{
  "title": "Public Information Notice: IMF Discusses Liberia's Post-Conflict Conditions and Economic Program for 2004/05",
  "publication": "IMF News, December 3, 2004",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn04135",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2004-12-03",
  "sections": [
    {
      "heading": "Background",
      "content": "- Peace agreement signed in August 2003 ended fifteen years of intermittent civil wars.\n- Two-year transitional government established with mandate to rebuild institutional capacity and prepare for elections in October 2005.\n- Security improvements: deployment of 15,000 UN peace-keepers and demobilization of 65,000 combatants.\n- Post-2003 recovery supported by donor assistance and related manufacturing and services activities."
    },
    {
      "heading": "Macroeconomic performance and projections",
      "content": "- Real GDP developments:\n  - Following severe contraction in the second half of 2003, the economy started to recover.\n  - Real GDP is projected to increase by about 21 percent in the second half of 2004, compared to the second half of 2003.\n  - Expected to expand further, although at a slower pace, in the first half of 2005, driven by increasing donor support and a partial recovery of agriculture activities.\n- Price developments:\n  - Consumer prices (annual average) reported as: 12.1, 14.2, 15.0, ..., 5.0 (for the listed periods).\n- Exchange rate:\n  - Official exchange rate (Liberian dollar per U.S. dollar; end of period) listed as: 49.5, 65.0, 50.0."
    },
    {
      "heading": "Fiscal and monetary developments",
      "content": "- Fiscal execution and policy:\n  - A basic economic program for the first half of 2004 was successfully implemented.\n  - A cash-based budget was executed, without recourse to domestic financing.\n  - Revenue-enhancing measures boosted revenue; some steps taken to strengthen the budget process, including expenditure controls.\n  - For 2004/05, the budget continues to be cash-based, without recourse to domestic financing.\n  - Spending plans geared toward social projects, reestablishment of security and the justice system, and some repayments of domestic arrears.\n- Monetary operations and banking system:\n  - The Central Bank of Liberia (CBL) accommodated increased demand for local currency without affecting the exchange rate; reserves recovered modestly.\n  - First steps toward a more transparent and market-based framework for banking operations included introduction of foreign exchange auctions and removal of ceilings on lending rates.\n  - Scope for monetary policy constrained by high degree of dollarization; authorities intend to further develop instruments of monetary policy to be utilized as demand for local currency increases.\n- Recent slippages and risks:\n  - Emergence of domestically financed budgetary deficits and measures that led to higher expenses at the CBL have put undue pressures on the financial position of the banking system.\n  - Recent slippages in the fiscal and monetary areas noted as a concern; IMF is working with the authorities on a package of corrective measures.\n  - Liberia has been in continuous arrears to the Fund since 1984; declaration of noncooperation issued in 1986; voting and related rights suspended in March 2003.\n  - At end-July 2004, Liberia's arrears to the Fund amounted to SDR 506 million or 709 percent of quota."
    },
    {
      "heading": "Governance, structural reforms, and external relations",
      "content": "- Petroleum and timber:\n  - Authorities intend to implement final steps to liberalize petroleum product imports, with technical support from the World Bank.\n  - Working with external partners on measures that could lead to lifting of sanctions on timber exports.\n- Institutional agenda:\n  - Focused agenda to reestablish a transparent budget process; accountable revenue-generating agencies; and a market-based and transparent framework for the operations of the CBL and banking system.\n  - Technical assistance from the Fund expected to continue, in particular to improve statistical reporting."
    },
    {
      "heading": "Executive Board assessment — Findings",
      "content": "- Directors welcomed improvements in security and the incipient economic recovery.\n- Commended successful implementation of the basic economic program for the first half of 2004 based on a cash-based budget without recourse to domestic financing.\n- Welcomed steps to improve the budget process and CBL operating framework, including foreign exchange auctions and removal of ceilings on lending interest rates.\n- Regretted slippages since June 2004 caused by additional spending and reemergence of a cash deficit financed domestically.\n- Noted high degree of dollarization limiting scope of monetary policy.\n- Noted recent slippages in financial management of the CBL and irregularities in accounting of official reserves and data provided to the Fund as a setback; welcomed immediate corrective steps taken by authorities."
    },
    {
      "heading": "Executive Board assessment — Policy recommendations and conditions",
      "content": "- Fiscal policy and public finance:\n  - Maintain a cash-based budget to foster fiscal discipline.\n  - Make expenditure controls fully effective; Cash Management Committee should implement policies consistently to prevent circumvention of agreed procedures.\n  - Develop an equitable strategy for settlement of domestic arrears, balancing treatment of domestic and external arrears.\n  - Strongly caution against resorting to domestic borrowing given arrears and financial fragility of the CBL and domestic banking system.\n- Monetary policy and financial sector:\n  - Develop monetary policy instruments with external assistance to expand policy scope as demand for local currency increases.\n  - CBL should redouble efforts to strengthen its financial position and lay the ground for effective banking supervision in anticipation of financial sector recovery.\n- Governance and external cooperation:\n  - Continue close cooperation with the Fund on corrective measures and ensure full and timely implementation of understandings reached with staff.\n  - Emphasized importance of close cooperation with external partners and development of concrete and time-bound action plans to support the reform agenda.\n  - Supported request for technical assistance from the Fund, particularly to improve statistical reporting.\n- Remedial measures and Fund relations:\n  - Directors expressed willingness to consider initiation of de-escalation of remedial measures related to Liberia's overdue financial obligations to the Fund once steps to reverse recent policy slippages are fully implemented and understandings on a staff-monitored program for 2005 are reached.\n  - A number of Directors expected the authorities to consider increasing monthly payments to the Fund as the international reserves position improves."
