Liberia
Third Review of Performance Under the Staff-Monitored Program: Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Liberia

The staff report for the Third Review of Performance Under the Staff-Monitored Program (SMP) on Liberia explains economic developments. The Central Bank of Liberia (CBL) will continue to use the exchange rate to gauge domestic monetary conditions and manage Liberian dollar liquidity to maintain broad exchange rate stability. Progress has been made in rebuilding Liberia’s statistical capacity, but more needs to be done to establish the database required for policy formulation and monitoring.

Abstract

The staff report for the Third Review of Performance Under the Staff-Monitored Program (SMP) on Liberia explains economic developments. The Central Bank of Liberia (CBL) will continue to use the exchange rate to gauge domestic monetary conditions and manage Liberian dollar liquidity to maintain broad exchange rate stability. Progress has been made in rebuilding Liberia’s statistical capacity, but more needs to be done to establish the database required for policy formulation and monitoring.

I. Introduction

1. This report reviews Liberia’s recent economic developments and progress under the SMP through March 2007. Full details of the authorities’ 2007 program were presented in Country Report No. 07/49. The attached letter of intent (Appendix I) proposes minor adjustments to the quantitative and structural benchmarks for the second-half of 2007, as agreed with the authorities.

2. Performance under the SMP through March 2007 was satisfactory. The authorities achieved all but one of the quantitative benchmarks at end-December 2006 and end-March 2007 (Table 1, Appendix I) and completed most of the structural benchmarks, albeit some with delay (Table 2 and 3, Appendix I). The ceiling on CBL expenditures at end-December was exceeded by a small margin (US$0.2 million). The authorities submitted legislation for the merger of the Bureau of the Budget (BoB) and Bureau of Maritime Affairs (BMA) into the Ministry of Finance in September 2006 (June 2006 benchmark), and are hopeful it will be considered during the current legislative session. An external audit of the CBL’s 2006 accounts (April 2007 benchmark) was conducted, and is expected to be completed soon.

Table 1.

Liberia: Selected Economic and Financial Indicators, 2004-08

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Sources: Liberian authorities; and IMF staff estimates and projections.

Technical adjustments were made to the CPI in 2004 in light of the substitution of some items in the CPI survey in mid-2004.

Fiscal year basis (July-June).

Defined as Liberian currrency outside banks plus demand, time, and savings deposits in Liberian and U.S. dollars.

Table 2.

Liberia: Balance of Payments, 2004-08

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Sources: Liberian authorities; and IMF staff estimates and projections.

The assumed steady rise in donor inflows (about half the rate of nominal GDP growth) is based on Liberia’s extensive reconstruction needs and assumed strong donor support. Donor inflows in the first few years after 2007 are expected to be affected by the projected reduction in UNMIL operations.

Apart from token payments to international financial institutions, Liberia is not servicing its external debt.

Table 3.

Liberia: Summary of Central Government Operations, 2004/05-07/08

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Sources: Liberian authorities; and IMF staff estimates and projections.

Expenditure projections include $17.4 million of commitments at end-2005/06 projected to be recorded as expenditures in 2006/07.

Preliminary assumption is that payments on external debt will remain unchanged following decision point (US$100,000 per month to the IMF, WB and

Following commencement of implementation of the domestic debt strategy in 2006/07, payments previously reported as domestic arrears are now classified as payment of domestic debt. Contributions to the domestic debt trust fund are reported below the line.

The 62 percent increase in 2007/08 is driven, in part from a revatilization of SOEs, the Liberia Electric Corporation and the Liberia Electricity Corporation and the transfer to local authorities of $3 million in revenues from Mittal Steel for community development in Nimba, Bong and Grand Bassa counties.

For 2007/08 and beyond, note that once arrears payments and contributions to the domestic debt trust fund are accounted for the fiscal balance is zero.

Adjustments in 2005/06 and 2006/07 are a result of commitments at end-2005/06 projected to be recorded as expenditures in 2006/07.

Includes initial disbursements under a WB pre-arrears clearance grant ($30 million) and AfDB ISP grant ($4.5 million). Some of the projects funded by these grants are managed through the MDB -supported Project Financial Management Unit at the MoF and are implemented with assistance from ministries, but remain outside the budget. The increase in 2006/07 reflects greater government involvement in implementation of donor-funded projects.

For 2006/07, when reported on a commitment basis, the value is 7 percent.

