Press Release No. 10/157

Press Release No.10/157
April 19, 2010

An International Monetary Fund (IMF) mission led by Mr. Christopher Lane visited Liberia April 5–19 to conduct discussions for the fourth review under the Extended Credit Facility¹. The mission met with President Ellen Johnson-Sirleaf; Minister of Finance, Augustine Ngafuan; Central Bank of Liberia Executive Governor, Joseph Mills Jones; other senior officials; representatives of the commercial and banking sectors, and development partners.

At the end of the mission, Mr. Lane, IMF Mission Chief for Liberia issued the following statement in Monrovia today:

“The Liberian economy is emerging from a series of setbacks mostly rooted in the global economic downturn. External investment is reviving particularly in iron ore mining and agriculture. Commercial logging activity has begun and the production of rubber, Liberia’s main export, has stabilized while international prices have strengthened. Activity in construction and communications has been buoyant. Accordingly, it is anticipated that economic output will increase at a faster pace in 2010 than 2009, with growth estimated in the range of 6 percent.”

“Performance under the Fund supported economic program has been strong. Fiscal and monetary objectives through end-December 2009 have been achieved: foreign reserves increased and a balanced cash-based budget was maintained despite revenue shortfalls. Expenditure authorizations were reduced in line with the available resources, as detailed in the authorities mid-term budget report, while protecting the share of spending supporting Poverty Reduction Strategy objectives.”

“Significant progress was achieved in advancing structural reforms critical to the ECF program and the Heavily Indebted Poor Countries (HIPC) Initiative including: completion of a second round of audits of five key government ministries; passage of a new Investment Act that removes discretionary investment incentives; and, completion of the first annual progress report of the Poverty Reduction Strategy. Implementation of the 2009 Public Financial Management Act has progressed: including through preparation of the FY11 budget, adoption of a new chart of accounts, establishment of a debt management committee, and unification of the accounting function in the Ministry of Finance.”

“The mission reached preliminary understandings with the authorities on fiscal policies for the financial year beginning July 1, 2010 and on a revised debt strategy to prevent the re-emergence of unsustainable levels of debt. The draft budget envisages concessional external financing and moderate domestic financing from a newly created treasury bill framework. The central government deficit is projected to remain below 2 percent of GDP (after taking account of principal repayments and wage arrears payments).”

“Following an assessment by IMF management, the fourth review of the ECF-supported program will be submitted for consideration by the IMF’s Executive Board in June 2010. A positive conclusion should enable Liberia to receive an additional disbursement of SDR 4.44 million (approximately US$6.8 million) under the ECF. It is expected that the HIPC Completion Point document will be reviewed by the Management of the IMF and the World Bank and submitted for consideration by their respective Boards on a schedule that is parallel to the ECF program review schedule.”

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

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¹ The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.