weather event that causes a 2.5 percent decline in real GDP.
  - Additional public spending for post-disaster reconstruction and humanitarian assistance.
  - A 3.5 percent decline in export growth.
  - The spending needs are financed by a one-off increase in public debt equivalent to 6 percent of GDP.
  - Results indicate several sustainability thresholds would be breached; the PV of public debt-to-GDP would remain above the high-risk threshold for an extended period.
- An alternative scenario with more ambitious climate adaptation policies assumes:
  - Public investment efficiency would rise and GDP losses under less ambitious adaptation policies would be avoided.
  - About 80 percent of additional financing needs would be covered with medium- and long-term external borrowing, with the remaining part covered by domestic debt.
  - Debt-distress indicators would improve, especially in the long term, compared to the natural disaster scenario without adaptation.

### Risk rating, vulnerabilities, and projections
- Liberia is assessed to be at moderate risk of external debt and high risk of overall debt distress.
- All external debt sustainability indicators remain below their indicative high-risk threshold regions in the baseline, except for a minor breach in debt-service-to-revenue in the first year of the projection period.
- The PV of public debt-to-GDP ratio exceeds the 35-percent threshold until 2030, entailing an assessment of high risk of public debt distress.
- In 2031, the PV of public debt-to-GDP ratio is projected to cross down its indicative threshold, leading to an assessment of public debt sustainability under prudent fiscal policy implementation.
- Liberia is expected to continue benefiting from predominantly concessional external financing over the medium term, helping contain debt service obligations and support favorable debt dynamics.
- Risks remain that concessional financing could decline more rapidly than assumed, requiring greater reliance on less favorable borrowing terms and increasing debt vulnerabilities.
- RSF financing supports resilience and macroeconomic stability and contributes positively to debt sustainability over the medium to long term, but its size increases debt stock and reduces borrowing space.
- Despite the high risk of overall debt distress, public debt is assessed as sustainable because:
  - The interest rate-to-growth differential will remain negative, exerting strong downward pressure on debt ratios throughout the forecasting horizon.
  - Continued fiscal rationalization combined with automatic debt dynamics will ensure a gradual and steady decline in the ratio of the PV of public debt-to-GDP into moderate risk rating territory starting from 2031.
- Beyond 2031, public debt projections assume a continued gradual fiscal adjustment path that protects public investment while keeping debt in check amid rising debt service costs; once the financing mix settles, these factors will stabilize the ratio of public debt service to fiscal revenues.

### Policy recommendations and debt management measures
- Maintain prudent fiscal policy and prioritize borrowing on concessional terms or grants to safeguard debt sustainability and bring public debt to moderate debt distress risk.
- Ensure a prudent and conservative approach in contracting both new domestic (commercial bank financing) and external debt.
- Ensure transparency and timely disclosure of new debt contracts to monitor debt developments.
- Enhance debt management capacity without delay and develop and implement a credible and coherent medium-term debt strategy.
- The annual debt strategy should include a detailed borrowing plan to reduce risks associated with timely debt service and overall debt sustainability.
- Strengthen public financial management, including cash planning, to avoid incurring payment arrears or violating PFM regulations that require strict prioritization of debt service payments.
- Strengthen oversight of SOEs to mitigate fiscal risks and prevent the materialization of contingent liabilities.
- Urgently mobilize tax revenue to create fiscal space to implement the ARREST Agenda for Inclusive Development (AAID) and to better mitigate future adverse shocks.

### Balance of risks and authorities’ views
- Balance of risks is tilted to the downside:
  - A sizable drop in nominal GDP (due to sharp depreciation of the Liberian dollar (LRD) or weaker-than-anticipated real GDP growth) is a significant risk to external borrowing space and external debt risk ratings.
  - A larger-than-projected global slowdown, lower external demand, rising trade protectionism, or declines in exports, FDI and donor support could adversely impact Liberia.
  - High dependence on commodity exports and food imports exposes Liberia to global shocks.
  - Natural disaster events and pandemics could severely strain fiscal positions.
  - Deterioration in payment culture (accumulating new domestic and external arrears or missing payment deadlines) can lead to loss of confidence and tighter financing constraints.
  - Fiscal slippages could substantially reduce Liberia’s borrowing space.
  - If major climate risks materialize before adaptation measures are in place, economic activity could falter.
- Authorities’ views and commitments:
  - Authorities broadly agreed with the DSA and the ratings for debt distress risks.
  - Authorities are committed to adopting a strong medium-term fiscal framework, enhanced domestic revenue mobilization, and improved public spending efficiency.
  - Authorities will continue to foster coordination among debt management stakeholders, strengthen institutional frameworks, and enhance fiscal risk monitoring and management related to contingent liabilities.
  - Authorities will strictly prioritize concessional borrowing and grants, apply strict discipline in selecting externally funded projects (including PPPs), and comply with program targets.
  - Authorities intend to use fiscal policy space created under the RSF to address climate- and pandemic-related vulnerabilities threatening long-term BoP stability and debt sustainability.
  - Authorities hope donor support will drop off less than projected in the DSA; sustained higher-than-projected concessional financing would reduce recourse to non-concessional and commercial borrowing.

