IMF Executive Board Completes Seventh and Eighth ECF Reviews for Liberia And Approves US$20.7 Million Disbursement
IMF News, November 13, 2017
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- Published: November 13, 2017
Disbursement and program financing
- Completion of the seventh and eighth (final) reviews enables immediate disbursement of SDR 14.764 million (about US$20.7 million).
- Total disbursements under the arrangement now amount to SDR 111.664 million (about US$156.3 million).
- A separate sentence in the release states total disbursements under the arrangement to SDR 111.664 million (about US$ 156.7 million).
Waivers and performance criteria
- The Executive Board approved the authorities’ request to waive the non-observance of performance criteria.
- Waivers pertain to:
- end-December 2016 floors on total revenue collection of the central government;
- end-December 2016 ceiling on the present value of gross external borrowing by public sector;
- end-June 2017 floors on total revenue collection of the central government;
- end-June 2017 net foreign exchange position of the Central Bank of Liberia;
- end-June 2017 ceiling on the Central Bank of Liberia’s gross direct credit to the central government.
ECF arrangement history and augmentation
- The ECF arrangement for Liberia was approved by the Board on November 19, 2012 (Press Release No. 12/449) for SDR 51.68 million (about US$69.3 million or 40 percent of quota as of that date).
- In September 2014, the Board approved an augmentation of access of SDR 32.3 million (about US$ 43.3 million or 25 percent of quota as of that date) under the ECF arrangement as part of the response to the Ebola outbreak.
IMF assessment of recent performance and economic context (statement by Mr. Tao Zhang, Deputy Managing Director and Acting Chair)
- Causes of delayed recovery:
- lingering effects of the Ebola epidemic;
- low global commodity prices;
- impact of the withdrawal of the United Nations peacekeeping mission.
- Consequences noted:
- sharp decline in net foreign currency inflows;
- pressure on the exchange rate and inflation;
- mixed program performance.
- Authorities’ policy response described as appropriate:
- exchange rate adjustment;
- relatively tight fiscal and monetary policy stance that prevented exchange rate overshooting and contained second round inflationary dynamics.
Policy recommendations and priorities going forward (from Mr. Tao Zhang)
- Fiscal policy:
- Adherence to rules governing the release of contingent expenditure will be crucial to avoid unintended financing gaps while protecting high-priority social spending.
- Monetary policy:
- The monetary policy stance needs to remain tight in the face of inflationary and exchange rate pressures.
- Staying within the spending limits set in the central bank’s three-year financial plan will be essential to regaining adequate reserve cover.
- External borrowing:
- Recourse to external borrowing should remain restrained as the risk of debt distress is already elevated.
- New borrowing should be on concessional terms and, to the extent possible, replaced with enhanced utilization of already signed and ratified loans.
- Governance and supervision:
- Publication of the executive summary of the forensic audit report of the circumstances leading up to the closure of First International Bank Liberia Limited and a significant financial loss by the central bank was an important first step in ensuring transparency.
- Publication of an action plan to improve central bank governance and supervisory capacity is welcome; sustained efforts will be needed for successful implementation.
- Structural reforms and political context:
- Good progress has been made on structural reforms and maintaining this momentum beyond the expiration of the Fund-supported program is important.
- Resolving the current political uncertainty in a timely manner consistent with the democratic process would be important to minimize the economic and social costs of delay.
Press Release No. 17/437 — November 13, 2017, IMF Communications Department