IMF approves US$20.7 million disbursement to Liberia

14 Novembre 2017

Washington, US, November 14 (Infosplusgabon) - The Executive Board of the International Monetary Fund (IMF) has announced an immediate disbursement of US$20.7 million to Liberia following completion of the seventh and eighth (final) reviews of the country’s economic performance under the programme supported by the Fund’s Extended Credit Facility (ECF) arrangement.

“Liberia’s economic recovery has suffered some delay due to the lingering effects of the Ebola epidemic, low global commodity prices, and the impact of the withdrawal of the United Nations peacekeeping mission,” remarked Mr. Tao Zhang, IMF Deputy Managing Director and Acting Chair of the Board.

In a statement issued late on Monday following the Board’s discussion on Liberia, Mr. Zhang noted that the resulting sharp decline in net foreign currency inflows had put pressure on the exchange rate and inflation, and led to a mixed programme performance.

He noted that the Liberian authorities responded to these shocks with an appropriate macroeconomic policy mix. “Combined with exchange rate adjustment, a relatively tight fiscal and monetary policy stance prevented exchange rate overshooting and contained second round inflationary dynamics,” he said.

The IMF Board also approved the authorities’ request to waive the non-observance of performance criteria.

It elaborated that the waivers pertained to the end-December 2016 floors on total revenue collection of the central government and ceiling on the present value of gross external borrowing by public sector, and to end-June 2017 floors on total revenue collection of the central government, net foreign exchange position of the Central Bank of Liberia, and the ceiling on the Bank’s gross direct credit to the central government

The latest tranche from the ECF would bring total disbursements to Liberia under the arrangement, which was approved by the Board on 19 November 2012, to about US$156.7 million.

“Going forward, maintaining macroeconomic stability is critical,” said Mr. Zhang. “In fiscal policy, adherence to rules governing the release of contingent expenditure will be crucial to avoid unintended financing gaps, while protecting high-priority social spending.”

He emphasised that the monetary policy stance needs to remain tight in the face of inflationary and exchange rate pressures.

“Staying within the spending limits set in the central bank’s three-year financial plan will be essential to regaining adequate reserve cover,” Mr. Zhang suggested, cautioning that recourse to external borrowing should remain restrained as the risk of debt distress was already elevated.

“New borrowing should be on concessional terms and, to the extent possible, replaced with enhanced utilization of already signed and ratified loans.

“The publication of the executive summary of the forensic audit report of the circumstances leading up to the closure of First International Bank Liberia Limited and a significant financial loss by the central bank was an important first step in ensuring transparency. The publication of an action plan to improve central bank governance and supervisory capacity is also welcome. Sustained efforts will be needed for successful implementation.

“Good progress has been made on structural reforms, and it would be important that this momentum is maintained beyond the expiration of the Fund-supported programme. Resolving the current political uncertainty in a timely manner consistent with the democratic process would be important to minimize the economic and social costs of delay,” he added.

The IMF Board pointed out that good progress has been made on structural reforms, and it would be important that this momentum is maintained beyond the expiration of the Fund-supported programme.

Also, the Board noted that resolving Liberia’s current political uncertainty in a timely manner consistent with the democratic process would be important to minimize the economic and social costs of delay.

FIN/INFOSPLUSGABON/MOP/ GABON 2017

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