*Source: IMF staff DSA chapter for Liberia (content as provided in the supplied PDF excerpt).*

### 2.5 percentage points of GDP in

### 1lbrea2026001 - 2.5 percentage points of GDP in

### Indicators of Domestic Public Debt (Figure 6 excerpt)
- Time series points labeled 2020 2021 2022 2023 2024 2025 2026 2027 with vertical axis "In percentage points of GDP" and "In percent".
- Multiplier scenario labels shown: "Baseline", "Multiplier = 0.2", "Multiplier = 0.4", "Multiplier = 0.6", "Multiplier = 0.8".
- Graphic annotation: "2.5 percentage points of GDP in approx. top quartile".

### External Debt Sustainability Framework, Baseline Scenario, 2023–46 (Table 1 — selected indicators and projections)
- External debt (nominal) 1/ (Percent of GDP): 35.8 (Historical), 36.8 (2025), 39.7 (2026), 39.0 (2027), 39.5 (2028), 38.8 (2029), 37.8 (2030), 31.8 (2031), 21.1 (2036), 32.7 (2046), 36.5 (projection unspecified).
- of which: public and publicly guaranteed (PPG): same values as above.
- Change in external debt: -0.1 (historical), 1.0, 2.9, -0.7, 0.5, -0.7, -0.9, -0.8, -2.4.
- Identified net debt-creating flows: -5.0 (historical), 2.9, 2.7, 2.2, 2.8, 1.7, 1.4, 2.0, 1.4, 10.2, 2.0.
- Non-interest current account deficit (percent of GDP): 5.8, 10.5, 10.9, 11.3, 11.8, 12.2, 11.5, 11.4, 10.5, 16.7, 11.4.
- Deficit in balance of goods and services: 18.3, 20.3, 20.5, 20.5, 20.3, 20.0, 18.5, 18.7, 18.5, 29.0, 19.4.
- Exports (percent of GDP): 40.4, 41.2, 41.4, 42.2, 42.6, 42.0, 42.4, 42.5, 40.7.
- Imports (percent of GDP): 58.8, 61.4, 61.8, 62.7, 62.9, 62.0, 60.9, 61.3, 59.2.
- Net current transfers (negative = inflow): -18.8, -17.1, -17.1, -17.0, -16.7, -16.0, -15.3, -15.6, -15.6, -17.7, -16.1.
  - of which: official: -2.3, -1.9, -1.8, -1.6, -1.5, -1.4, -1.2, -0.9, -0.6.
- Other current account flows (negative = net inflow): 6.2, 7.4, 7.5, 7.8, 8.2, 8.2, 8.3, 8.2, 7.6, 5.4, 8.1.
- Net FDI (negative = inflow): -8.5, -6.5, -6.8, -7.4, -7.4, -8.8, -8.6, -8.6, -8.6, -5.1, -8.0.
- Endogenous debt dynamics: -2.3, -1.2, -1.5, -1.6, -1.6, -1.6, -1.5, -0.9, -0.4.
  - Contribution from nominal interest rate: 0.8, 0.5, 0.4, 0.4, 0.4, 0.4, 0.5, 0.5, 0.6.
  - Contribution from real GDP growth: -1.7, -1.7, -1.8, -2.1, -2.0, -2.1, -2.0, -1.4, -1.0.
  - Contribution from price and exchange rate changes: -1.3 (table continues but truncated in source).
- Residual 3/: 4.9, -1.9, 0.3, -2.9, -2.3, -2.4, -2.4, -2.8, -3.8, -8.2, -2.4.
  - of which: exceptional financing: 0.0 (series of 0.0 in table).
- Sustainability indicators:
  - PV of PPG external debt-to-GDP ratio: 26.6, 26.6, 27.9, 26.95, 27.3, 27.0, 26.6, 24.0, 18.2.
  - PV of PPG external debt-to-exports ratio: 65.7, 64.5, 67.6, 63.8, 64.0, 64.3, 62.8, 56.5, 44.8.
  - PPG debt service-to-exports ratio: 5.9, 5.8, 5.0, 4.8, 3.8, 3.7, 3.8, 3.5, 4.0.
  - PPG debt service-to-revenue ratio: 14.9, 14.6, 12.5, 12.2, 9.5, 9.2, 9.3, 8.6, 10.0.
- Gross external financing need (Million of U.S. dollars): -20.6, 363.4, 374.3, 378.8, 417.2, 361.4, 360.0, 476.2, 743.4.
- Key macroeconomic assumptions:
  - Real GDP growth (in percent): 5.1 (historical), 5.1, 5.4, 5.6, 5.6, 5.6, 5.5, 4.5, 4.5, 2.0, 5.1.
  - GDP deflator in US dollar terms (change in percent): 3.8, 2.9, 1.7, 1.1, 1.2, 1.4, 1.8, 2.1, 1.5, 3.4, 1.9.
  - Effective interest rate (percent) 4/: 2.3, 1.5, 1.1, 1.2, 1.1, 1.2, 1.3, 1.7, 2.5, 1.2, 1.4.
  - Growth of exports of G&S (US dollar terms, in percent): 54.2, 10.2, 7.6, 8.9, 7.9, 5.4, 8.5, 7.3, 6.3, 13.4, 7.6.
  - Growth of imports of G&S (US dollar terms, in percent): 34.1, 13.1, 7.8, 8.3, 7.2, 5.5, 5.5, 7.2, 6.4, 2.8, 7.5.
  - Grant element of new public sector borrowing (in percent): 32.5, 30.1, 28.9, 21.0, 12.2, 14.7, 7.2, N.A., 16.4 (series truncated with ellipses in source).
  - Government revenues (excluding grants, in percent of GDP): 15.9, 16.3, 16.4, 16.7, 17.0, 17.0, 17.1, 17.1, 16.3, 14.7, 16.9.
  - Aid flows (in Million of US dollars) 5/: 352.5, 313.0, 317.2, 321.5, 322.7, 266.4, 271.2, 271.2, 317.9.
  - Grant-equivalent financing (in percent of GDP) 6/: 6.1, 6.3, 4.7, 4.5, 3.6, 3.4, 2.5, 3.9 (table contains ellipses for other years).
  - Grant-equivalent financing (in percent of external financing) 6/: 62.1, 55.8, 66.4, 57.4, 57.8, 57.8, 55.0, 57.8 (ellipses present).
- Memorandum items:
  - PV of external debt 7/ (percent of GDP): 26.6, 26.6, 27.9, 27.0, 27.3, 27.0, 26.6, 24.0, 18.2.
  - In percent of exports: 65.7, 64.5, 67.6, 63.8, 64.0, 64.3, 62.8, 56.5, 44.8.
  - Total external debt service-to-exports ratio: 5.9, 5.8, 5.0, 4.8, 3.8, 3.7, 3.8, 3.5, 4.0.
  - PV of PPG external debt (in Million of US dollars): 1386.3, 1499.2, 1690.2, 1739.6, 1881.9, 1993.5, 2113.4, 2665.9, 3905.7.
  - (PVt-PVt-1)/GDPt-1 (in percent): 2.2, 3.4, 0.8, 2.2, 1.6, 1.6, 1.4, -0.7.
  - Non-interest current account deficit that stabilizes debt ratio: 5.9, 9.5, 8.0, 12.0, 11.3, 12.9, 12.5, 12.3, 12.9.
- Definitions and notes:
  - Coverage of debt: central government, central bank, government-guaranteed debt.
  - Definition of external debt is Residency-based.
  - Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt.
  - Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows.

