Press Release: IMF Executive Board Concludes Third Review Under Extended Credit Facility Arrangement for Liberia and Approves US$11.4 Million Disbursement
IMF News, July 3, 2014
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- Published: July 3, 2014
Review outcome and disbursement
- The Executive Board completed the third review of Liberia’s performance under the three-year Extended Credit Facility (ECF) arrangement.
- The completion of the review enables the disbursement of an amount equivalent to SDR 7.382 million (about US$11.4 million).
- Total disbursements under the arrangement are now SDR 29.528 million (about US$45.7 million).
Program details and Board actions
- The ECF arrangement for Liberia is for SDR 51.68 million (about US$79.9 million) and was approved by the IMF’s Executive Board on November 19, 2012 (see Press Release No. 12/449).
- In completing the review, the Board:
- granted a waiver for the nonobservance of the floor on government revenue, and
- modified the targets for end-June net foreign reserves and public sector gross external borrowing.
Economic assessment and outlook
- “Liberia’s growth performance remains strong. Real GDP growth is estimated at 8.7 percent in 2013, reflecting increased iron-ore production.”
- Output is projected to continue to expand at a healthy pace over the medium term as:
- new mining projects come on stream, and
- non-mining activities pick up, supported by the implementation of large public infrastructure projects.
Identified challenges and policy recommendations
- Fiscal and institutional challenges:
- Completion of the payroll cleanup is expected to save about 0.5 percent of GDP annually.
- A pilot phase of the Treasury Single Account has been launched.
- Substantial revenue shortfalls and recently-uncovered spending commitments for road projects outside the budget process indicate significant remaining capacity and institutional constraints.
- Revenue and procurement actions:
- Authorities are taking actions to strengthen revenue collection and avoid recurrence of extra-budgetary commitments.
- Additional measures to improve compliance by large taxpayers and state entities are being implemented.
- The new Liberia Revenue Authority will focus on improving tax controls.
- Authorities have requested external audits of the problematic road contracts, together with a broader review of procurement practices in other ministries.
- Additional structural measures, to be supported by Fund technical assistance, aim at strengthening expenditure controls and oversight of investment projects.
- Monetary and liquidity management:
- “Containing inflation in the dual currency regime will require more effective liquidity management.”
- Enhanced coordination between fiscal and monetary authorities, together with further development of monetary policy instruments, would help better control the Liberian dollar money supply.
- Debt and borrowing guidance:
- “The current debt accumulation is broadly in line with the temporary scaling up of public investment envisaged under the program, but borrowing plans need to carefully balance development needs and debt sustainability.”
International Monetary Fund Press Release No. 14/328, July 3, 2014