## IMF Executive Board Concludes 2018 Article IV Consultation with Liberia

_IMF News, June 13, 2018_

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## Bibliographic details
- Published: June 13, 2018

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### Context and baseline scenario
- Mission and timing:
  - The Executive Board concluded the Article IV consultation with Liberia on June 8, 2018; press release dated June 13, 2018.
  - The baseline scenario is staff’s interpretation of the authorities’ stated policies as articulated at the time of the March 2018 mission.
- Country situation:
  - A new government is in place with a mandate to achieve ambitious development objectives.
  - Liberia’s economy appears poised for recovery: growth bottomed out in 2016 and edged to 2.5 percent in 2017.
  - Decline in aid inflows (which were elevated during 2014–16) has put pressure on the exchange rate and fiscal resources.
  - The government faces a demanding development agenda while managing near-term adjustments and safeguarding macroeconomic stability.
- Risks:
  - Main upside risk: an increase in commodity prices and output.
  - Main downside risks: difficulties in mobilizing resources to fill the financing gap and in pursuing structural and institutional reforms.

### Executive Board assessment and policy priorities
- Overall judgment:
  - Directors noted the economy appears poised for recovery but significant fragilities remain.
  - Assuming sound policies, Directors agreed the medium‑term outlook is favorable, albeit with risks.
  - Directors welcomed the authorities’ pro‑poor agenda and stressed that macroeconomic stability is essential for advancing this agenda.
- Fiscal policy and debt sustainability:
  - Need to anchor fiscal policy with the goal of ensuring debt sustainability over the medium term.
  - Urged increased efforts to mobilize additional domestic resources.
  - Specific revenue-side action: enhance the IT system of the revenue authority to improve tax compliance and efficiency.
  - Emphasized improved governance, greater fiscal transparency and accountability to improve spending efficiency.
  - Welcomed efforts to contain the public wage bill and encouraged redirection of budgetary expenditures to capital spending, especially for rebuilding infrastructure.
  - Future debt obligations should be undertaken transparently, limited to concessional terms, with effective implementation of infrastructure projects.
- Monetary policy and central bank:
  - Maintaining macroeconomic stability hinges on effective implementation of monetary policy.
  - Recapitalization of the Central Bank of Liberia (CBL) would be necessary to equip it with effective operational tools.
  - Need to safeguard international reserves, and preserve governance principles and central bank independence.
- External sector and exchange rate:
  - Strengthen the external position by allowing greater exchange rate flexibility while maintaining price stability.
  - Institute structural reforms to improve productivity and competitiveness and reduce the public saving‑investment gap.
- Financial sector and banking risks:
  - Need to reduce risk in the banking sector by reducing nonperforming loans, including by clearing government obligations to the banks.
  - Complete implementation of the CBL’s Action Plan of reform.
  - The remittance surrender requirement, while currently appropriate, should be lifted when foreign exchange market conditions allow.
- Data and capacity development:
  - Acknowledged recent improvement in trade and aid data but serious data shortcomings remain.
  - Urged continued enhancement of data quality, especially in national accounts and external data.
  - Underscored the key role of capacity development and technical assistance for Liberia.

### Selected economic indicators (2016–19)
- Output
  - Real GDP growth (%): 2016: -1.6; 2017: 2.5; 2018: 3.2; 2019: 4.7
- Prices
  - Inflation – average (%): 2016: 8.8; 2017: 12.4; 2018: 11.7; 2019: 10.5
- Central Government (percent of GDP; fiscal year July 1 to June 30; commitment basis)
  - Revenue and grants (% of GDP): 2016: 51.9; 2017: 33.3; 2018: 31.0; 2019: 28.2; with revised GDP column shows 2019: 28.3
  - Expenditure (% of GDP): 2016: 56.1; 2017: 36.0; 2018: 35.8; 2019: 33.4
  - Fiscal balance (% of GDP): 2016: -4.2; 2017: -2.7; 2018: -4.8; 2019: -5.2; with revised GDP column shows 2019: -5.1
  - Public Debt (% of GDP) (excluding central government debts from the Central Bank of Liberia): 2016: 28.6; 2017: 18.3; 2018: 24.6; 2019: 30.8
- Money and Credit
  - Broad money (% change): 2016: -2.5; 2017: 1.7; 2018: 6.0
  - Credit to private sector (% change): 2016: 2.3; 2017: 14.7; 2018: 10.0
- Balance of Payments
  - Current account (% of GDP): 2016: -28.9; 2017: -18.5; 2018: -22.7; 2019: -22.4; with revised GDP column shows 2019: -22.3
  - Reserve (in months of imports)4: 2016: 3.0; 2017: 3.1
  - External public debt (% of GDP)2: 2016: 28.0; 2017: 17.9; 2018: 22.7; 2019: 26.3; with revised GDP column shows 2019: 29.9
- Exchange rate
  - NEER (% change): 2016: -7.3; 2017: -16.7
  - REER (% change): 2016: 0.1; 2017: -9.6
- Notes on indicators:
  - The numbers expressed in percent of GDP are not comparable to those referenced in IMF Country Report 17/348 due to the revisions to GDP estimates.
  - Reserve measure in months of next year's imports excludes imports related to UNMIL operations and FDI projects such as iron-ore concessions.
  - Sources: Liberian authorities; IMF staff estimates.

*IMF Communications Department — Press Release No. 18/235 (June 13, 2018).*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Liberia and the IMF](http://www.imf.org/external/country/LBR/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2018/06/13/pr18235-imf-executive-board-concludes-2018-article-iv-consultation-with-liberia_