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IMF Country Report No. 20/202
LIBERIA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR LIBERIA
June 2020
In the context of the Request for Disbursement under the Rapid Credit Facility, the following documents have been released and are included in this package:
A Press Release including a statement by the Chair of the Executive Board.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on June 5, 2020, following discussions that ended on May 22, 2020, with the officials of Liberia on economic developments and policies underpinning the IMF arrangement under the Rapid Credit Facility. Based on information available at the time of these discussions, the staff report was completed on June 1, 2020.
A Debt Sustainability Analysis prepared by the staff of the International Monetary Fund and the International Development Association.
A Statement by the Executive Director for Liberia.
The documents listed below have been or will be separately released:
Letter of Intent sent to the IMF by the authorities of Liberia*
*Also included in Staff Report
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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LIBERIA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY
June 1, 2020
Executive Summary
Context. The COVID-19 pandemic came at a time when a consensus on the need for broad-based reform had finally emerged, but macroeconomic conditions continued to be challenging in Liberia. With the impact of COVID-19, growth is now projected at -2.5 percent for 2020, 3 percentage points below the pre-COVID baseline, largely due to lockdowns at home and abroad. The impact will hit the poorest as there is little or no social safety net and the food security of those relying on uncertain daily income is a pressing concern. The full scale of the COVID spread is unknown, but the health care system is underdeveloped and likely to be overwhelmed should cases rise.
Request for Fund Support. In the attached letter of intent, the authorities request financial support amounting to 14 percent of quota (SDR36.176 million; US$49.1 million; 1.7 percent of GDP) under the Rapid Credit Facility (RCF) to meet the urgent balance of payments need arising from the global pandemic at a time when the first review of the ECF program has been delayed due to the practical difficulties of holding comprehensive policy discussions in current conditions. Staff supports the request.
Macroeconomic Policies. The authorities’ policies to address the pandemic include direct measures (quarantine requirements and a nation-wide lockdown announced on March 22; and fiscal measures, including securing a US$3 million emergency response budget. More policy responses are however needed, requiring close cooperation between the authorities and development partners, including: procuring and distributing medical supplies; ensuring households have access to food throughout the lockdown; and funding and executing the budget—including paying wages to health workers even in the face of anticipated revenue shortfalls. The Liberian authorities are enhancing their response including by: putting all available domestic resources into the government consolidated account; reallocating non-essential spending to emergency food aid; improving monitoring and control of spending; and safeguarding scarce foreign exchange reserves. Given institutional weaknesses and limited administrative capacity, development partners are increasing their role in delivering both emergency and cash assistance. Nonetheless, urgent disbursement under the RCF is critical to address the balance of payments need and keep the budget fully funded.
Approved By
Dominique Desruelle (AFR), Kevin Fletcher (SPR)
An IMF team consisting of Ms. Saito (head), Mr. Jenya, Mr. Matsumoto and Ms. Tejada (all AFR), Ms. Kamali (SPR), Ms. Lattie (MCM), Mr. Oestreicher (Resident Representative), and Mr. Deline (Economist, Resident Representative Office) exchanged information and held discussions with President Weah, Finance Minister Tweah, Central Bank Governor Tarlue, State Minister McGill, Commerce Minister Tarpeh, Agriculture Minister Cooper, other senior government and central bank officials by video conferences during April 17-May 22, 2020. Ms. Kaze provided research support and Mr. Magno assisted the team in the preparation of this report.
Contents
CONTEXT
IMPACT OF THE COVID-19 PANDEMIC
A. Economic Developments Before the Pandemic
B. Impact of the Pandemic
C. Medium-Term Recovery and Risks
POLICY DISCUSSIONS
A. Gathering All Domestic Resources
B. Reallocating Non-Essential Spending to Emergency Food Aid
C. Safeguarding External Buffers
D. Improving Transparency of Emergency Response Expenses
E. Preserving a Sound Banking System
MODALITIES OF SUPPORT
STAFF APPRAISAL
FIGURES
1. Foreign Exchange Developments, 2015–20
2. Monetary Developments, 2012–20
3. Recent Economic Developments, 2016–20
4. Fiscal Performance, FY2014–20
TABLES
1. Selected Economic and Financial Indicators, 2018–25
2. Balance of Payments, 2018–25
3a. Fiscal Operations of the Budgetary Central Government (Including Off-Budget Transactions), 2018–25, (Millions of U.S. dollars)
3b. Fiscal Operations of the Budgetary Central Government (Including Off-Budget Transactions), 2018–25, (Percent of GDP)
3c. Fiscal Operations of the Budgetary Central Government, 2018–25, (Millions of U.S. dollars)
3d. Fiscal Operations of the Budgetary Central Government, 2018–25, (Percent of GDP)
4. Monetary Survey, 2018–25
5. Financial Soundness Indicators, 2014–18
6. External Financing Requirement and Sources, 2017–25
7. Indicators of Capacity to Repay the IMF, 2019–29
ANNEX
I. Social Spending in Liberia (Update from the 2019 Article IV)
II. Weekly Fiscal Dashboard
APPENDIX
I. Letter of Intent
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LIBERIA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY—DEBT SUSTAINABILITY ANALYSIS
June 1, 2020
Approved By
Dominique Desruelle (IMF) and Marcello Estevão (IDA)
Prepared by the International Monetary Fund and the International Development Association.1
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