IMF Executive Board Completes Fourth Review under the Extended Credit Facility Arrangement and Concludes the 2022 Article IV Consultation for Liberia
IMF News, August 24, 2022
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- IMF Executive Board Completes Fourth Review under the Extended Credit Facility Arrangement and Concludes the 2022 Article IV Consultation for Liberia
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- Published: August 24, 2022
Program and financing
- The four-year Extended Credit Facility (ECF) arrangement has total access of SDR 155 million (60 percent of quota or about US$214.30 million).
- The IMF Executive Board approved the arrangement on December 11, 2019.
- Today's decision allows for an immediate disbursement of SDR 17 million (about US$ 22.1 million), bringing total disbursements under the arrangement to SDR 85 million (about US$ 110.7 million).
- In completing the fourth review, the Executive Board granted a waiver of nonobservance of the end-June 2021 quantitative performance criterion on net international reserves, based on corrective action taken by the authorities.
Economic outlook and risks
- Liberia experienced a strong economic recovery in 2021.
- Global developments will dampen economic growth to 3.7 percent this year.
- Heightened global uncertainties and commodity price shocks are pushing inflation into the double-digits.
- Liberia’s COVID-19 vaccination program has accelerated in recent months, but pandemic-related risks, including a potential outbreak of new variants, remain.
- The upcoming political cycle with presidential and parliamentary elections is scheduled for September 2023 and is a source of uncertainty.
Program performance and structural reforms
- Quantitative program performance was quite strong while the implementation of the structural reform agenda incurred delays.
- Adoption of new anti-corruption legislation was identified as good progress.
- The authorities preserved macroeconomic stability, ensured a comfortable international reserve position, and maintained debt sustainability despite delays with the broad-based reform agenda.
- The 2022 supplementary budget aims primarily to mitigate pressures on food prices and stabilize the state-owned electricity company.
- To limit the temporary widening of the fiscal deficit, authorities streamlined non-priority spending while largely preserving a significant increase of public investment relative to previous years, facilitated by partial use of the IMF’s 2021 SDR allocation to Liberia.
Policy recommendations and priorities (statements by Mr. Bo Li, Deputy Managing Director and Acting Chair)
- Press ahead with fiscal structural reforms to:
- make public services and public enterprises more efficient;
- secure more permanent space for adequate public investment while preserving debt sustainability.
- Build on progress in mobilizing domestic revenues, including by streamlining tax exemptions.
- Renew impetus to address capacity constraints that hamper selection, preparation, and execution of public investment projects.
- Modernize Liberia’s monetary policy framework and continue the ongoing currency changeover, ensuring operational risks are appropriately mitigated to strengthen macroeconomic stability.
- Step up the fight against corruption; swift implementation of recently adopted measures is key. Recent measures include:
- the amended Liberia Anti-Corruption Commission (LACC) Act;
- the new Whistleblower and Witness Protection Act;
- the revised Code of Conduct.
- Strengthen the growth leg of the reform program by:
- implementing pro-growth fiscal reforms and anti-corruption measures;
- fully executing plans to improve the business climate and enable greater access to credit, including by facilitating the resolution of non-performing loans;
- improving educational attainment;
- adapting to climate change; and
- addressing gender disparities.
Selected macroeconomic and fiscal indicators (as presented)
- Real GDP (annual percent changes and projections): -2.5; -3.0; 3.6; 5.0; 4.7; 3.7; 4.9; 5.7; 5.5; 5.6.
- Mining & panning (annual percent changes): 13.2; 2.0; 7.0; 17.6; 7.1; 4.3; 5.8; 7.5; 4.6; 5.2.
- Non-mining (annual percent changes): -4.7; -3.8; 2.9; 2.8; 3.0; 4.8; 5.4.
- Nominal non-mining per capita GDP (U.S. dollars): 531; 507; 584; 567; 618; 625; 659; 653; 677; 710; 750.