    },
    {
      "heading": "Selected economic and financial indicators (selected figures from table)",
      "content": "- Real GDP (annual percentage change, unless otherwise indicated): 4.9; 3.3; -29.5; 23.1; 20.5.\n- Consumer prices (annual average): 12.1; 14.2; 15.0; ...; 5.0.\n- Central government operations (In percent of GDP, calendar year):\n  - Total revenue and grants: 13.0; 12.9; 10.8; 16.1; 13.7.\n  - Of which: tax revenue: 11.4; 12.5; 9.5.\n  - Total expenditure and net lending: 10.2; 17.2.\n  - Of which: current expenditure: 7.6; 4.6; 5.5.\n  - Capital expenditure: 6.1; 9.6.\n  - Overall fiscal balance (cash basis): -0.7; -1.3; 0.7; -1.1; 0.\n- External sector (In percent of GDP):\n  - Current account balance, including grants (deficit, -): -20.3; -7.6; -12.3; -9.0.\n  - Of which: public interest payments due: -12.7; -8.0; -10.1; -13.5; -11.2; -26.3; -8.7; -12.0; -24.7; -18.7.\n  - Trade balance (deficit, -): -2.7; -11.4; -70.1; -62.9.\n  - Exports, f.o.b.: 23.9; 29.6; 21.4; 9.4; 8.3.\n  - Imports, c.i.f.: -36.3; -32.3; -79.6; -71.2.\n  - Public sector external debt outstanding (total): 455.3; 476.8; 613.3; 640.9; 588.8.\n- Selected monetary and nominal levels (In millions of U.S. dollars, unless otherwise indicated):\n  - Current account balance including grants (deficit, -): -198.5; -6.1; -33.4; -26.5; -23.3; -65.9; -15.3; -50.4; -150.6; -163.3.\n  - Nominal GDP: 534.4; 561.8; 442.2; 214.8; 259.8.\n  - Official exchange rate (Liberian dollar per U.S. dollar; end of period): 49.5; 65.0; 50.0.\n\nPublic Information Notice: IMF Discusses Liberia's Post-Conflict Conditions and Economic Program for 2004/05 — December 3, 2004\n\n---\n\n\n References\n\n- Liberia and the IMF\n- Public Information Notices\n- Article IV\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn04135"
    }
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    "Published: December 3, 2004",
    "Peace agreement signed in August 2003 ended fifteen years of intermittent civil wars.",
    "Two-year transitional government established with mandate to rebuild institutional capacity and prepare for elections in October 2005.",
    "Security improvements: deployment of 15,000 UN peace-keepers and demobilization of 65,000 combatants.",
    "Post-2003 recovery supported by donor assistance and related manufacturing and services activities.",
    "Real GDP developments:",
    "Price developments:",
    "Exchange rate:",
    "Fiscal execution and policy:",
    "Monetary operations and banking system:",
    "Recent slippages and risks:",
    "Petroleum and timber:",
    "Institutional agenda:",
    "Directors welcomed improvements in security and the incipient economic recovery.",
    "Commended successful implementation of the basic economic program for the first half of 2004 based on a cash-based budget without recourse to domestic financing.",
    "Welcomed steps to improve the budget process and CBL operating framework, including foreign exchange auctions and removal of ceilings on lending interest rates.",
    "Regretted slippages since June 2004 caused by additional spending and reemergence of a cash deficit financed domestically.",
    "Noted high degree of dollarization limiting scope of monetary policy.",
    "Noted recent slippages in financial management of the CBL and irregularities in accounting of official reserves and data provided to the Fund as a setback; welcomed immediate corrective steps taken by authorities.",
    "Fiscal policy and public finance:",
    "Monetary policy and financial sector:",
    "Governance and external cooperation:",
    "Remedial measures and Fund relations:",
    "Real GDP (annual percentage change, unless otherwise indicated): 4.9; 3.3; -29.5; 23.1; 20.5.",
    "Consumer prices (annual average): 12.1; 14.2; 15.0; ...; 5.0.",
    "Central government operations (In percent of GDP, calendar year):",
    "External sector (In percent of GDP):",
    "Selected monetary and nominal levels (In millions of U.S. dollars, unless otherwise indicated):",
    "[Liberia and the IMF](http://www.imf.org/external/country/LBR/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[Article IV](https://www.imf.org/external/pubs/ft/aa/aa04.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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