Debt coverage has remained the same as in the previous DSA.
Liberia’s debt-carrying capacity based on the Composite Indicator (CI), which is based on the October 2021 WEO data and the 2020 Country Policy and Institutional Assessment (CPIA), is assessed as weak. The CI score is 2.72 which points to medium CI ranking. However, to change the debt carrying capacity to medium two consecutive signals are needed.
The definition of external and domestic debt uses a residency criterion.
The stock of domestic debt to the CBL has declined from US$487 million in the last DSA after removing old IMF loans, that are also included in the external debt, from this consolidated debt of the government to the CBL.
In May 2022, the Government published its Quarterly Debt Management Report for the quarter ending December 31, 2021, with coverage of detailed debt data (on-lent, guaranteed and non-guaranteed) reported by 12 SOEs representing 95 percent of SOE consolidated liabilities by end December 2021, as part of the SDFP PPAs for FY22. The report includes the information on issuance dates, maturity dates, interest rates, issuance currency, disbursed amounts, repaid principals, and current stocks are provided for loans contracted with commercial banks and on-lent debt.
The contingent liabilities shock from the SOE debt is kept at the default value of 2 percent to reflect risks associated with non-guaranteed SOE debt, excluded from the analysis due to data availability constraints. The SOE Reporting and Coordination Unit (SOERCU) of the MFDP monitors and reports on the performance of 15 out of 39 registered SOEs in Liberia, but the reports do not provide any specific information about non-guaranteed SOE debt. The amended PFM Act strengthens requirements for reporting and monitoring of SOE debt, including non-guaranteed debt. Going forward, the external debt coverage will be expanded as the government plans to include SOE’s non-guaranteed debt into public sector debt. The authorities’ efforts to expand and improve SOE debt transparency have been supported by the World Bank’s SDFP for the past two years.
This DSA is prepared jointly by the staff of the IMF and the World Bank, in collaboration with the authorities of Liberia. The current DSA follows the revised Debt Sustainability Framework (DSF) for LICs and Guidance Note (2017) in effect as of July 1, 2018. The last joint DSA can be found in IMF Country Report No. 21/9, January 2021.
In 2021, nominal GDP in U.S. dollar grew 15.5 percent, reflecting to a large extent a valuation effect in the wake of the strong real appreciation of the Liberian dollar.
The DSA and macro-framework assume CCRT debt service relief through April 2022.
See Selected Issues Paper “Liberia’s Growth Potential and How to Get There.”
The CI score is not updated using April 2022 WEO data at this stage because the mission took place prior to the release of April 2022 WEO data and staff discussed the CI score based on October 2021 WEO with the authorities during the mission.