II. Recent Economic Developments

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Liberia: Selected Economic Indicators, 2006-07

Citation: IMF Staff Country Reports 2007, 356; 10.5089/9781451822946.002.A001

Sources: Liberian authorities; and IMF staff estimates.1/ Comparison of the Harmonized CPI with the Monrovia CPI is not possible. The latter, replaced from January 2007, was based on 1964 basket weights, and contained only 79 items, while the HCPI, based on basket weights from neighboring countries, contains 235 items.2/ Includes over $13 million of checks issued in 2005/06 which were not cashed until the third quarter of 2006.

III. Policy Discussions and the Outlook for 2007

3. A continued strong effort will be required to implement outstanding structural benchmarks through year-end 2007. Discussions focused on adjustments to program benchmarks consistent with prospects for the remainder of the year and actions needed to meet these benchmarks, several of which require supportive legislation (including timely passage of the budget).

A. Fiscal Policy

4. As evidenced by the large surplus in the government’s accounts at the CBL, bottlenecks have continued to slow expenditure approvals. The fiscal surplus for 2006/07 is projected at about 3 percent of GDP (commitment basis). The staff and the authorities, however, concurred that efforts to accelerate expenditure in the last quarter of 2006/07 should adhere to the interim commitment control system and public procurement guidelines. To speed the pace of expenditure in 2007/08, line ministries and agencies will need to make further progress on public procurement training supported by technical assistance from the World Bank. Passage of the law to integrate the BoB into the Ministry of Finance would also improve budget execution.

5. The government has begun implementing their domestic debt resolution strategy (see Box). However, many claims classified as “contestable” by the external auditors could give rise to future liabilities. The authorities and staff agreed on the need to move swiftly to resolve outstanding issues—including ensuring that it is consistent with plans to restructure the banking sector, and implementing the government’s strategy to settle cross debts with state-owned enterprises. The staff emphasized the importance of establishing clear and transparent mechanisms for the Trust Fund envisaged to finance the debt resolution strategy.

6. In mid-May a cash-based balanced budget for 2007/08 was submitted to the legislature which targets revenues (excluding grants) of US$182.5 million, a 30 percent increase from the staff’s revised projection for 2006/07.1 The authorities expect this outturn to stem from stronger revenue administration, continued economic recovery, and a one-off payment of US$15 million by Mittal Steel.2 On the expenditure side, the budget allocates US$29.1 million to health and education—15.9 percent of total expenditures, from 15.5 percent in the 2006/07 budget.

Liberia’s Domestic Debt Resolution Strategy

In January 2007 the authorities, assisted by an external auditor, finalized a domestic debt resolution strategy following an extensive review of US$914 million in claims classified as either “valid,” “contestable,” or “rejected.”3 4 Each category claimed roughly a third of the claims (see Table). All valid claims, with the exception of the CBL’s, will be discounted at a range of 0 percent for claims below US$1,000 to 87.6 percent for claims above US$1 million. Commercial bank claims will be discounted by the average rate for other claims (46.6 percent), though in each case the rate will be calibrated to prevent triggering failure at the bank in question.

Outcome of Domestic Debt Verification and Discounting

(Millions of U.S. dollars)

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Source: Liberian authorities.

Financial Institutions (FIs)

Of the US$263.8 million of valid claims to FIs, 97 percent is due to the CBL. Claims owed to FIs will be paid over 30 years beginning in 2007/08, with debt service increasing in the outer years, following a four-year grace period on principal. The total fiscal cost per year for 2007/08-2010/11 will be US$2.4 million.

Other claims (excluding FIs)

Of the US$40.1 million of other claims, individual claimants have yet to be identified for US$14 million. The remaining US$26 million—since discounted to US$8.4 million—constitute salary arrears to government employees and arrears on goods and services in the past five years. The 2006/07 budget appropriates US$5.6 million to cover the discounted claims. The remaining US$2.8 million is expected to be covered under a US$6 million appropriation for domestic arrears in the 2007/08 budget.

Trust Fund

A Trust Fund will be established to ensure that enough resources are available to resolve the debt as planned. To finance the Trust Fund, the government will allocate US$6 million in the 2007/08 budget (compared with expected domestic debt strategy payments of US$5.2 million in the fiscal year) and 5 percent of total revenues in 2008/09-10/11 (compared with an expected average fiscal year obligation on valid claims of around 1 percent of revenue). These amounts exclude pre-NTGL salary arrears and foreign mission arrears, which are expected to be paid under a separate appropriation.