### Public Sector Debt Sustainability Framework, Baseline Scenario, 2023–46 (Table 2 — selected indicators and projections)
- Public sector debt 1/ (Percent of GDP): 54.9 (historical), 54.4 (2025), 55.3 (2026), 52.7 (2027), 50.9 (2028), 48.1 (2029), 45.4 (2030), 35.3 (2031), 23.7 (2036), 47.9 (2046), 45.6 (final column).
- of which: external debt (Percent of GDP): 35.8, 36.8, 39.7, 39.0, 39.5, 38.8, 37.8, 31.8, 21.1, 32.7, 36.5.
- Change in public sector debt: -1.5, -0.5, 0.9, -2.6, -1.7, -2.8, -2.7, -1.4, -0.8.
- Identified debt-creating flows: -3.7, -2.5, -3.1, -2.9, -1.9, -2.9, -2.6, -1.1, -0.8, 1.1, -2.2.
- Primary deficit: -0.2, 0.4, 0.0, 0.4, 1.3, 0.1, 0.2, 0.6, 0.2, 3.2, 0.4.
- Revenue and grants (percent of GDP): 21.0, 20.6, 20.5, 20.4, 20.5, 20.2, 20.1, 19.5, 17.8, 25.9, 20.1.
  - of which: grants: 5.1, 4.3, 4.1, 3.8, 3.6, 3.2, 3.0, 2.3, 1.5.
- Primary (noninterest) expenditure (percent of GDP): 20.8, 21.1, 20.5, 20.9, 21.8, 20.3, 20.3, 20.1, 17.9, 29.1, 20.5.
- Automatic debt dynamics: -3.5, -3.0, -3.1, -3.3, -3.2, -3.1, -2.8, -1.7, -0.9.
  - Contribution from interest rate/growth differential: - (same series as automatic dynamics) 2.9, -3.0, -3.1, -3.3, -3.2, -3.1, -2.8, -1.7, -0.9.
  - of which: contribution from average real interest rate: -0.2, -0.3, -0.4, -0.4, -0.4, -0.4, -0.3, -0.1, 0.1.
  - of which: contribution from real GDP growth: -2.8, -2.7, -2.8, -2.9, -2.8, -2.7, -2.5, -1.6, -1.1.
- Residual: 2.3, 2.0, 4.0, 0.2, 0.2, 0.1, -0.1, -0.3, 0.0, 2.0, 0.4.
- Sustainability indicators:
  - PV of public debt-to-GDP ratio 2/: 45.7, 44.2, 43.5, 40.6, 38.7, 36.3, 34.2, 27.5, 20.8.
  - PV of public debt-to-revenue and grants ratio: 217.7, 214.2, 212.4, 198.6, 188.6, 179.8, 170.6, 141.1, 117.3.
  - Debt service-to-revenue and grants ratio 3/: 17.9, 24.0, 25.3, 28.3, 21.2, 20.0, 16.5, 11.4, 9.9.
  - Gross financing need 4/: 3.5, 5.3, 5.1, 6.1, 5.6, 4.1, 3.5, 2.7, 1.9.
- Key macro-fiscal assumptions:
  - Real GDP growth (in percent): 5.1, 5.1, 5.4, 5.6, 5.6, 5.6, 5.5, 4.5, 4.5, 2.0, 5.1.
  - Average nominal interest rate on external debt (in percent): 2.3, 1.5, 1.1, 1.2, 1.1, 1.2, 1.3, 1.7, 2.5, 1.2, 1.4.
  - Average real interest rate on domestic debt (in percent): 0.9, 1.2, 2.7, 3.6, 3.6, 3.5, 3.0, 2.0, 3.5, 0.0, 2.5.
  - Inflation rate (GDP deflator, in percent): 3.8, 2.9, 1.7, 1.1, 1.2, 1.4, 1.8, 2.1, 1.5, 3.4, 1.9.
  - Growth of real primary spending (deflated by GDP deflator, in percent): -5.5, 6.6, 2.6, 7.7, 10.3, -1.6, 5.3, 6.0, -1.3, -3.5, 4.8.
  - Primary deficit that stabilizes the debt-to-GDP ratio 5/: 1.3, 0.9, -0.9, 3.1, 3.0, 3.0, 2.9, 2.0, 1.0, 2.6, 2.2.
- PV of contingent liabilities (not included in public sector debt): 0.00 series.

