Liberia: Third 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 focuses on Liberia’s Third Review Under the Extended Credit Facility (ECF) Arrangement and Request for Waiver of Nonobservance of Performance Criterion (PC) and Modification of Performance Criteria. Real GDP grew at 8.7 percent in 2013 and is projected to decline to 5.9 percent in 2014 as mining production decelerates. Most end-December 2013 PCs and indicative targets (ITs) were met, except for the PC on government revenue and the IT on external borrowing. Four out of five structural benchmarks were met on time. The IMF staff supports the completion of the third ECF review.


This paper focuses on Liberia’s Third Review Under the Extended Credit Facility (ECF) Arrangement and Request for Waiver of Nonobservance of Performance Criterion (PC) and Modification of Performance Criteria. Real GDP grew at 8.7 percent in 2013 and is projected to decline to 5.9 percent in 2014 as mining production decelerates. Most end-December 2013 PCs and indicative targets (ITs) were met, except for the PC on government revenue and the IT on external borrowing. Four out of five structural benchmarks were met on time. The IMF staff supports the completion of the third ECF review.

Relations with the Fund

(As of April 30, 2014)

Membership Status: Joined: March 28, 1962.

Article XIV

General Resources Account:

article image

SDR Department:

article image

Outstanding Purchases and Loans:

article image

Latest Financial Arrangements:

article image

Formerly PRGF.

Projected Payments to Fund

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

article image
article image
article image

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:

article image

Safeguards Assessment

An update of the 2011 safeguards assessment of the Central Bank of Liberia (CBL), completed in September 2013, noted slow progress by the CBL in implementing previous safeguards recommendations and a need to regain momentum in building adequate safeguards. The recent technical breaches of the CBL Act with regard to credit to government raise safeguards concerns on governance and compliance mechanisms at the CBL. Separately, the CBL’s expansion of the credit stimulus schemes (initiated during 2010) to include other sectors, resulted in additional foreign exchange reserves being placed with commercial banks. The audited financial statements classify them as loans and advances creating an apparent inconsistency as, under the CBL Act provisions on credit to financial institutions, such placements would require collateral and duration limits. The authorities generally agreed with the recommendations of the assessment, but did not agree with statements on the breaches of the CBL Act and the credit stimulus schemes. Notwithstanding this, activity under the credit schemes has been capped as recommended by the ECF program second review. In addition, staff has noted progress in the implementation of a few other key recommendations.

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 de facto exchange rate regime is classified as ‘other managed’ effective November 7, 2011 when the exchange rate departed from the stabilized 2 percent six-month band. The de jure exchange rate regime classification remains ‘managed floating’. The Central Bank of Liberia (CBL) intervenes in the foreign exchange market to smooth volatility. The exchange rate between the Liberian dollar and United States dollar at May 15, 2014 was L$89=US$1 (mid-point between buying and selling rates).

Article IV Consultation and Review of the ECF Arrangement

The 2012 Article IV consultation discussions were held in Monrovia during September 4–21, 2012. The staff report (Country Report No. 12/340, December 2012) was discussed by the Executive Board on November 19, 2012 and is posted on the IMF website.

The second review of the three-year arrangement under the Extended Credit Facility was discussed by the Board on November 26, 2013 (Country Report No. 13/365, December 2013) and is posted on the IMF website.

Technical Assistance 2012–14

article image
article image
article image

Resident Representative

A resident representative has been posted in Monrovia since April 2, 2006. Mr. Sobolev assumed the position in July 2009 and his term expired in September 2013. Mr. Amo-Yartey assumed the post as a new resident representative on May 1, 2014.

Joint World Bank-Imf Work Program, 2012–14

(As of May 20, 2014)

article image
article image

Relations with the World Bank Group1

(As of May 20, 2014)

A. Bank Group Strategy

The current Country Partnership Strategy (CPS) for Liberia was discussed by the Board of the World Bank Group on July 30, 2013. The overarching objective of the CPS is to support the Government’s Agenda for Transformation (AfT) to contribute to sustained growth, poverty reduction and shared prosperity while exiting fragility and building resilience. In this regard, the CPS pillars are aligned with three key pillars of the AfT: (i) Economic Transformation to reduce constraints to rapid, broad-based and sustained economic growth to create employment; (ii) Human Development to increase access and quality of basic social services and reduce vulnerability; and (iii) Governance and Public Sector Institutions to improve public sector and natural resources governance. In addition, the CPS focused on the themes of capacity development and gender equity both of which will be mainstreamed throughout the Bank Group’s portfolio.

