Press Release: IMF Executive Board Approves US$ 45.6 Million Disbursement under the Rapid Credit Facility and US$ 36.5 Million in Debt Relief Under the Catastrophe Containment and Relief Trust for Liberia

IMF News, February 23, 2015

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Canonical URL: Press Release: IMF Executive Board Approves US$ 45.6 Million Disbursement under the Rapid Credit Facility and US$ 36.5 Million in Debt Relief Under the Catastrophe Containment and Relief Trust for Liberia

Press Release No. 15/69 — February 23, 2015.
The Executive Board approved:
- a disbursement of an amount equivalent to SDR 32.3 million (about US$45.6 million or 25 percent of quota) to be drawn from the Rapid Credit Facility (RCF).
- SDR 25.84 million (about US36.5 million or 20 percent of the country’s quota) in immediate debt relief under the Catastrophe Containment and Relief (CCR) Trust.
Purpose: RCF funds to support authorities’ fight against the Ebola outbreak by covering urgent budgetary and balance of payments needs and strengthening international reserves. CCR funds to be applied to immediately repay outstanding debt up to the equivalent of 20 percent of Liberia’s quota (SDR 25.84 million).

Key observations from the Executive Board Chair and Deputy Managing Director (Mr. Shinohara):
- “The Ebola outbreak continues to cripple the Liberian economy, although the recent decline in new cases is welcome.”
- “Economic activity has decelerated significantly, and fiscal and external financing needs are more pronounced than envisaged at the time of the Extended Credit Facility (ECF) augmentation.”
- “The economy is projected to stagnate in 2014 and contract in 2015, due to the ongoing impact of the epidemic and lower investment in mining and infrastructure. A gradual recovery in economic activity is projected to take hold in 2016, led by a rebound in services.”
- “Large financing gaps are estimated for 2015–16, and reserves coverage could decline significantly in 2015 in the absence of additional financing.”
Role of IMF assistance and CCR relief:
- Boost central bank reserves to meet market demand for foreign exchange.
- Act as a catalyst for additional grant financing from other official and private creditors.

Fiscal policy:
- “Fiscal policy should continue to remain accommodative to meet spending priorities relating to the epidemic, subject to the availability of financing.”
- Deploy emergency social safety nets to address rising poverty and food insecurity.
- Continued improvements in public financial management and transparency in the use of external resources to unlock further donor budget support.
- Over the medium term, rebuilding a resilient health system should remain a priority.
Monetary and financial sector policy:
- “Greater exchange rate flexibility is desirable to maintain adequate reserves in the context of a prolonged crisis.”
- Continued close monitoring of monetary and financial sector conditions, and enhanced liquidity management, are essential to contain lingering vulnerabilities in the financial system.
- The central bank plans to develop a framework for the provision of emergency liquidity support to banks, supported by Fund technical assistance, to help enhance the resilience of the banking system.
Program implementation:
- Program implementation capacity has been hampered since the beginning of the crisis as authorities focused on the emergency.
- Implementation of structural reforms has been delayed by the limited functioning of the public sector due to the Ebola outbreak.

Rapid Credit Facility (RCF):
- Provides rapid financial support in a single, up-front payout for low-income countries facing urgent financing needs.
- Financial assistance under the RCF is provided as an outright disbursement to Poverty Reduction and Growth Trust (PRGT)-eligible members that face an urgent balance of payments need, and where a full-fledged economic program is either not necessary or not feasible.
Catastrophe Containment and Relief (CCR) Trust:
- Provides grant assistance to be used as debt relief for eligible countries confronting major natural disasters, including public health disasters.

SDR 32.3 million (about US$45.6 million or 25 percent of quota) — RCF disbursement.
SDR 25.84 million (about US36.5 million or 20 percent of the country’s quota) — CCR Trust debt relief.
Economy projections cited: stagnation in 2014; contraction in 2015; gradual recovery in 2016.
Financing gap period referenced: 2015–16.

Source: IMF Press Release No. 15/69 (February 23, 2015).