### Sensitivity Analysis for Key Indicators of External Debt, 2026–36 (Table 3 — selected results)
- Baseline PV of debt-to-GDP ratio series (2026–36): 27 28 27 27 27 26 25 24 24 (table columns correspond to years 2026–36).
- Alternative scenarios, bound tests, and tailored tests show varied PV of debt-to-GDP and related indicators with explicit numeric paths, e.g.:
  - A1. Key variables at their historical averages in 2026-2036 2/: 27 33 38 43 48 54 59 64 69 74 79.
  - B3. Exports (bound test): 27 35 46 46 45 44 42 41 40 39 39.
  - Thresholds indicated for various indicators (e.g., Threshold 30 for PV of debt-to-GDP in one panel; Threshold 140 in another panel).
- Debt service-to-exports ratio, Debt service-to-revenue ratio, PV of debt-to-exports ratio series presented with baseline and scenario results (many bold values indicate breaches of thresholds per source).

### Sensitivity Analysis for Key Indicators of Public Debt, 2026–36 (Table 4 — selected results)
- Baseline PV of Debt-to-GDP Ratio (2026–36): 44 44 41 39 36 34 33 31 30 28 27.
- Total public debt benchmark: 35 across years.
- PV of Debt-to-Revenue Ratio baseline path: 214, 212, 199, 189, 180, 171, 164, 158, 151, 145, 141.
- Under alternative scenarios and bound/tailored tests, PV of Debt-to-Revenue Ratio and Debt Service-to-Revenue Ratio rise in many scenarios; several scenario-specific series are reported (e.g., A1, A2, B1–B6, C1–C4).
- Baseline Debt Service-to-Revenue Ratio (selected years): 24, 25, 28, 21, 20, 16, 16, 17, 16, 14, 11.
- Benchmarking notes: "1/ A bold value indicates a breach of the benchmark." "2/ Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP." "3/ Includes official and private transfers and FDI."

### Liberia’s Vulnerability to Climate Change and Pandemics (Annex A — narrative excerpt)
- Summary findings:
  - Climate change expected impacts: hotter temperatures, more heat extremes, changes in precipitation patterns, rising sea levels and coastal erosion, more frequent natural disasters such as severe flooding and drought.
  - Spatial patterns: areas in the north and west expected to see the greatest precipitation increases; areas in the south may see declines in rainfall.
  - Timing: hotter seasons will likely begin earlier and finish later.
  - Projected macroeconomic and social impacts cited from World Bank: "Without action, climate change could shrink Liberia’s economy by 15 percent and push 1.3 million people into poverty by 2050 (World Bank 2023a)."
- Sectoral vulnerabilities:
  - Agriculture: contributes approximately 40 percent of Liberia’s GDP; risks include reduced agricultural labor productivity due to heat, and projected declines in yields of key crops (rice, cassava, maize, cocoa, groundnuts, bananas, plantains) under a dry/hot scenario.
  - Fisheries: endangered by mangrove loss and sea level rise, threatening protein sources.

