Liberia: Third Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver and Modification of Performance Criteria, and Financing Assurances Review—Informational Annex

This paper discusses key findings of the Third Review for Liberia Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility (PRGF). The program remains on track. All performance criteria (PC) for end-June 2009 were met, except the PC on total revenue collection. IMF staff supports the authorities’ request for a waiver on the basis that the deviation was temporary and did not jeopardize key program objectives. Structural reform commitments were largely met, albeit some with delays. The 2010 quantitative and structural reform program is appropriately ambitious.

Abstract

This paper discusses key findings of the Third Review for Liberia Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility (PRGF). The program remains on track. All performance criteria (PC) for end-June 2009 were met, except the PC on total revenue collection. IMF staff supports the authorities’ request for a waiver on the basis that the deviation was temporary and did not jeopardize key program objectives. Structural reform commitments were largely met, albeit some with delays. The 2010 quantitative and structural reform program is appropriately ambitious.

I. Liberia—Relations with the Fund

(As of Oct. 31, 2009)

I. Membership Status: Joined 03/28/1962; Article XIV

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V. Latest Financial Arrangements:

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VI. Projected Payments to the Fund (without HIPC Assistance) 1

(SDR million; based on existing use of resources and present holdings of SDRs):

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Projected Payments to the Fund (with Board -approved HIPC Assistance)

(SDR million; based on existing use of resources and present holdings of SDRs):

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VII. Implementation of HIPC Initiative:

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VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not applicable

IX. Safeguards Assessment

An update of the safeguards assessment of the Central Bank of Liberia (CBL) was completed in August 2008. The update found that while the CBL had largely addressed the measures to increase transparency recommended by the 2007 interim safeguards assessment, significant risks exist in the control framework of the bank. Of particular concern during the course of the assessment was a delay in the assumption of co-signing authority for CBL financial matters by the Fund-supported Special Advisor, which has since occurred. The assessment also found that internal audit capacity was weak and that the Audit Committee was not exercising effective oversight of CBL financial reporting, audit, and control systems. A priority measure to engage its external auditor to conduct special periodic audit of monetary data reported to the Fund has been adopted by the bank. The most recent report for the six month ended June 30, 2009 indicated some areas for improvement but noted that, overall, the monetary data submitted by the CBL are accurate and in compliance with TMU

X. Exchange Rate Arrangement

Liberia maintains an exchange rate system that is free of restrictions on payments for current and capital transfers. The currency of Liberia is the Liberian dollar. The U.S. dollar is also legal tender. The current exchange rate arrangement is a managed float, with no predetermined path for the exchange rate. The exchange rate of the Liberian dollar is market determined, and all foreign exchange dealers, including banks, are permitted to buy and sell currencies. The authorities manage the exchange rate with reference to the U.S. dollar, and the arrangement is classified as ‘other managed’. Liberia’s exchange rate at end-October 2009 was L$70.5=US$1.

XI. Article IV Consultation

The 2008 Article IV consultation discussions were held in Monrovia during October 20-31, 2008 in Monrovia. The staff report (Country Report No. 09/4, 1/13/09) was discussed by the Executive Board on December 22, 2008 and is posted on the IMF website.

XII. Technical Assistance 2008-09

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XIII. Resident Representative

A resident representative has been posted in Monrovia since April 2, 2006. Mr. Sobolev assumed the position in July, 2009 replacing Mr. Tharkur.

II. Liberia—Joint World Bank-IMF Work Program, 2009-10

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III. Liberia—Statistical Issues

As of November 12, 2009

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Liberia—Table of Common Indicators Required for Surveillance

As of November 12, 2009

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extrabudgetary funds, and social security funds) and state and local governments.

Includes external gross financial asset and liabilities positions vis-a-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); Annually (A); irregular (I); not available (NA).

1

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

2

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

3

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Liberia: Third Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver and Modification of Performance Criteria, and Financing Assurances Review: Staff Report; Informational Annex; and Press Release
Author: International Monetary Fund