## IMF Executive Board Approves US$213.6 Million ECF Arrangement for Liberia

_IMF News, December 11, 2019_

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## Bibliographic details
- Published: December 11, 2019

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### Overview
- On December 11, 2019, the Executive Board approved a four-year arrangement under the Extended Credit Facility (ECF) for Liberia in an amount equivalent to SDR 155 million (60 percent of quota or about US$ 213.6 million).
- The Executive Board’s decision enables an immediate disbursement of SDR 17 million (about US$ 23.4 million).
- The program aims to help restore macroeconomic stability, provide a foundation for sustainable growth, and address weaknesses in governance.

### Key economic context and vulnerabilities
- Inflation and year-on-year exchange rate depreciation are high at 30 percent.
- Growth is described as subdued.
- Liberia’s external vulnerabilities are significant, and foreign reserve stocks have fallen to low levels.
- Recent macroeconomic difficulties arose from a decline in external assistance, weak domestic revenue generation, limited expenditure adjustments (especially on wages), and an accommodative monetary policy stance, resulting in:
  - An unsustainable fiscal stance,
  - The emergence of arrears,
  - Excessive central bank financing,
  - Depletion of fiscal and external buffers,
  - Pressure on inflation and the exchange rate.

### Program objectives and expected roles
- Primary objectives:
  - Restoring macroeconomic stability while protecting the poorest segment of the population from the burden of adjustment.
  - Putting Liberia on a fiscally sustainable growth path, aligned with the objectives of the Pro-Poor Agenda for Prosperity and Development (PAPD).
  - Addressing weaknesses in governance and institutions of the public sector to safeguard scarce resources.
- The program also aims to catalyze substantial external support to ensure the programmed adjustment is politically and economically feasible and to ensure public and external debt sustainability.

### Policy priorities, conditions, and recommendations
- Fiscal policy:
  - The recent upfront fiscal tightening is welcome; full implementation of the recently instituted set of fiscal controls is important to preserve gains and maintain budget credibility.
  - Strengthening tax policy and administration over the program period is critical to ensure that the public sector can operate effectively.
  - The authorities are committed to adhere to the ceiling on non-concessional borrowing and to refrain from non-transparent collateralized agreements under the Fund-supported program.
- Monetary policy:
  - The monetary tightening by the Central Bank of Liberia (CBL) enacted in November 2019 was necessary to reduce inflation.
  - A key prerequisite for success is full adherence to the program prohibition on government borrowing from the CBL.
  - Building resilience will require containing the CBL’s operational expenses and limiting foreign exchange intervention.
- Financial sector and governance:
  - Ensuring financial sector stability is an important element of the program.
  - Improving data reporting and obtaining an overview of the health of the banking system are necessary to identify and address financial sector vulnerabilities.
  - Taking decisive measures as needed and enhancing the legal framework will ensure the CBL has the required instruments if remediation is necessary.
  - Structural reforms aimed at improving governance will help reduce vulnerabilities to corruption and promote private-sector led growth.

### Recent policy and program context (Annex highlights)
- President George Weah launched the Pro-Poor Agenda for Prosperity and Development (PAPD) in October 2018; its objectives of building roads and improving social services have largely been delayed due to lack of funding.
- The IMF-supported program is intended to stabilize the economy, catalyze financing for the PAPD, and put Liberia on a sustainable medium-term growth trajectory.

*Press Release No. 19/451 — December 11, 2019, International Monetary Fund.*

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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)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/12/11/pr19451-liberia-imf-executive-board-approves-us23-4-million-ecf-arrangement_