IMF Executive Board Concludes Third Review Under Extended Credit Facility Arrangement for Liberia and Approves US$11.4 Million Disbursement

MONROVIA, Liberia, July 4, 2014/African Press Organization (APO)/ — The Executive Board of the International Monetary Fund (IMF) today completed the third review of Liberia’s economic performance under the three-year arrangement under the Extended Credit Facility (ECF) for Liberia. The completion of the review enables the disbursement of an amount equivalent to SDR 7.382 million (about US$11.4 million), bringing total disbursements under the arrangement to SDR 29.528 million (about US$45.7 million). In completing the review, the Board also granted a waiver for the nonobservance of the floor on government revenue, and modified the targets for end-June net foreign reserves and public sector gross external borrowing.

The ECF arrangement for Liberia for SDR 51.68 million (about US$79.9 million) was approved by the IMF’s Executive Board on November 19, 2012 (see Press Release No. 12/449).

Following the Executive Board’s discussion, Mr. David Lipton, IMF First Deputy Managing Director and Chair issued the following statement:

“Liberia’s growth performance remains strong. Real GDP growth is estimated at 8.7 percent in 2013, reflecting increased iron-ore production. Output is projected to continue to expand at a healthy pace over the medium term as new mining projects come on stream and non-mining activities pick up, supported by the implementation of large public infrastructure projects.

“The authorities continue to make progress in implementing their economic program, but further efforts are critically needed in some areas. The completion of the payroll cleanup will help save about 0.5 percent of GDP annually and the pilot phase of the Treasury Single Account has been launched. At the same time, substantial revenue shortfalls and recently-uncovered spending commitments for road projects outside the budget process underscore significant remaining capacity and institutional constraints.

“The authorities are taking appropriate actions to strengthen revenue collection and avoid the recurrence of extra-budgetary commitments. Additional measures to improve compliance by large taxpayers and state entities are being implemented, and the new Liberia Revenue Authority will focus on improving tax controls. The authorities have also requested external audits of the problematic road contracts, together with a broader review of procurement practices in other ministries. Additional structural measures, to be supported by Fund technical assistance, aim at strengthening expenditure controls and oversight of investment projects.

“Containing inflation in the dual currency regime will require more effective liquidity management. Enhanced coordination between fiscal and monetary authorities, together with further development of monetary policy instruments, would help better control the Liberian dollar money supply.

“The current debt accumulation is broadly in line with the temporary scaling up of public investment envisaged under the program, but borrowing plans need to carefully balance development needs and debt sustainability.”