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© 2004 International Monetary Fund

March 2004

IMF Country Report No. 04/84

Liberia: Report on Post-Conflict Economic Situation and Prospects for January–June 2004—Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Liberia

This Report on Post-Conflict Economic Situation and Prospects for January–June 2004 for Liberia was prepared by a staff team of the IMF, following discussions that ended on March 1, 2004, with the officials of Liberia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on February 12, 2004. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

The following documents have been released and are included in this package, together with the staff report on post-conflict economic situation and prospects for January-June 2004:

  • a staff statement of March 1, 2004 updating information on recent developments.

  • a Public Information Notice (PIN) summarizing the views of the Executive Board as expressed during its March 1, 2004 discussion of the staff report.

  • a statement by the Executive Director for Liberia.

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to

Copies of this report are available to the public from

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Report on Post-Conflict Economic Situation and Prospects for January–June 2004

Prepared by the African Department

(In consultation with Finance, Fiscal Affairs, Legal, Monetary and Financial Systems, Policy Development and Review, and Statistics Departments)

Approved by Amor Tahari and Matthew Fisher

February 12, 2004


  • Executive Summary

  • I. Introduction

  • II. Recent Political and Economic Developments

  • III. Report on Discussions

    • A. Implementation of Early Measures

    • B. Economic Program and Prospects for the First Half of 2004

    • C. Fiscal Policy Measures

    • D. Governance Issues

    • E. Monetary and Banking Issues

    • F. External Debt Issues

    • G. Relations with the Fund and Possible Staff-Monitored Program (SMP)

  • IV. Assessment of Technical Assistance Needs

  • V. Donor Activities

  • VI. Staff Appraisal

  • Boxes

  • 1. Measures Taken by the NTGL to Strengthen Economic Management

  • 2. Timber Sector and Sanctions

  • 3. Liberia’s Dual Currency System

  • 4. The Results-Focused Transitional Framework (RFTF)

  • Tables

  • 1. Selected Economic and Financial Indicators, 1999–2004

  • 2. Summary of Central Government Operations, 1999–June 2004

  • 3. Monetary Survey, June 2002–June 2004

  • 4. Balance of Payments, 1999–2004

  • 5. External Public Debt, Debt Service, and Arrears, 1999–2003

  • Appendices

  • I. Summary of Fiscal TA Needs Assessment

  • II. Early Findings and Initial Priority Technical Assistance Recommended in the Monetary and Financial Systems by the IMF Mission in December 2003

  • III. Needs Assessment for Technical Assistance in Statistics and Recommendations by the IMF Mission in December 2003

  • IV. Relations with the Fund

  • V. Relations with the World Bank Group

  • VI. The Afghanistan Reconstruction Trust Fund

Executive Summary

  • The internal conflict has largely destroyed the economy. Real GDP is estimated to have declined by 30 percent in 2003. Exports contracted sharply, also reflecting the UN ban on timber exports. Humanitarian aid and remittances have helped to sustain imports. Commercial banks are very fragile.

  • Prospects for economic recovery depend on the re-establishment of security throughout the country and the pace of donor activities. The full deployment of UN troops is expected to help lead to the return of refugees to their homes and resumption of agriculture. Donor activities have already begun to stimulate the economy in the Monrovia area.

  • The transitional government has made progress in implementing first measures to boost revenue, restore an orderly budget process, and address key governance issues. The centralization of revenue collections has increased these significantly, and government accounts have been transferred to the Central Bank of Liberia (CBL). Imports of rice have been liberalized, and similar steps are being taken for petroleum products.

  • Further steps are envisaged in these areas for the first half of 2004. Revenue is expected to be bolstered further through quick-yielding measures in the taxation of sales and imports, and budgetary cash planning and monitoring is to be improved. Audits are to be conducted for the main revenue-generating agencies and the CBL.

  • Adherence to a basic overall framework for economic management is expected to lead to a more stable macro economic environment during that period. The budget through June refrains from the use of domestic financing, and increasing donor activities and sustained remittances are projected to lead to a modest increase of deposits and international reserves.

  • The financial system will require substantial strengthening. Commercial banks, already fragile before the 2003 hostilities, have suffered from rising non-performing loans. The CBL is running an operational deficit and needs to move to transparent and market-based instruments for monetary policy.

  • Significant pledges for reconstruction and humanitarian aid were made at a donor conference in February 2004. Donors agreed to provide support under a common, government-led framework.

  • The transitional government has demonstrated its desire to improve relations with the Fund. Discussions were held in a largely collaborative manner, and monthly token payments to the Fund have resumed. The staff supports the authorities’ request for a resumption of the Fund’s technical assistance in light of pressing capacity-building needs.

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March 1, 2004

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Public Information Notice (PIN) No. 04/22


March 18, 2004

International Monetary Fund

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March 1, 2004