IMF Executive Board Completes Fifth and Sixth ECF Reviews for Liberia, Increases Access, Extends the Arrangement, and Approves US$37.1 million Disbursement

IMF News, December 16, 2016

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Completed the fifth and sixth reviews of Liberia’s performance under the Extended Credit Facility (ECF) arrangement.
Approved immediate disbursement of SDR 27.69 million (about US$37.1 million).
Total disbursements under the arrangement now amount to SDR 96.9 million (about US$129.9 million).
Approved the authorities’ request to augment access under the program by SDR 27.69 million (about US$37.1 million), of which SDR 12.9 million (about US$17.3 million) would be directed to the budget.
Approved the authorities’ request to extend the program until November 18, 2017.

Approved the authorities’ request to waive non-observance of performance criteria.
Waivers pertain to:
- end-December 2015 floors on total revenue collection of the central government and the net foreign exchange position of the Central Bank of Liberia;
- end-June 2016 performance criteria on floors on total revenue collection of the central government and net foreign exchange position of the Central Bank of Liberia;
- end-June 2016 ceiling on the Central Bank of Liberia’s gross direct credit to the central government.

The ECF arrangement for Liberia was approved by the Board on November 19, 2012 for SDR 51.68 million (about US$69.3 million or 40 percent of quota as of that date).
In September 2014, as part of the Ebola response, the Board approved an augmentation of access of SDR 32.3 million (about US$ 43.3 million or 25 percent of quota as of that date).

Post-Ebola economic recovery has been delayed by a weak global commodity price environment.
Low prices for iron ore and rubber have led to significant cutbacks in output and investment.
Withdrawal of UNMIL peacekeepers has reduced demand for local services.
Authorities have managed to maintain macroeconomic stability in a difficult economic situation and remain committed to strong program implementation.
Program performance has been mixed due to the challenging economic situation and policy choices, including open bank assistance by the central bank.
The pace of structural reform has been slow because of limited capacity and weak prioritization, partly due to transition of economic management teams at the ministry of finance and central bank.

Fiscal policy:
- Continue fiscal prudence in coming years.
- Introduce the VAT.
- Rationalize the wage bill.
- Continue progress on public financial management reforms, especially the Treasury Single Account, investment management, and financial control of state-owned enterprises, to support fiscal consolidation.
Borrowing and debt management:
- Maintain prudent borrowing policies.
- Prioritize concessional loans.
- Carefully contract new borrowing through sound project appraisal.
- Note: Authorities’ success so far in respecting debt limits under the new debt limit policy is commendable.
Central bank and external buffers:
- Implement the central bank’s three-year financial plan rigorously.
- Limit foreign exchange intervention to smoothing volatility.
- Rely on good liquidity management to anchor inflation.
Financial sector governance:
- Closure of the First International Bank of Liberia Limited (FIBLL) is welcome.
- Forensic audit launched by the central bank enhances credibility and transparency.
- Strengthen frameworks for emergency liquidity assistance, bank resolution, and deposit insurance based on lessons from the FIBLL experience.

Press Release No. 16/565, IMF, December 16, 2016.