Liberia: Selected Fiscal Indicators, 2007/08-2009/2010

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Calendar year basis, with growth corresponding to calendar year in which fiscal year ends.

The rise in real GDP growth in 2008 is largely due to the resumption of logging and continued growth in the services sector. Together with significant investments in the mining sector, this also supports the acceleration to 2010.

Sources: Liberian authorities, and IMF staff estimates and projections.

7. The budget provides for an increase in civil service wages. The authorities and the staff agreed on the importance of completing, in a timely manner, with support from the World Bank, the strategy for comprehensive civil service reform to strengthen capacity and reduce wage compression. However, in the interim, the budget provides for an increase in the minimum civil service wage from US$30 per month to US$50 per month, and allows for more wage dispersion. The authorities are also developing a Senior Executive Service as an interim measure to attract well-qualified staff. As a result of these steps, the wage bill is projected to increase from 7.0 percent of GDP in 2006/07 to 9.1 percent of GDP in 2007/08, but would still account for a lower share of revenues (35 percent) than in, for example, WAEMU countries (38 percent in 2006).5 Preliminary projections show that under the assumption of an unchanged wage bill, this could result in a temporary lowering of budgeted capital expenditure (as a share of GDP) in 2008/09 (see text table), although the bulk of capital spending will continue to be financed by donor support outside the budget. On debt servicing, the budget allocates US$12.7 million for implementation of the domestic debt strategy and US$3.9 million for external debt payments.

8. To achieve the revenue target for 2007/08, the authorities should sustain current efforts in strengthening revenue administration and broadening the tax base. In this regard, the authorities plan to (i) finish restructuring domestic tax administration by establishing a headquarters in charge of policy formulation and field offices for large, medium and small taxpayers in charge of implementation; (ii) implement the new 9-digit taxpayer identification number; and (iii) further reduce tax exemptions by strictly applying the Liberia Revenue Code (LRC); and (iv) collect from sources which yielded little revenue in 2006/07, including GSM licensing fees and forestry related revenues. On tax incentives, the staff and the authorities agreed on the importance of amending the current law, which allows the government to grant ad hoc special tax incentives (beyond those already provided in the LRC) regardless of an investment’s size or strategic significance.

B. Monetary and Financial Sector Policies

9. Under the current policy framework, the CBL will continue to use the exchange rate to gauge domestic monetary conditions and manage Liberian dollar liquidity to maintain broad exchange rate stability. In this context, it has continued to hold biweekly foreign exchange auctions, which recently increased in size. However, the accumulation of U.S. dollars in the government’s accounts at the CBL has exerted downward pressure on the exchange rate, contributing to upward pressure on inflation. The authorities and staff concurred on the importance for the Ministry of Finance to continue its regular sale of foreign exchange to the CBL, consistent with the assumptions in the monetary program, in order to safeguard the auctions’ credibility and maintain broad exchange rate stability.

10. Consistent with ongoing Fund technical assistance, the monetary policy framework should be strengthened. Further efforts are needed to finalize the regulations and procedures required to introduce credit and deposit auctions to augment the foreign exchange auction as policy instrument.

11. Progress has been made in improving bank capitalization, though the banking system remains fragile. Besides having a high share of nonperforming loans, the sector’s income is concentrated in fee-based activities (Table 5). Discounting of banks’ claims on the government, provided for in the government’s domestic debt resolution strategy, could also adversely impact some banks, although the government committed to prevent the risk of bank failures. Against this background, and given the country’s limited regulatory capacity, the staff reiterated the importance of cautiously pursuing any plans to grant licenses to new banks or to deposit-taking microfinance institutions. The submission of four abandoned and nonoperating banks to the courts for final resolution was welcomed, as were plans to submit another two cases by the end of the year.

Table 4.

Liberia: Monetary Survey, 2004-08

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Sources: Liberian authorities; and IMF staff estimates.

Derived from commercial banks’ balance sheets (Liberian dollar denominated).

Liberian dollar currency outside banks and commercial banks reserves (Liberian dollar denominated) held at central bank.

Excluding one bank (May 2003).

Excluding U.S. dollars in circulation.

Table 5.

Liberia: Core Set of Financial Soundness Indicators, 2003-07

(Percent)

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Source: CBL.

Adjusted by the CBL.

