The Executive Board of the International Monetary Fund (IMF) has completed the fourth review under an Extended Credit Facility (ECF) arrangement for Liberia and has approved the disbursement of US$10.2million.
A press release, a copy of which was received the Daily Observer, said the current action made its total disbursement under the arrangement to about US$95.8 million.
Completing the review, the IMF Board approved waivers for the non-observance of the performance criteria on government revenues and central bank net foreign exchange position.
The Board also approved the re-phasing and extension of the arrangement to the end of 2016 in light of the delays caused by the Ebola outbreak.
In the wake of the Ebola outbreak, the IMF supported Liberia with an ad hoc disbursement of about US$44.7 million in augmentation of access under the current ECF Arrangement.
The Board also approved about US$44.7 million disbursement under the Rapid Credit Facility (RCF) as well as debt relief under the Catastrophe Containment and Relief (CCR) Trust. The total financing of about US$125.2 million helped the country meet urgent balance of payments and fiscal needs resulting from the epidemic.
Following the Executive Board’s discussion of Liberia, Mr. David Lipton, First Deputy Managing Director and Acting Chair said, “Liberia overcame the Ebola epidemic, due to decisive policy actions, unprecedented international support, and strong community engagement but the sharp decline in global commodity prices is holding back the economic recovery.”
He added: “Performance under the authorities’ Fund-supported program has been uneven as a result of the epidemic and, to a lesser extent, policy slippages. A still challenging economic situation underscores the importance of strong program implementation in the period ahead to sustain macro-economic stability, improve policy credibility, and secure additional donors financing.
“Fiscal policy next year will remain accommodative to support the recovery. Reallocation of resources toward the health and education sectors is appropriate. In light of limited fiscal space, caution is needed in considering tax relief for companies in the commodity sector. The authorities should also press ahead with addressing public financial management weaknesses and further strengthen revenue administration.”
He said borrowing polices should remain prudent in the context of lower growth prospects and financing needs, particularly for large investment projects, should be covered mostly with grants and concessional loans.
“This approach would facilitate needed capital projects while preserving debt sustainability. Rebuilding external buffers in Liberia’s dual currency regime requires containing the central bank’s operational expenses and limiting foreign exchange intervention only to smoothing volatility,” he explained.
More effective liquidity management and further development of monetary policy instruments will help safeguard price stability, he said, “Strengthening the prudential oversight of the banking system and the framework for crisis management remains critical to tackle threats to financial stability.”
The ECF arrangement for Liberia was approved by the IMF’s Executive Board on November 19, 2012 for SDR 51.68 million (about US$71.6 million) and was extended on October 14, 2015 to allow for the completion of the fourth review, the release said.