*Source: Excerpts from the IMF staff report and associated tables (1lbrea2026001).*

### 3. Liberia’s infrastructure and coastline are increasingly vulnerable to climate change. The

### 3. Liberia’s infrastructure and coastline are increasingly vulnerable to climate change.

### Climate and infrastructure vulnerabilities
- Liberia has an extensive coastline of 580 km, where nearly 60 percent of the population lives.
- Climate risks along the coast include flooding, erosion, and sea level rise:
  - A one-meter sea level rise could submerge about 95 km² of Liberia’s coastal zone by the end of the century, affecting sheltered coasts and retreating shorelines.
- Road infrastructure is weak and exposed:
  - Less than half of the primary (feeder) roads in Liberia are in good condition.
  - Many primary roads lie in flood-prone areas, causing disruptions that reduce access to markets and health facilities.

### Health impacts and pandemic vulnerability
- Baseline health vulnerabilities and climate sensitivity:
  - Liberia faces one of the highest maternal mortality ratios in the world: 742 per 100,000 live births.
  - Top causes of death that are climate sensitive: malaria (15.4 percent), diarrheal diseases (7.9 percent), neonatal disorders (7.5 percent), and lower respiratory infections (6.5 percent).
  - Chronic undernutrition affects 30 percent of children under five.
- Historical public health shocks and economic consequences:
  - 2014–2016 Ebola outbreak in Liberia: 10,678 infections and 4,810 deaths; GDP losses of US$240 million in 2015.
  - 2020–2022 COVID-19 outbreak had wide-ranging impacts, highlighting fragility to infectious disease outbreaks and urgency for pandemic preparedness.
- Structural drivers of outbreak risk:
  - Liberia’s tropical climate, proximity to zoonotic reservoirs, and extensive coastline increase risk of infectious disease outbreaks and cross-border transmission.
  - Socioeconomic challenges—poverty, urban overcrowding, inadequate transportation infrastructure, and limited public health capacity—impede timely detection and effective response, compounded by years of civil conflict and weakened health systems.

### National vulnerability and readiness indicators
- Liberia’s Vulnerability Index: 0.61, ranking 173 out of 188 countries.
- Adaptation Readiness Index: 0.28, ranking 163 out of 197 countries.
- Global Health Security Index (2021): 35.7/100 (94th globally), with sub-scores:
  - Prevention: 7.6
  - Detection: 24.6
  - Response: 32.6

### Government commitments on climate adaptation and pandemic preparedness
- NDC 3.0 (submitted September 2025) aligns with AAID (2025-2029), the Paris Agreement, and the Sendai Framework.
  - NDC 3.0 embeds climate resilience across energy, agriculture, forestry, transport, waste management, and health.
  - Prioritizes adaptation measures including climate-resilient agriculture and infrastructure, early warning systems, coastal protection, and WASH services, with equity and climate justice principles.
- Legal and policy anchors:
  - Environment Protection and Management Law (EPML) empowers the EPA to regulate GHG emissions.
  - National Adaptation Plan (NAP) guides resilience across sectors.
  - Liberia Rising Vision 2030 and the AAID include an “environmental sustainability” pillar.
- Mitigation ambition in NDC 3.0:
  - Reaffirms a commitment to reduce economy-wide GHG emissions by 64 percent by 2035 (threefold increase from NDC 2.0, partly due to base year change).
  - Emissions changed from 5,695 GgCO₂e (base year 2015) to 12,471 GgCO₂e (base year 2022).
  - Revised 2035 targets:
    - Unconditional reduction: 5,551 GgCO₂e (10 percent).
    - Conditional reduction: 29,974 GgCO₂e (54 percent), contingent on international support.
  - Between 2021 and 2024 Liberia achieved a reduction of 2,545 GgCO₂e.
  - Sets a conditional long-term goal of achieving net zero emissions by 2050, contingent on international finance, technology transfer, and capacity building.

### Pandemic preparedness progress and gaps
- Post-Ebola investments and outcomes:
  - Resilient Health System Investment Plan (2015–2021): established National Public Health Institute, enhanced disease surveillance, expanded laboratory infrastructure, trained over 14,000 healthcare workers in infection control, set up national and county Emergency Operations Centers, and adopted the One Health Approach.
  - These investments helped manage the COVID-19 pandemic better.
- Evaluations and outstanding weaknesses:
  - 2023 Joint External Evaluation (JEE) found progress but noted insufficient financing, misalignment of legal frameworks with International Health Regulations, critical shortages of One Health staff, and laboratory and surveillance system weaknesses.
  - Liberia is developing a new National Action Plan for Health Security (NAPHS) to address these gaps.
  - JEE recommends establishing a national budget line for routine IHR implementation and emergency response across all levels.

