Press Release No. 09/380

Press Release: IMF Staff Statement at the Conclusion of PRGF Review Mission to Liberia

November 2, 2009

An International Monetary Fund (IMF) mission led by Mr. Christopher Lane visited Liberia October 15–28 to conduct discussions for the third review under the Poverty Reduction and Growth Facility (PRGF) arrangement that was approved in March 2008 (see Press Release No. 08/52). The mission met with Minister of Finance Augustine Ngafuan, Central Bank of Liberia (CBL) Executive Governor Joseph Mills Jones, other senior officials of the government, and representatives of the legislature, commercial and banking sectors, civil society and donor agencies.

At the end of the mission, Mr. Lane issued the following statement in Monrovia:

“The global recession is adversely affecting Liberia. Economic growth has slowed and foreign exchange inflows have declined considerably due to a decline in export proceeds and remittances from abroad. This has in turn led to a depreciation of the Liberian dollar against the U.S. dollar in 2009. However, continued donor support and limited external financial linkages have helped shield the Liberian economy from the worst of the global downturn.

“With the global recession receding and an improving external environment, we expect economic growth in Liberia to begin to pick up in 2010 and inflation to continue to moderate. The medium-term economic outlook remains broadly positive, particularly in the commercial agriculture sector and mining.

“The performance of fiscal policy for 2008/09 was broadly in line with the program. Although total revenue fell short of objectives, there was some compression of spending, and a balanced cash budget was maintained without new domestic and external arrears. Looking ahead, the fiscal program for 2009/10 is grounded on realistic revenue assumptions and maintains the balanced cash budget policy. The mission discussed revisions to the Liberia Revenue Code and prospects for passage of the Investment Incentives Act.

“The CBL has made progress in managing cross-border risks, given high levels of foreign ownership in Liberian banking system. The unfavorable global economic environment and the limited avenues for lending in Liberia pose risks for loan portfolio quality and profitability. Against this backdrop, the mission welcomes the CBL's plans to ensure that all banks operating in Liberia meet capital adequacy standards, to develop the infrastructure for a Liberian dollar treasury bill market with IMF technical assistance, and to further strengthen bank supervision and inspection.

“The recent allocation of Special Drawing Rights (SDRs) to Liberia significantly expands the country’s international reserves to better manage shocks to the balance of payments and the exchange rate.

“Structural reforms have advanced. Following enactment of the Public Financial Management (PFM) Act, the mission discussed with the authorities plans for its rapid implementation. The first report under the Liberia Extractive Industries Transparency Initiative was validated by the Extractive Industries Transparency Initiative Board, making Liberia the first compliant country in Africa. The mission also discussed the reform program for tax and customs administration, the governance and anti-corruption agenda, the management of government assets, and actions to reduce the cost of clearing goods imported into Liberia.

“Liberia has significantly advanced its implementation of the triggers for the achievement of the completion point under the Heavily Indebted Poor Countries Initiative. With continued strong performance the completion point could be reached in 2010.

“Following an assessment by the Managing Director of the IMF, the third review of the PRGF-supported program will be submitted for consideration by the IMF’s Executive Board before year-end. A positive conclusion should enable Liberia to receive an additional disbursement (SDR 4.44 million, about US$7.0 million) of the financial assistance planned under the PRGF.

“The mission wishes to thank the Liberian authorities and other counterparts for the constructive and cooperative discussions that took place in Monrovia.”