Liberia: First Review Under the Extended Credit Facility Arrangement and Request for Waiver of Nonobservance of Performance Criterion and Modification of Performance Criteria—Informational Annex

This paper describes Liberia’s First Review Under the Extended Credit Facility Arrangement and Request for Waiver of Nonobservance of a Performance Criterion and Modification of Performance Criteria. Nonresource real GDP growth, in particular, while still on an upward trend has been revised down for 2013, reflecting the sluggish pace of public investment. Nonresource growth is expected to pick up in the medium term, in line with an expected increase in public investment albeit the investment path is somewhat more moderate than originally planned and provided project execution speeds up.


This paper describes Liberia’s First Review Under the Extended Credit Facility Arrangement and Request for Waiver of Nonobservance of a Performance Criterion and Modification of Performance Criteria. Nonresource real GDP growth, in particular, while still on an upward trend has been revised down for 2013, reflecting the sluggish pace of public investment. Nonresource growth is expected to pick up in the medium term, in line with an expected increase in public investment albeit the investment path is somewhat more moderate than originally planned and provided project execution speeds up.

Relations with the Fund

(As of September 30, 2012)

Membership Status: Joined: March 28, 1962.

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans:

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Latest Financial Arrangements:

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Formerly PRGF.

Projected Payments to Fund

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

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Implementation of HIPC Initiative:

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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.

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.

Delivery of Debt Relief at the Completion Point:

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Safeguards Assessment

An update safeguards assessment, which is substantially completed, noted a need to regain momentum in building robust safeguards at the CBL. While progress has been made on some recommendations from the 2011 assessment, including finalizing a memorandum of understanding (MoU) clarifying the rights and obligations of the government and the CBL regarding IMF transactions, a number of previous recommendations have not been implemented. These include strengthening the internal audit function through an external peer review, independent reviews of monetary program data by internal audit, and a review of the currency operations. At the same time, the recent overdraft and bridge financing arrangements with the CBL are in breach of the CBL Act with regard to credit to government which raises safeguards concerns on governance and compliance mechanisms at the CBL. Recommendations from the update of the safeguard assessment include appointing internationally reputable external auditors for the next three-year term, resuming independent internal audits of monetary data, and strengthening Board oversight on the (i) external audit process and (ii) compliance of bank operations with the CBL Act. Staff received assurances from the CBL on the planned continuation of external audits, in accordance with international standards, by suitably qualified reputable firms. The recommendations arising from the update safeguards assessment do not require action in the context of the first review, and will be monitored under the program.

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 exchange rate showed limited mobility for most of 2011 resulting in a short lived re-classification of the de facto exchange rate regime to ‘stabilized arrangement’ effective January 5, 2011. The de facto exchange rate regime was re-classified back to ‘other managed’ effective November 7, 2011 as the Liberian dollar diverged from the 2 percent six months band. The de jure exchange rate regime classification remains ‘managed floating’. The exchange rate between the Liberian dollar and United States dollar at end-May 2013 was L$76.00=US$1 (mid-point between buying and selling rates).

Article IV Consultation

The 2010 Article IV consultation discussions were held in Monrovia during September 21–October 1, 2010. The staff report (Country Report No. 10/373, December 2010) was discussed by the Executive Board on December 8, 2010 and is posted on the IMF website.

Technical Assistance 2009–13

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Resident Representative

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

Joint World Bank-IMF Work Program, 2012–13

(As of June 6, 2013)

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Relations with the World Bank Group1

(As of May 31, 2013)

The Joint Country Assistance Strategy2 (JCAS) presented to the Board of the World Bank Group on April 21, 2009 aims to support Liberia’s transition from post conflict recovery to long-term development. More specifically, the JCAS, which is fully aligned with the Africa Regional Strategy and the Government’s Poverty Reduction Strategy (PRS), focuses on three strategic objectives: (i) rebuilding core state functions and institutions; (ii) rehabilitating infrastructure to sustain economic growth; and (iii) facilitating pro-poor growth. The World Bank’s program under the JCAS involved a combination of development policy lending, investment lending and analytical work in support of the three strategic objectives.

A progress report presented to the Board on July 7, 2011 extends the current Joint Country Assistance Strategy to end FY12 to coincide with the launching of Liberia’s second Poverty Reduction Strategy—the Agenda for Transformation—launched in December 2012. The World Bank’s IDA financing for the JCAS period (FY09–FY12) was US$338.0 million. With the addition of some US$120 million under the Liberia Reconstruction Trust Funds managed by the Bank, as well as other trust funds, the actual financing under the JCAS program was approximately US$727 million. The International Finance Corporation (IFC) net commitment under the JCAS was about US$16.4 million with a program focused on: improvement of the investment climate; improving the dialogue between the government and the private sector; strengthening the financial sector; supporting private participation in the economy.