### Financing challenges and cost estimates
- Annual climate finance flows averaged just US$ 112 million in 2019/20, mostly grants and low-cost project debt.
- NDC financing projections:
  - NDC 3.0 has not yet been costed.
  - NDC 2.0 projections: full implementation of proposed actions up to 2025 would require US$ 491 million (likely an underestimation; 82 percent of those costs were for mitigation measures).
- Macro-scale adaptation cost-benefit estimate:
  - Interventions on adaptation in the CCDR were estimated to cost 2–3 percent of Liberia’s GDP annually till 2050 while the benefits (equivalent to 3.7 percent of GDP a year) exceed the costs.
- Health security financing constraints:
  - 2023 JEE found limited financing is a significant obstacle; government heavily relies on external funding and lacks mechanisms to quickly redistribute funds in emergencies.
  - International support has been declining; funding spikes during crises and drops afterward.
  - Continued domestic investment is crucial.

### World Bank Group (WBG) engagement and selected projects
- WBG Liberia Country Partnership Framework (CPF) 2025–2030 focuses on integrated jobs challenge and resilience with four outcomes:
  - Outcome 1: Reduced learning poverty.
  - Outcome 2: Expanded access to energy.
  - Outcome 3: Strengthening of accountable and effective governance.
  - Outcome 4: Increased private investment.
- CPF emphasis on social, environmental, and fiscal resilience to address climate risks and support job creation.
- Liberia Resilient and Inclusive Growth Development Policy Financing (DPF) three-part series aims to:
  - Strengthen fiscal resilience.
  - Enable private sector development.
  - Support social, disaster, and climate resilience (Pillar 3 emphasizes gender equity, climate resilience, DRM, and land use policies).
- Selected WB-financed activities:
  - Liberia First Resilient and Inclusive Growth DPF (P502565: 2025) valued at US$ 60 million.
    - Includes two prior actions on climate and disaster resilience: (i) establishment of a centralized framework for Disaster Risk Management; (ii) introduction of the National Zoning Bill integrating climate resilience.
    - Includes a $20 million Catastrophe Deferred Drawdown Option (CAT-DDO).
    - Rapid Response Option (RRO) allows repurposing up to 10 percent of undisbursed Bank financing across the portfolio for emergency needs.
  - Liberia Second Resilient and Inclusive Growth DPF (P508962: under preparation) valued at US $40 million.
    - Will focus on broadening the tax base, transparency in public spending, private sector development reforms, and promoting social inclusion, disaster preparedness, and climate resilience.
  - Mission 300 (M300) Initiative contributions to energy security and renewable investments.
    - Liberia’s National Energy Compact (launched 2025) outlines an investment requirement of US$ 1.5 billion to achieve energy access target.
    - Ongoing/planned WBG engagement will provide access to 1.25 million people through LESSAP; a similar scale expected under DARES.
  - Health Security Program in Western and Central Africa (HeSP: P179078) to increase regional collaboration and health system capacities.
  - Rural Economic Transformation Project (RETRAP, P175263): launched 2021; received additional financing of US$30 million from the IDA Crisis Response Window in 2022, extending reach by 36,000 new households.

### Analytical and advisory work
- Liberia Country Climate Development Report (2024): outlines four climate action themes emphasizing adaptation through infrastructure upgrades, health system preparedness, climate-smart agriculture, forestry community support, land use planning, and disaster response.
- Liberia Crises Preparedness Gap Analysis, Technical Annex (2025): documents limited resources, infrastructure constraints, and institutional fragmentation undermining crisis preparedness.
- Unlocking Results-based Climate Finance for Upper Guinean Forests (P501060): delivered Forest Ecosystem Accounts and supports readiness for carbon markets, including ART-TREES jurisdictional program concept work.
- Liberia Climate and Health Vulnerability Assessment (CHVA) (ongoing): focuses on health financing, service delivery, and resilient health systems to assess climate-health damages and develop adaptation recommendations.

*Source: IMF staff supplement reporting on Liberia (chapter content provided).*

### 2.      The materialization of the April WEO adverse scenario

### 2.      The materialization of the April WEO adverse scenario

### Adverse scenario impact and external buffers
- The April WEO adverse scenario would widen the current account deficit by about 2.6 percent of GDP in 2026 relative to the Staff Report baseline projections, with marginal positive impact in 2027 due to higher gold prices.
- Authorities’ existing buffers to address rising balance-of-payments needs:
  - Strong revenue performance, including a large mining concession payment received in March (3.8 percent of GDP).
  - An additional World Bank budget support disbursement (0.8 percent of GDP).
  - Planned RSF disbursements expected to continue supporting buffer-building against long-term balance-of-payments vulnerabilities.
- Footnote assumptions from the scenario:
  - Oil prices are assumed to be 80 percent and 20 percent higher in 2026Q2-Q4 and 2027, respectively, and food prices 2.5 percent higher in 2026 relative to the January WEO baseline.
  - As the disbursement originally planned for 2025 has been delayed to May 2026, the authorities could receive two disbursements in 2026, provided conditions are met.