12. The financial position of the CBL has continued to improve, but remains vulnerable. After achieving a lower-than-targeted deficit in 2006 (US$0.9 million versus US$1.9 million), the CBL’s board of governors in early January approved a 2007 budget targeting a small surplus, against a program benchmark of a balanced budget. Regularizing the CBL’s claims on the government is expected to further boost the CBL’s income position in 2007. However, given future spending priorities, including printing new currency and the cost of new monetary policy instruments, it will be important to maintain strict budget discipline. In view of the chief administrator’s key role in strengthening financial management, the staff emphasized the importance of his continued involvement in all aspects of CBL management and operations as articulated in his terms of reference.

13. The recently completed voluntary safeguards assessment of the CBL concluded that significant vulnerabilities exist in the central bank’s safeguards framework (see Informational Annex, Appendix I). The CBL is in the process of addressing these safeguards deficiencies by implementing the recommendations made by staff, including adoption of new audit selection procedures to ensure an external audit in line with international standards and implementation of an internationally recognized financial reporting framework by 2008.

C. Governance Issues

14. The mission welcomed the government’s recent adoption of an anticorruption strategy, drafted in consultation with international partners. The strategy, among other things, would establish an independent anticorruption commission with its own investigative and prosecutorial powers. Legislation to establish the commission has been submitted to the president. The staff urged the authorities to move quickly to draft a financial plan for the commission’s operation and to seek the necessary donor financing. Swift action would also ensure that the commission’s operational costs could be integrated in the national budget cycle.

D. External Debt and Arrears

15. Progress has been made in reconciling Liberia’s external debt. Preliminary work on the HIPC Initiative debt sustainability analysis, undertaken in collaboration with the World Bank, confirms Liberia’s eligibility to benefit from HIPC Initiative and MDRI-related debt relief, once financing assurances have been obtained. The staff also briefed the authorities on the operational steps involved in arrears clearance.

E. Data Issues

16. Progress has been made in rebuilding Liberia’s statistical capacity, but more needs to be done to establish the database required for policy formulation and monitoring. IMF technical assistance has focused on improving fiscal, monetary, and balance of payments statistics; other donors have helped build a store of socioeconomic data. To ensure a comprehensive and prioritized approach to rebuilding Liberia’s national statistical capacity, the authorities will need to complete the planned medium-term national statistical plan in consultation with donors in a timely manner.

IV. Program Monitoring and Risks

17. Performance under the SMP will be monitored on the basis of quantitative and structural benchmarks for end-June, end-September and end-December 2007 (Tables 1 and 3, Appendix I). The floor for revenue collections for September and December 2007 has been raised, bringing it in line with the 2007/08 budget. The benchmarks on the foreign exchange reserves accumulated by the CBL for June, September, and December have been changed to reflect the revised monetary program for 2007. The structural benchmark relating to the anticorruption strategy’s implementation has also been revised; it now requires the authorities to submit legislation that would establish an independent anticorruption agency.6 It was also agreed that completion of a national statistical plan would be added as a benchmark for end-September 2007.

18. Despite progress under the SMP and the government’s continued commitment to the reform process, capacity constraints and the political environment, which have led to delays in achieving a number of structural benchmarks under the program, pose considerable risks.7 Internal politics, including the election of a new House speaker, have already slowed legislation in 2007. Yet the ability to achieve a number of key structural benchmarks is predicated on legislative action, including passage of the 2007/08 budget and of laws that would eliminate ad hoc investment incentives, integrate the BoB and Bureau of Maritime Affairs into the Ministry of Finance, and establish an independent anticorruption commission. The program’s success also hinges on continued financial and technical support from donors.

V. Staff Appraisal

19. Performance under the SMP through March 2007 has been broadly satisfactory. The government has achieved most of the quantitative benchmarks and completed most of the structural benchmarks under the SMP. The slow pace of expenditure and the resulting accumulation of U.S. dollars in the government’s accounts at the CBL, however, have put some downward pressure on the exchange rate to the U.S. dollar. To improve the pace and quality of expenditure, Liberia’s line ministries should continue to receive support and training on budget implementation in the near-term while developing a comprehensive and properly sequenced reform plan to further strengthen public financial management.

20. Planned increases in social spending, provided for in the 2007/08 budget, are welcome. The proposed budget allocates greater resources to the wage bill. While recognizing the need for higher wages, the staff is of the view that a comprehensive civil service reform strategy is needed to strengthen government institutions and guide future wage policy decisions. In further implementing the domestic debt strategy, the government should move quickly to finalize modalities for restructuring banks’ claims and establish clear and transparent mechanisms for the Trust Fund that will administer domestic debt.