The World Bank Group’s program under the CPS involves a combination of development policy lending, investment lending and analytical work in support of the strategic pillars. The IDA allocation for the lending program for the CPS period is approximately US$308 million encompassing the remaining period of IDA 16 (to June 2014) and the full IDA 17 allocation. The majority of the IDA financing during the CPS will focus on investment in the energy and transport sectors to help remove binding constraints to growth and improve well-being. IDA financing under the CPS will also support building institutional and human capacity essential for the effective implementation of the AfT and the country’s long-term vision plan.

The International Finance Corporation (IFC) investment over the CPS period could average US$25–35 million per year. The current IFC portfolio comprises US$7 million in equity; US$13 million credit and trade lines; US$13 million seed investment in the West Africa Venture Fund for direct on-lending to, or equity in SMEs and US$6 million debt financing in the rubber sector. The priority sectors for IFC’s investments include agribusiness, infrastructure including power, financial services and mining. IFC’s advisory service will include strategic engagement in investment climate improvement, education to foster employment, supplier linkages, agriculture, leasing, finance services infrastructure and private sector development.

B. Active Projects

There are currently fourteen (14) active2 IDA projects in Liberia, including four regional projects, with a total commitment of approximately US$342.2 million of which approximately US$142.4 million is undisbursed. Two new credits have been approved for FY14 to date, for a total commitment of approximately US$21.6 million. These new credits are summarized below:

A second Additional Financing for the Liberia Urban and Rural Infrastructure Rehabilitation Project (URIRP) was approved in January 2014 for US$19.6 million; also approved was a US$9.4 million grant from the LRTF (Liberia Reconstruction Trust Fund). The objective of the project is to support government’s goal of improving road access in Monrovia and targeted rural areas, as well as improve institutional structure for technical management of the road sector. This objective lies at the heart of the Bank’s assistance strategy for Liberia. The government has requested that International Development Association (IDA) take the lead role in the transport sector and intensely assist the country not only by providing much needed investments and acting as a catalyst for attracting other donor funding into the sector, but also by helping to establish professional sector management in its broadest sense. This operation will help respond to the situation by financing several critical components of transport infrastructure around the country.

The Liberia Public Sector Modernization Project was approved in February 2014 for US$2.0 million from IDA and US$8.7 million from other donors including USAID and SIDA to improve pay and performance management in participating ministries, and strengthen payroll management in the Civil Service in Liberia. The project has four key components: (i) Improve Pay Management. This component addresses the challenge of the civil service to attract and retain competent managerial and professional staffs and low levels of motivation and engagement among existing civil servants which undermines individual work effort; (ii) Strengthened Payroll Management. This component addresses the lack of effective payroll discipline that has facilitated entries into the payroll without due process and weak establishment control leading to escalating wage bill; (iii) Improved Performance. This third component addresses the challenge of management’s ability to hold staff responsible for their performance in ensuring service delivery. The final component, (iv) Project and Program Management supports the coordination and delivery of project inputs and overall implementation program.

The World Bank portfolio in Liberia continues to be affected by long effectiveness delays and implementation problems, both of which have seriously affected disbursements in the current fiscal year.

C. 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 Liberia Poverty Reduction Support Credit was approved in June 2013 for US$10 million. The objectives of the operation are to sustain and deepen government-owned efforts to reform governance and civil service, and to support the broadening of reforms to include economic transformation and human development in the context of the implementation of the Agenda for Transformation. Specifically, these reforms are focused on: (i) strengthening governance with particular emphasis on transparency and accountability to reduce corruption, and enhance budget execution and oversight; (ii) creating the environment for economic transformation through addressing infrastructure constraints; land tenure issues and agricultural credit; and (iii) improving human capital development particularly through improved access and quality of education.

D. Financial Relations

(as at May 20, 2014)

Active and Disbursing Projects1

(Millions of U.S. dollars)

article image

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)

article image

Relations with the African Development Bank1

(As of April 30, 2014)

There are 19 active AfDB projects in Liberia, including two regional projects, with a total commitment of approximately UA 216.6 million, equivalent to US$325 million, of which 27 percent 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. The last tranche of UA 8 million was disbursed in December 2013. The project is considered as closing on June 30, 2014.

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. Regional 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.

4. 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.

5. Agriculture Sector Rehabilitation Project (ASRP): 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.

6. 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 2014 to 2017 and seeks to scale-up the on-going Agricultural Sector Rehabilitation Project (ASRP). 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.