### Fiscal response: supplementary budget and concession payment
- Supplementary budget (submitted April 13):
  - Increases expenditures by US$45 million relative to the original budget.
  - Financing: additional World Bank budget support in 2026 (US$40 million) and higher domestic revenue (US$5 million).
  - Allocation: about two thirds of the additional spending is allocated to measures to mitigate the impact of higher oil prices and potential increases in rice prices; the remainder supports higher public investment.
  - Fiscal outcome: Despite additional expenditures, the primary balance would remain within the program target.
- One-off mining concession payment:
  - In March 2026, one of Liberia’s largest iron ore companies made a one-off concession payment of US$200 million, the largest component of the US$256 million in contingent revenue envisaged in the 2026 budget.
  - This payment will trigger activation of contingent expenditures of an equivalent amount, primarily for infrastructure and facilities-related public investment, as approved in the original budget.
  - Implementation constraints (procedural accountability requirements and the rainy season) are likely to spread this spending over two or more years; prioritizing quality of spending will take precedence over full execution within the year.
  - The revenue windfall will provide an important fiscal and external buffer against a large external shock.

### Authorities’ program statement — performance and priorities
- Program performance:
  - All six performance criteria (PCs) for end-June 2025 were met.
  - Three out of five indicative targets (ITs) were met; the IT on ceiling on new domestic arrears related to Government of Liberia (GOL), security repayment to banks and floor on the share of public wage bill paid in Liberian Dollars were missed by small margins. Corrective measures have cleared these arrears.
  - The authorities aim to increase the share of the public wage bill paid in the Liberian dollar (LRD) from the current 30 percent to 35 percent in the medium term.
- Structural benchmarks and prior actions:
  - Two of ten Structural Benchmarks (SBs) were met, four were implemented with delays, and four were not implemented. Two unimplemented measures were completed as a prior action (PA); two remaining SBs postponed to end-May 2026.
- Request:
  - Given satisfactory program performance and reform commitment, and balance-of-payments needs due to climate-related risks, the authorities seek Executive Directors’ support in completing the third review under the ECF arrangement and Request for Resilience and Sustainability Facility Arrangement.

### Recent economic developments and outlook (authorities’ figures)
- Growth and inflation:
  - Real GDP growth is estimated at 5.1 percent in 2025 (up from 4.0 percent in 2024), driven by strong mining sector performance, expansion in agriculture and services.
  - Inflation declined to about 4.4 percent in the fourth quarter of 2025 from 12.5 percent in the first quarter of 2025.
  - Inflation is projected to average of 6.3 percent in 2026 and gradually converge toward the Central Bank of Liberia’s (CBL) medium-term objective of 5.0 percent by 2029.
- External position:
  - Current account deficit estimated at 6.5 percent of GDP in 2025, supported by strong remittances inflows and a narrowing services deficit despite a widening trade deficit.
  - Gross international reserves are projected to rise to about 3 months of imports cover by end-2027, supported in part by prospective RSF disbursements.

### Fiscal policy, revenue mobilization, and debt sustainability
- Fiscal stance:
  - Primary fiscal surplus estimated at 1.4 percent of GDP in 2025, exceeding the program target.
  - Legislature approved a historically large budget envelope for 2026; authorities prioritizing reallocation toward more productive capital spending in line with the ARREST Agenda for Inclusive Development (AAID).
- Revenue mobilization measures:
  - Increased GST standard rate and fuel excises; work underway to launch Value Added Tax (VAT).
  - VAT measures: upgrade tax administration IT infrastructure, establish VAT refund system, complete legal amendments by June 2026, launch nationwide VAT awareness campaign.
  - Three new concessional agreements with foreign investors adopted by the Legislature expected to generate additional non‑tax revenues in 2026.
  - Rationalization of tax exemptions through amendments to the revenue code to define beneficiaries, strengthen controls, and introduce mandatory fiscal assessment for exemptions.
- Mining fiscal regime reforms:
  - Plan to amend the Minerals and Mining Law (MML) to remove fiscal provisions and anchor taxation in the Liberia Revenue Code (LRC).
  - Proposed reforms include higher mineral royalty rates (particularly for gold and iron ore), increased withholding tax rates on interest and dividend, and indefinite carryforward of minimum tax credits (instead of current 5-year limit).
- Debt management:
  - Commitment to debt sustainability: adopt a strong medium-term fiscal framework, improve domestic debt recording and monitoring (including contingency liabilities), enhance coordination among debt management stakeholders.
  - Selective approach to externally funded projects including PPPs, external borrowing to remain prudent and anchored in concessional financing, and accelerate domestic debt market development.
  - Active engagement with creditors to resolve disputed external debt claims.

