Statement by the IMF Staff Representative

The civil war in Liberia has resulted in the destruction of most of its infrastructure. Executive Directors noted the weak revenue performance, the lack of progress on fiscal transparency and accountability, and the poor control and prioritization of government spending. They emphasized the need to address governance, accelerate structural reforms, increase revenue, and improve fiscal transparency. In view of all this, Executive Directors agreed that the procedure to suspend Liberia's voting and related rights in the IMF should be initiated.

Abstract

The civil war in Liberia has resulted in the destruction of most of its infrastructure. Executive Directors noted the weak revenue performance, the lack of progress on fiscal transparency and accountability, and the poor control and prioritization of government spending. They emphasized the need to address governance, accelerate structural reforms, increase revenue, and improve fiscal transparency. In view of all this, Executive Directors agreed that the procedure to suspend Liberia's voting and related rights in the IMF should be initiated.

1. This statement reflects information provided by the Liberian authorities since the circulation of the staff report to the Executive Board on February 20, 2003.

2. The Liberian Minister of Finance, Mr. Charles Bright, informed staff on Monday, March 4, 2003 that the Government of Liberia had decided to increase its monthly payment to the Fund from US$50,000 to US$75,000 effective from the start of its next fiscal year, beginning July 1, 2003. Mr. Bright also provided staff with a copy of the financial audit of the Liberian Petroleum Refining Corporation (LPRC) for 2000 and 2001 recently completed by the audit firm Pannel Kerr Foster, Inc. He indicated that the audit for 2002 is expected to be available within the next six weeks.

3. Mr. Bright clarified that no commitment has yet been made by the European Union (EU) on the funding of independent financial audits of the Bureau of Maritime Affairs (BMA), Forestry Development Authority (FDA), and LPRC. The European Commission has confirmed that some resources would be available within the current envelope for Liberia, but that additional resources would probably need to be mobilized if a decision were taken to finance the audits. To date, the only action that has been undertaken with respect to the audits is the circulation of a preliminary draft of terms of reference.

4. If Liberia’s payments to the Fund increase to US$75,000 per month from July 2003, total payments in 2003 would represent 0.1 percent of Liberia’s arrears to the Fund or about 10 percent of its obligations falling due. They would be equivalent to 0.5 percent of Liberia’s recorded exports of goods in 2002.

5. This information does not affect the thrust of the staff appraisal or the staff’s assessment that Liberia has not adequately strengthened its cooperation with the Fund since the last review.

Liberia: Staff Report for the 2002 Article IV Consultation, Overdue Financial Obligations to the Fund—Review Following Declaration of Ineligibility, and Decision on Suspension of Voting and Related Rights
Author: International Monetary Fund