Statement by the IMF Staff Representative October 20, 2004

This report reviews Liberia’s Post-Conflict Economic Conditions and Economic Program for 2004–05. The economy of Liberia is recovering, following a sharp contraction in the second half of 2003, as a result of increasing donor support and the revival of associated manufacturing and services activities. Despite political and capacity constraints, the economic program through June 2004 was implemented successfully. The monetary program for 2004–05 aims at a broadly stable exchange rate, while accommodating a further rebound in the demand for local currency.

Abstract

This report reviews Liberia’s Post-Conflict Economic Conditions and Economic Program for 2004–05. The economy of Liberia is recovering, following a sharp contraction in the second half of 2003, as a result of increasing donor support and the revival of associated manufacturing and services activities. Despite political and capacity constraints, the economic program through June 2004 was implemented successfully. The monetary program for 2004–05 aims at a broadly stable exchange rate, while accommodating a further rebound in the demand for local currency.

1. This statement reports on developments since the issuance of the staff report. This information does not alter the thrust of the staff appraisal.

2. The authorities have made progress toward designing a time-bound package of measures to roll back recent slippages in the fiscal and monetary areas. The staff considers that the proposed package is a major step toward putting Liberia’s reform program back on track. However, the authorities have indicated their wish to discuss the measures further within the National Transitional Government of Liberia (NTGL) so as to ensure broad-based support for the proposed actions, including for the specific timing of the measures under consideration.

3. The key areas under discussion are:

  • Establishing a fully effective cash management committee so as to avoid further expenditure in excess of available revenue.

  • Gradual repayment of the domestic financing incurred since the beginning of the fiscal year 2004/05 (July) without jeopardizing core functions of government.

  • Preparation of a plan to reduce staffing cost at the CBL, and preparation of a revised budget for the remainder of 2004.

  • Establishing a monitoring committee attached to the office of the Chairman to systematically monitor the implementation of understandings reached with the Fund.

4. The staff is continuing to work with the authorities to fully elaborate their action plan; a staff visit is scheduled for shortly after the Executive Board meeting to follow up with the authorities.

Liberia: Report on Post-Conflict Economic Conditions and Economic Program for 2004/05
Author: International Monetary Fund