The Liberia indicative allocation for the IDA16 period (July 2011–June 2014) is SDR 117.5 million, an increase of 18 percent over the IDA 15 allocation. The preparation of the new five-year Country Partnership Strategy (CPS) for FY13–17 is well advanced and is expected to be presented to the World Bank’s Board in July 2013.

A. Active Projects

There are currently fourteen active3 IDA projects in Liberia, including three regional projects, with a total commitment of approximately US$312.2 million of which US$136.6 million is undisbursed. Three new credits were approved for FY13 to date for a total commitment of approximately US$95 million. The new credits are summarized below:

The Liberia Road Asset Management Project (LIBRAMP) was first approved in June 2011 for US$67.7 million. Additional financing for US$50 million was approved in September 2012. The objective of the Road Asset Management Project for Liberia is to support the recipient’s efforts to reduce transport costs along the road corridor from Monrovia to the Guinea border and to maintain the road in good condition over a ten year period. The project has the following two components: Component 1: Design, Rehabilitation and Maintenance of Monrovia–Ganta–Guinea Border Road. This component will finance Output- and Performance-based Road Contracts (OPRC) for two road lots, Monrovia to Gbarnga (approximately 180 km) and Gbarnga to Ganta—the Guinea border (approximately 69 km). This road is vital to the nation’s reconstruction, connecting four of the country’s five largest cities and providing critical cross-border connection. Component 2: Consultant Services, Operating Costs, and Training. This component will finance consultancy services for the management of the OPRCs, as well as technical assistance for road feasibility studies and the development of sector institutions through hiring of skilled staff and the provision of staff training programs.

The Liberia Accelerated Electricity Expansion Project (LACEEP) was approved in May 2013 for US$35 million. The objectives of the project are to increase access to electricity and strengthen institutional capacity in the electricity sector. The project focuses on three of the most pressing issues for the implementation of the government’s ambitious plans to expand electricity services in Liberia by 2030. The first component supports the expansion of the transmission and distribution grid, both in and outside of Monrovia. The second component will create the conditions to shift from diesel to HFO-based thermal generation, for the country to effectively benefit from the price differential of the two fuels on the international market. The third component focuses on the strengthening of the institutional capacity within the government to lead the development of the electricity sector.

The Liberia Health Systems Strengthening Project was approved in May 2013 for US$10 million. The Objective of the project is to improve the quality of maternal health, child health, and infectious disease services in selected secondary-level health facilities. The first component of the project focuses on strengthening the institutional capacity needed to improve the quality of selected health interventions at target facilities. The second component deals with improving health worker competencies to address key health-related concerns. The third component covers project management.

B. Economic and Sector Work

The World Bank has completed a comprehensive Public Expenditure Review (PER), which explores various options for fiscal space enlargement. Given the large amount of additional expenditure required for the implementation of the government’s second Poverty Reduction Strategy—the Agenda for Transformation, it is critical that all options are examined to accommodate these expenditures. The PER focuses on measures for: (a) improving the efficiency of public expenditure; (b) increasing the amount of external grants; (c) mobilizing greater revenue from taxes, non-tax revenue and natural resources; and (d) public sector borrowing.

The World Bank has also completed a human development Public Expenditure Review (PER) covering the education, health and social protection sectors. Public spending on the human development sector in Liberia is low by Sub-Saharan Africa (SSA) standards. The PER therefore examines a number of key public expenditure issues affecting progress in attaining the MDGs. The Review considers the sources and levels of funding, budgetary allocations across and within the sectors, and the quality, equity and efficiency of public expenditure on human development.

The World Bank has completed the first public expenditure review focusing on the security and justice sector in collaboration with the United Nations Mission in Liberia (UNMIL). The Review was financed by the Bank-UN Partnership Trust Fund and in line with the policy implications of the 2011 World Development Report (WDR) on Conflict, Security and Development. It sought to assist the Government in identifying the core security functions and their associated financing costs and gap, as well as options to ensure smooth security transition beyond the drawdown of UNMIL peacekeepers beginning in October 2012. The report proposes a roadmap for prioritizing the security activities in the context of a medium-term expenditure framework.

C. Financial Relations (as at May 31, 2013)

(Millions of U.S. dollars) 1

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Amounts may not add up to original principal due to changes in the SDR/US exchange rate since signing.

IDA Disbursements and Debt Service

(Quarterly since HIPC Completion Point)

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Note: *=revised data.

