Liberia: Request for Disbursement under the Rapid Credit Facility and Debt Relief under the Catastrophe Containment and Relief Trust-Staff Report; Press Release; and Statement by the Executive Director for Liberia

Publication Date: February 27, 2015
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Summary: Background. In spite of a declining trend in new cases over recent weeks, the Ebola outbreak continues to cripple the Liberian economy. Economic activity has declined significantly, and fiscal and external financing needs are more pronounced than envisaged at the time of the Extended Credit Facility (ECF) augmentation. The authorities remain committed to the broad objectives of the ECF program, but, with the focus now on addressing the emergency, there are delays in advancing structural reforms. Large financing gaps are estimated for 2015–16. Request. The authorities are requesting a disbursement under the Rapid Credit Facility (RCF) of SDR 32.3 million, equivalent to 25 percent of quota, as well as debt relief under the Catastrophe Containment and Relief (CCR) Trust in an amount equivalent to 20 percent of quota (SDR 25.84 million) to help bridge the significant financing needs caused by the Ebola outbreak. Program status. An ad hoc ECF program review, including augmentation of access equivalent to 25 percent of quota, was approved on September 26, 2014. Key policy challenges • Fiscal policy should remain accommodative to meet spending priorities relating to the epidemic, subject to the availability of financing. • Greater exchange rate flexibility is desirable to maintain adequate reserves. Closely monitor banks’ liquidity conditions and develop a framework for emergency liquidity support. • Continued improvements in public financial management and transparency in the use of external resources will be key to unlocking further donor budget support. Appraisal. Staff recommends approval of the authorities’ requests for a disbursement under the RCF and debt relief under the CCR Trust given the extensive economic damage caused by the Ebola outbreak and based on the authorities’ updated policy intentions and commitments and the urgency and size of the balance of payments needs. Financing. The RCF disbursement together with debt relief would help cover about a third of the external and fiscal financing gaps for 2015, and would help catalyze further donor support. The authorities have committed to take the necessary measures to address any residual financing gap.
Series: Country Report No. 15/49
Subject(s): Rapid Credit Facility | External shocks | Debt relief | Emergency assistance | Emergency financing mechanism | Fiscal policy | Monetary policy | Economic indicators | Letters of Intent | Debt sustainability analysis | Staff Reports | Press releases | Liberia

Publication Date: February 27, 2015
ISBN/ISSN: 9781498365383/1934-7685 Format: Paper
Stock No: 1LBREA2015001 Pages: 45
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