Liberia: IMF Approves U.S.$213.6 Million Extended Credit

The Executive Board of the International Monetary Fund (IMF) has approved a four-year arrangement under the Extended Credit Facility (ECF) for Liberia in an amount equivalent to SDR 155 million (60 percent of quota or about US$ 213.6 million) to help the country restore macroeconomic stability, provide a foundation for sustainable growth, and address weaknesses in governance.

"After grappling with challenges for over a year, a consensus on the need for broad-based reform has emerged," the IMF said in a statement. "The program aims to support the authorities' strong adjustment efforts, catalyze significant donor financing, and provide a framework within which to implement the authorities' ambitious reform agenda. The Executive Board's decision will enable an immediate disbursement of SDR 17 million (about US$ 23.4 million)."

The program will focus on restoring macroeconomic stability, which is a key precondition for a sustainable transition out of fragility, while protecting the poorest segment of the population from the burden of adjustment; putting Liberia on a fiscally sustainable growth path, which is the main objective of the nation's development strategy, the Pro Poor Agenda for Prosperity and Development (PAPD); and addressing weaknesses in governance and institutions of the public sector, which will help safeguard scarce resources and facilitate achievement of the first two objectives.

The program also aims to catalyze substantial external support, which is critical to ensure that the programmed adjustment can be contained at levels that are politically and economically feasible while, at the same time, ensuring public and external debt sustainability.

The IMF observed that over the past period, a decline in external assistance combined with weak domestic revenue generation, limited expenditure adjustments--especially on wages--and an accommodative monetary policy stance led to numerous macroeconomic challenges. These including an unsustainable fiscal stance, the emergence of arrears, excessive central bank financing, depletion of fiscal and external buffers, and pressure on inflation and the exchange rate.

This article originally appeared in the Daily Observer