Relations with the African Development Bank1

(As of May 15, 2013)

There are 13 active AfDB projects in Liberia, including two regional projects, with a total commitment of approximately UA 146 million, equivalent to US$ 230 million, of which 31% is disbursed. A brief description of these projects is provided below.

1. Economic Governance and Competitiveness Support Program: This UA 30 million budget support operation aims to (i) improve PFM systems; (ii) strengthen tax and customs administration including transparency and accountability of revenue from the extractive industry; and (iii) improve business enabling environment for private sector development. It will also increase the government’s fiscal space for pro-poor expenditure in line with the PRS. The program is an integral part of a broader set of interventions of the AfDB designed to support good financial and economic governance. In December 2011, the first tranche of UA 14 million was disbursed. The disbursement process for the second tranche of UA8 million should be finalized by 15 June 2013.

2. Integrated Public Financial Management Reform Project (IPFMRP): The ADB’s UA 3.0 million grant support for this project was approved on September 10, 2012. Supported by four donors—the ADB, World Bank, USAID, and SIDA—this US$28.55 million project represents an innovative approach for the Bank to support a comprehensive government program for PFM reform. By using a pooled funding arrangement, the project harmonizes support from the four donors, increasing development effectiveness while decreasing the administrative burden on the Government. The project has five components, which are mutually reinforcing: (i) enhancing budget planning and credibility; (ii) strengthening budget execution, accounting and reporting; (iii) strengthening revenue administration; (iv) enhancing transparency and accountability; and (v) project management and capacity building.

3. Payment systems development project: This UA 5 million supplementary grant enables Liberia to join the West Africa Monetary Zone (WAMZ) Payments System Development Project. The project aims to improve the financial sector basic infrastructure in the WAMZ region through the upgrade of the payments systems of The Gambia, Guinea, Sierra Leone, and Liberia. The project components include: Real Time Gross Settlement (RTGS) system; Retail Payments Automation (RPA), a clearing system comprising Automated Checks Processing (ACP); Automated Clearing House (ACH); Central Banking Applications (CBA) system; and telecommunication infrastructure. The project will increase participation in the formal financial sector and enhance financial flows at the regional level. This project fits under Pillar I of the Bank’s proposed Regional Integration Strategy for West Africa 2011–15 on linking regional markets through trade and investment facilitation.

4. Technical Assistance from Fragile States Facility:

  • a. LEITI: US $460,000 grant assistance for Multi-Stakeholders Group costs; communication and outreach, staff training and capacity building of actors involved in extractive industries transparency related activities

  • b. Public Financial Management Reforms: US$1,000,560 grant assistance to cover operating cost for Public Financial Management Reform Unit, Macro Fiscal Unit, and Aid Management Unit.

  • c. Dagliotti School of Medicine: US$300,600 grant assistance to retain 3 professors teaching at Dagliotti School including cost of carrying out medical research.

  • d. Institutional Development and Capacity Building Support to the Governance Commission: UA 438,338 grant assistance to strengthen the capacity of the Governance Commission and to accelerate the implementation of governance reforms.

  • e. Technical Assistance for Services of Procurement Specialist/Transport Engineer to Support Ministry of Public Works: UA 117,000 grant to strengthen the capacity of the Ministry of Public Works in conducting construction, rehabilitation and maintenance works of socio-economic infrastructure including roads.

5. Liberia–Urban Water Supply and Sanitation Project (UWSSP). This UA 25.2 million grant project aims to improve Monrovia’s water and sanitation facilities. The project will: (i) provide access to adequate, safe and reliable water supply and public sanitation services in Monrovia, Buchanan, Kakata, and Zwedru; and (ii) enhance the institutional, operational, management capability, and the long-term financial viability of LWSC. The Project’s components are: (i) Rehabilitation and augmentation of water treatment and distribution systems; (ii) Provision of public sanitation facilities; (iii) Institutional support; (iv) Environmental and Sanitation Sensitization. Expected outcomes include: (i) Reliable and affordable water and sanitation services to 50 percent of the population in Monrovia, and 75 percent coverage in Buchanan, Kakata, and Zwedru (about 700,000 people in total); (ii) Social connection revolving fund to enable access by the poor; (iii) Improved projects implementation by water and sanitation sector staff; and (iv) Improved management, operation and maintenance of water and sanitation facilities.