- Nominal GDP (millions of U.S. dollars): 3,080; 3,037; 3,426; 3,509; 3,698; 3,938; 3,847; 4,236; 4,339; 4,636; 4,968; 5,354.
- Consumer prices (end of period): 20.3; 13.1; 9.7; 12.3; 11.7; 6.4; 6.9.
- Population (millions): 5.1; 5.3; 6.0.
- Central government operations (percent of GDP): Total revenue and grants: 27.4; 31.3; 30.7; 27.3; 28.9; 24.2; 28.0; 24.1; 24.0; 24.7; 24.9.
- Total revenue (percent of GDP): 13.9; 15.9; 17.8; 16.4; 17.2; 17.4; 16.1; 16.3; 16.7; 17.1.
- Grants (percent of GDP): 13.5; 15.3; 12.9; 10.9; 7.8; 10.5; 8.0; 7.7; 7.6.
- Total expenditure (percent of GDP): 32.2; 35.1; 33.1; 29.7; 32.9; 29.1; 30.0; 27.6; 27.7; 28.5; 28.7.
- Current expenditure (percent of GDP): 21.4; 24.5; 22.6; 21.9; 21.2; 20.9; 19.5; 19.2; 19.3; 19.8; 19.9.
- Capital expenditure (percent of GDP): 10.8; 10.6; 8.3; 8.4; 8.5; 8.6; 8.8.
- Overall balance, including grants (percent of GDP): -4.8; -2.4; -4.0; -5.0; -2.1; -3.5; -3.7.
- Overall balance, excluding grants (percent of GDP): -18.3; -19.2; -15.3; -13.3; -15.8; -12.7; -12.6; -11.5; -11.4; -11.3.
- Total public debt (nominal, percent of GDP): 48.5; 58.7; 56.1; 53.2; 59.0; 54.6; 59.4; 55.3; 56.9; 56.4; 55.6; 54.8.
- Public external debt (percent of GDP): 34.9; 41.1; 38.3; 37.2; 38.1; 38.8; 38.7; 40.3; 42.9; 43.9; 44.9; 46.0.
- Public domestic debt (percent of GDP): 13.6; 17.9; 16.0; 15.8; 20.6; 15.0; 14.0; 12.5; 10.7.
- M2/GDP (percent): 25.5; 24.6; 23.6; 24.8; 25.1.
- Credit to private sector (percent of GDP): 14.8; 16.6; 14.9; 15.2; 17.0.
- Credit to private sector (annual percent change): 12.7; 4.4; 9.4; 12.8; 7.9; 9.3; 9.5.
- Current account balance, including grants (percent of GDP): -19.6; -16.4; -17.9; -17.7; -18.9; -16.0; -19.9; -15.1; -14.9; -14.8; -14.6.
- Current account balance, excluding grants (percent of GDP): -25.0; -23.7; -22.6; -24.1; -19.1; -24.2; -18.2; -17.6; -17.3.
- Trade balance (percent of GDP): -12.8; -12.9; -13.1; -10.8; -10.6; -10.2; -9.6; -8.6; -8.5; -7.9.
- Exports (percent of GDP): 17.5; 20.0; 23.1; 25.0; 23.3; 24.3; 23.7; 24.4.
- Imports (percent of GDP): -30.3; -32.9; -35.7; -38.1; -34.1; -34.9; -33.8; -33.9; -33.0; -32.5; -31.2.
- Grants (donor transfers, net): 7.3; 3.1; 2.7.
- Gross official reserves (millions of U.S. dollars): 292; 358; 716; 700; 719; 691; 769; 784; 828; 881; 927.
- In months of next year's imports: 2.2; 4.2; 4.0.
- Net international reserves (millions of U.S. dollars): 27; 0; 392; 387; 362; 352; 401; 384; 451; 523; 611; 690.
IMF Press Release No. 22/290, August 24, 2022