7. Maryland Oil Palm Plantation (MOPP) – Private Sector: The project is located in Maryland and Grand Kru Counties, South East Liberia and entails the following (i) clearing, rejuvenating, and operating a 9,000 hectare abandoned palm oil plantation (DOPC) in Maryland county; (ii) development of two oil palms nurseries; (iii) establishment of a 6,000 hectare of out grower farmer scheme benefitting 750 families; and (iv) construction of an oil mill with a processing capacity of 90 tons of fresh fruit bunches (“ffb)” per hour with construction to begin in 2016. The project cost totals USD 203.3 million with USD 164.9 million to finance the industrial component and USD 38.4 million for the out grower scheme.

8. The Labor-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$1.2 million in the share capital of Access Bank (ABL): Access Bank Liberia (ABL) is a start-up microfinance bank sponsored in 2009/2010 by Access Microfinance Holding AG, with co-support by the International Finance Corporation (IFC) and the European Investment Bank (EIB). A capital increase of US$209,000 was approved in 2012.

10. Rural Water, Sanitation and Hygiene Program Development Study: This UA 924,138 study intends to inform the Government of Liberia 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; (ii) Program Implementation Manual; (iii) Monitoring and Evaluation Framework; (iv) Operational and Maintenance Plan; and (v) draft Mobilization White Paper.

11. Fostering Innovative Sanitation and Hygiene in Monrovia: The objective of the grant of Euro 1.2 million 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; and (c) implement an effective, efficient and sustainable FS management system with production of affordable FS fertilizer to increase scalable food security.

12. Paving Fish Town – Harper Road Project (Phase I): The objective of the Project is to provide efficient road transport access to South East Counties of Liberia and, by extension, to neighboring Mano River Union States. The project will involve upgrading from gravel to bitumen standard the Fish Town–Harper Road (Phase 1): Harper–Karloken section (50km) at an estimated cost of UA 43.04 million including GoL counterpart funding of UA 1.0 million. The expected outcomes include: (a) improved socio-economic inclusion of population in south-east region; (b) attraction of investments with employment creation and stronger government presence; (c) facilitated cross-border trade in MRU member states; and (d) employment generation during construction and post construction phase.

13. Regional Electricity Interconnection Project: Cote d’Ivoire, Liberia, Sierra Leone and Guinea. The Côte d’Ivoire, Liberia, Sierra Leone and Guinea (CLSG) electricity networks interconnection project involves the construction of a 1,357-km-long double circuit high voltage (225 kV) line to connect the national networks of the four countries. The construction of this line is part of the backbone of the Mano River Union countries and the priority projects of the West African Power Pool (WAPP) Master Plan. The project will help establish a dynamic electric power market in the West African sub-region and secure power supply for participating countries which have a comparative advantage in importing power rather than producing it at high costs using their national systems. The project, estimated at an overall cost of UA 331.51 million will be implemented over the 2014–17 period. The contribution of the Bank Group (ADF, FSF and NTF) amounts to UA 128.15 million (or 38.66 percent of the total cost). The direct beneficiaries of the project are the residents of its impact area (24 million inhabitants) who will have reliable electric power at competitive cost. The project will raise the average electricity access rate in the four countries from 28 percent in 2012 to 33 percent by 2017. The increased electricity access will generally contribute to improving the welfare of the beneficiaries and lead to the development of social and income-generating activities.

14. Technical Assistance from Fragile States Facility and other Trust Funds:

  1. LEITI - Phase II: US$409,000 grant assistance for Multi-Stakeholders Group costs; communication and outreach, staff training and capacity building of actors involved in extractive industries transparency related activities.

  2. 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.

  3. 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.

  4. Promoting local, participatory governance for County Development Funds: UA 180,000 grant to minimize corruption and ensure effective delivery of development initiatives in the 15 counties of Liberia by: (i) increasing the public’s awareness of the two major funds—The County Development and Social Development Funds—allocated for development in the counties; (ii) building the capacity of 750 youths (50 per county including adolescent girls and young women) to engage decision makers and managers of the funds; and (iii) actively participating in the planning, monitoring, and reporting on the funds.

  5. Capacity Building and Technical Support to the National Housing Authority: UA 240,000 grant to develop capacity for architects, engineers, draftsmen and surveyors to oversee effectively the design and implementation of housing projects. The capacity building will also concern internal functions like budgeting, monitoring, procurement and financial reporting and IT systems.

Statistical Issues

(As of April 30, 2014)

article image
article image

Table of Common Indicators Required for Surveillance

article image
article image

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.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

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).

These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

This reflects the assessment provided in the data ROSC or the Substantive Update (published on …, and based on the findings of the mission that took place during…) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.


Prepared by the World Bank.


Includes effective and or disbursing operations.


Prepared by the African Development Bank.