21. Meeting inflation objectives will require further efforts to improve the monetary policy framework. Continued efforts are also required to strengthen financial sector balance sheets and the supervisory framework. Given his central role, the chief administrator should be involved in all aspects of management and operations.

22. The continued success of the government’s program will require prompt action on key legislation, as well as strong technical and financial support from Liberia’s international partners. Timely approval of the 2007/08 budget will be critical in clarifying the resource envelope for the line ministries. Similarly, legislative approval of a proposal to merge the BoB into the Ministry of Finance would enhance budget implementation. The government will also need the support of the legislature to continue implementing its anticorruption strategy and to reform its tax exemption policies.

23. Liberia’s external debt is unsustainable, and comprehensive debt relief is required. Continued progress under the SMP, along with sufficient indications of support from donors, would be important steps toward clearance of arrears to the IMF. Such progress would also help pave the way for Liberia’s timely participation in the HIPC and MDR initiatives.

Figure 1.
Figure 1.

Liberia: Selected Economic Indicators, 2002-08

Citation: IMF Staff Country Reports 2007, 356; 10.5089/9781451822946.002.A001

Sources: Liberian authorities; IMF staff estimates and projections.1/ Fiscal year (July-June).
Figure 1.
Figure 1.

Liberia: Selected Economic Indicators, 2002-08

Citation: IMF Staff Country Reports 2007, 356; 10.5089/9781451822946.002.A001

Sources: Liberian authorities; and IMF staff estimates and projections.1/ Percent of total money supply.
Figure 2.
Figure 2.

Liberia: Exchange Rate Developments, January 2000-May 2007

Citation: IMF Staff Country Reports 2007, 356; 10.5089/9781451822946.002.A001

Sources: Liberian authorities; IMF staff estimates and projections.

Liberia. Appendix I–Letter of Intent

Monrovia, June 28, 2007

Mr. Rodrigo de Rato

Managing Director

International Monetary Fund

Washington, D.C. 20431

USA

Dear Mr. de Rato:

The outlook for the Liberian economy continues to improve. The maintenance of macroeconomic stability and strong growth prospects, lifting of UN sanctions, and increasing investor interest in Liberia are signs that progress in implementing our ambitious reform program is translating into positive outcomes. This progress, which was recognized by our development partners at the February 2007 Partners Forum, has resulted in renewed commitment of both financial and technical support, including pledges to support debt relief for Liberia. We remain strongly committed to continuing our reform efforts, including making progress on the SMP objectives and implementing technical assistance recommendations provided by the IMF and other partners.

The government has made good progress in meeting SMP benchmarks. All but one of the end-December 2006 and end-March 2007 quantitative benchmarks were met. Public revenues substantially exceeded program targets and more progress was made in improving the central bank’s finances. On the structural side, we have made good progress in achieving the outstanding 2006 and end-March 2007 benchmarks, including the introduction of the Harmonized CPI, commencing implementation of the government’s domestic debt strategy, and adoption of audit selection criteria to ensure that audits of the central bank will be conducted by a qualified firm of international repute. The external audit of the CBL’s 2006 accounts was conducted, and we are hopeful it will be completed soon. We will also continue to work with the legislature to seek passage of legislation to integrate the Bureau of the Budget and Bureau of Maritime Affairs into the Ministry of Finance.

Adherence to a transparent budget timetable enabled us to submit the 2007/08 budget to the legislature on May 17, 2007. Our cash-based balanced budget targets revenues (excluding grants) of US$182.5 million. We see this target as achievable in view of a one-off payment of US$15 million and the first annual payment of US$3 million for community development to the government following approval of the Mittal Steel agreement, and our continued efforts to enhance revenue efficiency and broaden the tax base. On the expenditure side, our budget is aligned with the developmental priorities identified in our interim poverty reduction strategy paper. To this end, the total allocation for ministries and agencies that are expected to deliver direct social services, such as education, health, agriculture, public works, and water and sanitation, has been increased by 39 percent (US$42.5 million) from the 2006/07 budget. The budget also provides for an increase in the civil service wage bill (by 43 percent compared with the previous year). This greater allocation will enable the government to raise the minimum civil service wage to US$50 per month from US$30 per month, as well as to begin addressing wage compression. Finally, the 2007/08 budget fully provides for implementation of our domestic debt resolution strategy (US$12.7 million) and allocates US$3.9 million for arrears payments.

