IMF Staff Completes Review Mission to Liberia
A mission from the International Monetary Fund (IMF), led by Corinne Deléchat, visited Monrovia from April 25 to May 8, 2015 to conduct the fourth review of the government’s economic program supported by the IMF under an Extended Credit Facility (ECF)1 arrangement, which was approved by the IMF Executive Board in November 2012. At the end of the visit, Ms. Deléchat issued the following statement:
“Liberia’s economy in 2014 was greatly affected by the Ebola crisis. Real GDP growth for 2014 is estimated at about 0.7 percent, compared to 8.9 percent in 2013. The economic impact of the Ebola outbreak was compounded by the steep decline in iron ore prices, which has affected planned investment in the mining sector. Consumer price inflation declined to 7.3 percent in March 2015 after peaking at 13.5 percent in September 2014 as lower international oil prices more than offset higher domestic food prices. Gross international reserves stood at about 2.7 months of imports as of end-April 2015.”
“The medium-term economic outlook remains challenging. Real GDP growth is projected to remain weak in 2015, with a gradual recovery taking hold in 2016 buoyed by a rebound in agriculture and services. Risks to the outlook stem mainly from a prolonged period of low commodity prices, which would significantly curtail tax and export revenues, and could dampen medium term growth prospects.”
“Program performance as of end-June 2014 was mixed. Most quantitative performance targets were met, while only 3 out of 7 structural benchmarks were implemented. Although implementation of the structural reform agenda was hampered by the Ebola outbreak, some notable achievements include the merger of the Ministries of Finance and Economic Planning and the establishment of the Liberia Revenue Authority.”
“For FY2015-16, fiscal policy will remain accommodative as the draft budget includes key post-Ebola initiatives under the government’s Economic Stabilization and Recovery Plan, including the rebuilding of the health system and additional spending on education. The authorities are committed to ensuring that expenditure increases allow room for implementation of their Public Sector Investment Program. The audit of the road contracts that were being implemented without corresponding budgetary allocations initiated last year is expected to be completed in the coming weeks. The government is implementing measures to strengthen investment planning and monitoring.”
“Monetary policy will aim at containing inflation while maintaining an adequate reserves buffer. The authorities are stepping up coordination between the Ministry of Finance and Development Planning and the Central Bank of Liberia (CBL) to enhance Liberian dollar liquidity management. Such coordination, including the joint preparation of monthly liquidity forecasts, would help contain exchange rate and inflation pressures.”
“The next phase of the program includes actions to restore growth to pre-crisis levels while protecting vulnerable groups, strengthen the budget process and improve public financial management, rebuild international reserves, modernize tax administration, and strengthen financial regulation and supervision. The authorities and IMF staff will continue discussions on these issues in the coming days with the objective of reaching an agreement, ad referendum, on a package of policies that would allow the government to achieve its program objectives. The authorities expressed their appreciation to the IMF for the extraordinary financial and technical support during the Ebola crisis on account of the ECF augmentation and the Rapid Credit Facility (RCF) disbursements. They look forward to continuous engagement and cooperation with the IMF on the implementation of Liberia’s Post-Ebola Economic Stabilization and Recovery Plan.”
“The mission expresses its deep appreciation to the authorities and technical staff for their excellent cooperation and the quality of the policy dialogue.”
The mission met with President Ellen Johnson-Sirleaf, Minister of Finance and Development Planning Amara M. Konneh, Central Bank Executive Governor Joseph Mills-Jones, other high-level government officials, and representatives of the private sector and the donor community.
1 The Extended Credit Facility (ECF) is the IMF’s main tool for medium-term financial support to low-income countries. It provides for a higher level of access to financing, more concessional terms, enhanced flexibility in program design, and more focused, streamlined conditionality. Financing under ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years.
Source: International Monetary Fund (IMF)