### Monetary, exchange rate, and financial sector policies
- Monetary policy stance:
  - CBL committed to preserving price stability; will reduce the policy rate if single-digit inflation and a relatively stable exchange rate environment are sustained.
  - CBL will maintain a sufficiently positive real policy rate, relying on CBL bills and reserve requirement adjustments as primary operational tools.
- Monetary policy operations and reforms:
  - Planned measures include narrowing the interest rate corridor from the current 10 percentage points to 5 percentage points; harmonizing reserve requirements on LRD and USD deposits; gradually reducing frequency of long-term CBL bills auctions; introducing differential reserve requirements to support de-dollarization and financial intermediation.
  - CBL plans toward a modernized monetary policy framework over the medium-term.
- Financial sector strengthening and NPL resolution:
  - Enforce reserve requirement regulations and report regulatory actions and penalties on non-compliant banks; phase out remaining dispensation to a non-compliant bank following liquidity improvement.
  - Enforce guidelines on foreign exchange risk exposure and placements abroad; tighten cap on ratio of aggregate liquid assets placed abroad to foreign currency deposits.
  - Enhance risk-based supervision, introduce a bank resolution framework, and establish a deposit insurance scheme after finalization of bank restructuring consistent with the BFIA.
  - Prepare regulations and operational guidelines on bank resolution and develop the Resolution Manual per the BFIA.
  - Enforce maximum NPL ratio of 10 percent of total loans and expedite preparation of a targeted NPL resolution strategy covering identification, management, monitoring, and mitigation of NPLs.
  - Improve NPL data quality, enforce full provisioning of NPLs after one year, and write-off NPLs classified as “loss” for more than two years; disciplinary measures for non-compliant banks include monetary penalties, suspension of dividend payments, and restrictions on certain activities.
  - Progressing on operationalization of the collateral registry system covering movable and immovable assets.
- Bank restructuring and supervision:
  - CBL enforcing restructuring plans adopted by some banks: one bank recapitalized by existing shareholders and progressing on alternative NPL resolutions; authorities consulting with another small bank to ensure completion of essential capital injections.
  - Adopt a formal framework associated with the BFIA for remedial and corrective actions; review and improve risk management and governance of the state-owned bank (SOB).
- Strengthening CBL governance and controls:
  - Comprehensive amendment of the CBL Act planned; implement recommendations to upgrade CBL core banking application and resolve corrective actions recommended by the General Auditing Commission (GAC).
  - Improve internal controls to mitigate financial and operational risks, including:
    - Restrict clearing of government checks to a maximum of US$500,000 during system glitches.
    - Reject any GoL issued checks or payment instructions drawn against underfunded GoL accounts with a penalty.
    - Enforce over-the-counter cash withdrawals capped at US$25,000, except for national security agencies.

### Structural reforms, governance, and climate resilience
- Business environment and access to finance:
  - Strengthen judicial, insolvency, and resolution frameworks; upgrade infrastructure (roads and port facilities); streamline import/export permits and customs clearance to reduce transaction times.
  - Develop credit reference bureau, establish a modern credit registry, modernize the land cadastre, and operationalize the national switch.
- Transparency, accountability, and beneficial ownership:
  - Increase budgetary allocation to integrity institutions (GAC, LACC, PPCC, FIA).
  - Intensify enforcement and digitalization of asset declaration (with World Bank GREAT project support).
  - Roll out National Biometric Registration and prepare an action plan to implement Governance Diagnostic Study (GDS) recommendations; publish GDS report and Action Plan.
  - Strengthen public procurement and contract transparency; provide training to procurement officers, IT personnel, and vendors; improve timely submission and award publication.
  - Enhance transparency of beneficial ownership (BO) of legal persons with a comprehensive workplan; request IMF technical assistance; operationalize online Beneficial Ownership Registry by June 2026; develop regime for collecting BO information for Liberian International Business Companies and the Liberian Shipping Registry; include DNFBPs under the BO framework.
- Climate vulnerability and RSF-supported reforms:
  - Liberia remains highly vulnerable to climate-related shocks (dry spells, flooding, coastal erosion, health risks) that weigh on fiscal stability, growth prospects, and external sustainability.
  - Authorities’ resilience-building steps include establishing early warning systems, investing in climate-resilient infrastructure, and improving public health surveillance.
  - Commitment to RSF-supported reforms to mitigate climate-related vulnerabilities: strengthen institutional capacity, improve climate data systems, integrate climate risk into national development and fiscal planning.
  - Key RSF priorities: disaster risk management, embedding risk considerations in public investment decisions, reinforcing social protection for vulnerable populations, climate finance and governance, and water and food security.

### Conclusion of authorities’ statement
- The Liberian authorities reaffirm strong commitment to the ECF and RSF reform agenda.
- They view continued Fund support as critical to anchoring macroeconomic stability, strengthening resilience, and catalyzing additional development partners’ support.
- Authorities request Executive Directors’ support in concluding the third ECF review and RSF arrangement and associated requests to support Liberia’s continued reform efforts and development goals.

*Source: 2.      The materialization of the April WEO adverse scenario*

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_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1lbrea2026001.pdf_