IMF ap­proves loan for Liberia

The Pak Banker - - Front Page -


The Ex­ec­u­tive Board of the In­ter­na­tional Mon­e­tary Fund (IMF) to­day ap­proved a three-year Ex­tended Credit Fa­cil­ity (ECF)1 Ar­range­ment for Liberia in an amount equiv­a­lent to SDR 51.68 mil­lion (about US$78.9 mil­lion). The over­all amount of the pro­gram rep­re­sents 40 per­cent of Liberia's quota in the IMF and ap­proval en­ables the im­me­di­ate dis­burse­ment of SDR 7.382 mil­lion (about US$11.3 mil­lion). The Ex­ec­u­tive Board also con­cluded the 2012 Ar­ti­cle IV con­sul­ta­tions with Liberia, which will be de­tailed in a Pub­lic In­for­ma­tion No­tice in due course.

Fol­low­ing the Ex­ec­u­tive Board's dis­cus­sion of Liberia, Mr. Min Zhu, Deputy Man­ag­ing Di­rec­tor and Act­ing Chair, made the fol­low­ing state­ment.

"Liberia made strong macroe­co­nomic gains un­der the re­cent Ex­tended Credit Fa­cil­ity (ECF) ar­range­ment sup­ported by the Fund. Eco­nomic growth has been ro­bust; in­fla­tion has been largely con­tained; in­ter­na­tional re­serves have been built up; and ex­ter­nal debt has been re­duced through sub­stan­tial debt re­lief. How­ever, fur­ther re­forms are needed to pro­mote broad-based growth, re­duce poverty, and cre­ate jobs, par­tic­u­larly for the youth.

"The new ECF ar­range­ment aims to sup­port the au­thor­i­ties' sec­ond poverty re­duc­tion strat­egy. The pol­icy pri­or­i­ties fo­cus on safe­guard­ing macroe­co­nomic sta­bil­ity and lay­ing the ba­sis for faster and di­ver­si­fied growth through a sub­stan­tial scal­ing up of in­fra­struc­ture and so­cial in­vest­ments.

"Growth will be un­der­pinned by sound macroe­co­nomic poli­cies, higher in­vest­ment, and vig­or­ous im­ple­men­ta­tion of struc­tural re­forms. Fis­cal re­forms fo­cus on con­tain­ing cur­rent spend­ing, par­tic­u­larly the wage bill, and strength­en­ing bud­get ex­e­cu­tion and con­trols, through im­prove­ments in pub­lic fi­nan­cial man­age­ment. An in­crease in ex­ter­nal debt lim­its will al­low a scal­ing up of crit­i­cal growth-en­hanc­ing in­vest­ments while main­tain­ing debt sus­tain­abil­ity. Mea­sures are also planned to fur­ther im­prove gov­er­nance and trans­parency, in­clud­ing fi­nan­cial over­sight of state-owned en­ter­prises, stream­lin­ing pro­cure­ment pro­ce­dures, im­prov­ing project ex­e­cu­tion, and es­tab­lish­ing a nat­u­ral re­source rev­enue unit at the Min­istry of Fi­nance. Fi­nan­cial sec­tor re­forms fo­cus on re­duc­ing vul­ner­a­bil­i­ties and im­prov­ing ac­cess to credit."

Liberia made strong macroe­co­nomic gains un­der a suc­cess­ful ECF pro­gram ini­tially ap­proved in 2008 for three years and later ex­tended to May 2012. The short- to medium-term out­look re­mains fa­vor­able, although sub­ject to con­sid­er­able risks. Fol­low­ing an ini­tial post-con­flict boost, eco­nomic growth has av­er­aged 7 per­cent a year since 2009 (mostly from non-min­ing ac­tiv­i­ties be­fore the re­sump­tion of iron ore ex­ports in late 2011), while in­fla­tion has been largely con­tained at or near sin­gle dig­its.

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