The Executive Board of the International Monetary Fund (IMF) today completed the fifth review of Liberia’s economic performance under a program supported by an Extended Credit Facility (ECF) arrangement. The completion of the review enables the immediate disbursement of an amount equivalent to SDR 4.44 million (about US$6.82 million), bringing total disbursements under the arrangement to SDR 234.58 million (about US$360.37 million).
The three year ECF arrangement for Liberia was approved in March 2008, for an amount of SDR 239.02 million (about US$367.19 million; see Press Release No. 08/52). The Executive Board also completed the 2010 Article IV Consultation. A Public Information Notice will be published in due course.
Following the Executive Board’s discussion of Liberia, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, made the following statement:
“The Liberian authorities have continued to implement prudent macroeconomic policies and to advance structural reforms under their IMF-supported economic program. The balanced budget principle was maintained during the 2009–10 financial year, with revenue shortfalls linked to the global economic crisis being matched by spending cuts. Inflation has returned to single digits, the exchange rate has been broadly stable, and economic growth is picking up, helped by a recovery of foreign direct investment flows.
“Significant progress has been made in implementing public financial management reforms and adopting laws and regulations that facilitate trade and investment. Reaching the completion point under the HIPC Initiative has laid the basis for comprehensive debt relief and Liberia now has a modest debt burden while having space to take on new concessional debt to finance investment projects.
“The macroeconomic policy framework for the current fiscal year (2010–11) is well-conceived. The budget envisages solid revenue growth, the allocation of an increased share of budgetary resources to poverty reduction programs, and a significant boost to public investment. Although the balanced budget policy remains in place, this will be re-evaluated if concessional financing and appropriate projects are identified. Monetary policy should support low inflation and permit a modest increase in reserves.
“Over the medium term, the authorities will need to follow through with reforms aimed at alleviating structural constraints on growth. The envisaged emphasis on infrastructure development is appropriate, but effective execution will require that capacity in project selection and preparation be improved, along with more efficient procurement and cash management procedures. Continued efforts to strengthen public financial management would complement other efforts to scale up investment effectively, while successful implementation of planned revenue administration reforms would augment budgetary resources. Accelerated financial sector development, and broad-based governance reform—including land tenure and property rights—would also support rapid private sector growth over the medium term,” Mr. Lipsky added.