The primary objectives of the government’s economic program for 2007, monitored by the IMF staff, are described in our letter of intent and accompanying memorandum of economic and financial policies of January 18, 2007. The main objectives of our program are to continue efforts to strengthen public financial management and the financial sector, and to begin implementing our domestic debt resolution and anticorruption strategies. During the March 29-April 11, 2007, SMP review mission, we agreed on revised quantitative benchmark targets for 2007 based on 2007/08 fiscal budget targets, the 2007 budget for the central bank, and a revised monetary program consistent with price stability. We also agreed to a revised structural benchmark relating to the implementation of our anticorruption strategy (submit required legislation for establishment of an independent anticorruption agency for legislative approval) and to add a new benchmark (prepare a medium-term national statistical plan by end-September 2007).

Resolving Liberia’s debt overhang remains a high priority for the government. Debt relief under the HIPC Initiative and the MDRI is essential if we are to normalize our relations with creditors and assume a path to sustainable development. The IMF staff has concluded that the policies under the 2007 program meet the standard of an upper credit tranche Fund arrangement, apart from program financing assurances. We believe that Liberia’s performance under the SMP continues to be good, and apart from financing assurances from donors to fund debt relief, could be counted toward a track record to reach the decision point under the HIPC initiative. We urge management and the Executive Board to take this into consideration when determining the track record Liberia needs to reach the HIPC decision point.

The policies and measures set forth in the letter of intent dated January 18, 2007, the accompanying MEFP, and this letter, reflect the understandings reached with the IMF staff during the November 2006 mission and are consistent with understandings reached in the April 2007 SMP review mission. We believe these measures will allow us to achieve the objectives of the program, but will, take any additional measures that may become necessary for this purpose. We continue to consult closely with the IMF staff on our adoption of such measures, and in advance of any revisions to the policies contained in the MEFP. The government will provide the IMF staff with all the information it requests to assess implementation of the SMP.

Sincerely yours,

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Attachments: Quantitative Indicators for 2006-7 SMP for February-September 2006-Structural Benchmarks Structural Benchmarks for 2007 SMP

Table 1.

Liberia: Quantitative Indicators 2006-07 (Cumulative basis from end of fiscal year, unless otherwise noted)

(Millions of US dollars)

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The fiscal balance, on a cash basis, is defined as the difference between (a) total central government revenue plus budget support (excluding project grants), and (b) total current expenditure plus investment expenditure (excluding foreign-financed investment expenditure).

The original program data for September 2006 reflects actual outturn at end-June, plus the original flow targets for September.

The floor on revenue collections is total revenue for FY05/06, and the floor on cash-based fiscal balance is accumulated government surpluses at the CBL as of end-June 2006. Most of the latter amount respresents checks approved and issued by the CMCo prior to end-FY05/06 that were not cashed prior to end-FY05/06. After taking into account commitments made but not cashed, the uncommitted balance of the government account at the CBL at end-June 2006 was $2.1 million. Under the cash-based budget, expenditures are recorded when they are cashed at the CBL.

Table 2.

SMP for February-September 2006—Structural Benchmarks

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Table 3.

Structural Benchmarks for 2007 SMP

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1

The budget does not report on donor assistance outside the budget, but the authorities agree on the importance of gathering donor data in order to enable a complete assessment of the economy-wide spending on infrastructure and social services.

2

Excluding the one-off payment which was added to the Mittal Steel agreement after renegotiation under the contracts and concessions review, revenues are projected to rise by 19 percent.

3

This total excludes pre-NTGL civil service and military salary arrears, estimated at US$30.3 million at end-March 2007, and foreign mission arrears for which reconciliation is ongoing. These arrears are being handled through direct budget appropriations.

4

Rejected claims comprise those of which the probability of being realized are considered small, while contestable claims comprise those of which the probability of having to honor them are considered nontrivial, although the proof of validity rests with the claimant.

5

Given the likely underestimation of Liberia’s GDP, the wage bill as a percent of revenues provides a more useful comparison.

6

This benchmark was revised in consultation with the Fund’s Legal Department in order to properly sequence the process leading up to the establishment of the anticorruption commission, i.e. requiring establishment of the commission only once legislation has been approved.

7

For example, on May 24, 2007, the president vetoed the Financial Autonomy Bill under which the legislature would set, and have full control of, its own budget without revision or oversight by any government institution. Passage of this bill would circumvent the interim commitment control system and undermine Liberia’s balanced cash-based budget–a cornerstone of the SMP. The legislature could still override this veto with a two-thirds majority.

Liberia: Third Review of Performance Under the Staff-Monitored Program: Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Liberia
Author: International Monetary Fund