6. Agriculture sector rehabilitation project: This UA 18.4 million project cost is financed by a UA 12.5 million grant from the Bank, UA 3.4 million grant from IFAD, and the balance financed in kind by the Government of Liberia. The project covers eight of the fifteen counties in Liberia. The overall goal of the Agriculture Sector Rehabilitation project is to contribute to food security and poverty reduction. Its specific objective is to increase the income of smallholder farmers and rural entrepreneurs including women on a sustainable basis. The project is implemented under three components: Agriculture Infrastructure Rehabilitation; Agricultural Production and Productivity Improvement; and Project Management, with Agriculture infrastructure constituting 60 percent of the cost.

7. Smallholder Agricultural Productivity Enhancement and Commercialization (SAPEC) Project: This UA 34.08 million project will be funded by a UA 29.08 million grant from the Global Agriculture and Food Security Program (GAFSP), a UA 4.0 million ADF loan, and UA 1.0 million by in-kind contributions from the Government of Liberia. The Intervention seeks to reduce rural poverty and household food insecurity by increasing income for smallholder farmers and rural entrepreneurs particularly women, youths and the physically-challenged. SAPEC will be implemented in 12 of the 15 counties of Liberia over the 2013–2017 timeframe. The project seeks to scale-up the on-going Agricultural Sector Rehabilitation Project (ASRP) by operating in 8 of the 12 counties where the ASRP is being implemented. The 3 uncovered counties are programmed for similar interventions by the United States Agency for International Development (USAID), World Bank (WB) and other donors. The project consists of four components, namely: (i) Sustainable Crop Production Intensification; (ii) Value Addition and Marketing; (iii) Capacity Building and Institutional Strengthening; and (iv) Project Management. The Legislature ratification process is almost finalized 13 months after approval.

8. The Labour-Based Public Works Project (LBPWP): The UA 20.24 million grant project aims to contribute to the improvement of productive livelihoods and service delivery. The project objective is to rehabilitate socio-economic infrastructure and improve capacities for infrastructure maintenance. Its components are: i) Rehabilitation of Socio-Economic Infrastructure; and ii) Capacity Development for Infrastructure Maintenance; and iii) Project Management. In 2011 the Bank provided a UA 5.00 million supplementary grant from the Fragile States Facility (FSF) to enable the financing of additional costs resulting from improved designs of the project infrastructure.

9. Equity investment of US$0.9 million in the share capital of access bank (ABL): The Access Bank Liberia (ABL) is a start-up microfinance bank sponsored by lead investor Access Microfinance Holding AG in Germany, with co-support by the International Finance Corporation (IFC) and the European Investment Bank (EIB). An additional capital increase of US $200.000 has been approved.

10. Rural Water, Sanitation and Hygiene Program Development Study: The UA 924,138 study has as objective to provide the Government of Liberia with sufficient information and justifications to make an informed decision on the most appropriate options for delivering sustainable and equitable access to safe and affordable drinking water supply, basic sanitation and hygiene services in rural areas. The outputs of the study will include; (i) National Program and Investment Plan for Rural Water, Sanitation and Hygiene services for the rural areas of Liberia for 2012–17; (ii) Program Implementation Manual; (iii) Monitoring and Evaluation Framework, (iv) Operational and Maintenance Plan, and (v) draft Mobilization White Paper.

11. ECOWAS Peace and Development Project: With a grant of US$10 million the project is implemented in Liberia, Bissau-Guinea, Sierra-Leone, and Guinea to contribute to promoting peace and development in the ECOWAS Member States. The project provides institutional capacity building for ECOWAS and civil society in conflict-affected countries with a view to improving coordination, management and implementation of conflict prevention actions, within a context of good governance.

12. Support to Liberia Institute of Public Administration (LIPA): A grant of US$114,045 serves to further enhance the performance of public servants in different sectors of the society through series of training administered by the Administrative Staff College of Nigeria (ASCON).

13. Fostering Innovative Sanitation and Hygiene in Monrovia, Liberia: The objective of the grant of Euro 1,212,446 from the African Water Facility administered by the ADB is to increase access to sustainable and affordable sanitation services with improved hygiene and livelihood for Monrovia’s urban poor. The specific objectives include (a) increase access to safe, sustainable and affordable sanitation services; (b) reduce the vulnerability of the urban poor populace to WASH related diseases caused by water contamination; (c) implement an effective, efficient and sustainable FS management system with production of affordable FS fertilizer to increase food security that is scalable.

Statistical Issues

(As of May 31, 2013)

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Table of Common Indicators Required for Surveillance

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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 to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Interest rate data cover the saving rate, deposit rate, and lending rate.

Foreign, domestic bank, and domestic nonbank financing.

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

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

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


Prepared by the World Bank.


Joint with World Bank, IFC and African Development Bank.


Effective and/or disbursing operations.


Prepared by the African Development Bank.