IMF Approves US$213.6M Extended Credit for Liberia

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Focus: to restore macroeconomic stability, setup fiscally sustainable growth path and strengthen governance and institutions of the public sector

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.

The IMF Executive Board

At the conclusion of the Executive Board’s discussion on December 11, 2019, First Deputy Managing Director and Acting Chair, Mr. Mitsuhiro Furusawa, stated:

“Liberia’s economic situation is challenging and fragile. Inflation and year-on-year exchange rate depreciation are high at 30 percent, and growth is subdued. The authorities are committed to carrying out the prudent macroeconomic policies and ambitious structural reforms necessary to restore macroeconomic stability and to put Liberia on a fiscally sustainable and inclusive growth path under the Fund’s four-year Extended Credit Facility arrangement.

“The recent upfront fiscal tightening is welcome. To preserve the gains and to maintain budget credibility, it is important that the recently instituted set of fiscal controls is fully implemented. Moreover, strengthening tax policy and administration over the program period is critical to ensure that the public sector can operate effectively.

“The monetary tightening by the Central Bank of Liberia (CBL) enacted in November 2019 was necessary to reduce inflation. A key prerequisite for success would be full adherence to the program prohibition on government borrowing from the CBL.

“Liberia’s external vulnerabilities are significant, and foreign reserve stocks have fallen to low levels. In addition to eliminating the financing of the budget, building resilience will require containing the CBL’s operational expenses, and limiting foreign exchange intervention.

“Given that a small worsening of the terms of debt, or failure to sufficiently adjust the fiscal stance could edge Liberia closer to high risk of external debt distress, the authorities are committed to adhere to the ceiling on non-concessional borrowing and to refrain from non-transparent collateralized agreements under the Fund-supported program.

“Ensuring financial sector stability is an important element of the program. Improving data reporting, obtaining an overview of the health of the banking system, and taking decisive measures as needed will help identify and address financial sector vulnerabilities. At the same time, enhancing the legal framework is important to ensure that the CBL has the required instruments should remediation be necessary.

“Structural reforms aimed at improving governance will help reduce vulnerabilities to corruption and promote private-sector led growth.’’

President George Weah launched the Pro-Poor Agenda for Prosperity and Development (PAPD) in October 2018, but its objectives of building roads and improving social services have largely been delayed due to lack of funding. According to the statement, “the IMF-supported program would help stabilize the economy – which is a necessary condition for a sustainable transition out of fragility – and catalyze financing for their development plan (the PAPD), ultimately putting Liberia on a sustainable medium-term growth trajectory.”

10 COMMENTS

  1. These crackpots want to leave us with huge debt burdens that may take almost a century to reimburse.
    The absurdness and nonsensicality of the situation is that the monies being borrowed do not really benefit the Liberian populace but a band of crooks and rebel clusters still dehumanizing the beautiful Liberian people.
    But sooner or later, judgment day will come, it won’t be long!

    My God is not dead,
    He’s Alive,
    He’s so real,
    I want you know my God!

    This is my praise and worship song to the suffering children of Liberia this morning. Take heart, there is light at the end of the tunnel.

  2. Uncle Dolo

    Every day you say that there is light at the end of the tunnel but it seems as though you the only person who can see the light, because each person I ask about this one light at the tunnel, one can see it. Are you using special lenses to see it?

    We are like a people in a strange land in our own country, and it brings to mind the song/verse
    By the rivers of Babylon, there we sat down
    yeah, we wept, when we remembered Zion

    There, the wicked, carried us away in captivity
    requiring from us a song,
    Now how long shall we sing the Lord’s song in a strange

    Are we living in a repressive society? and what kind of song shall be required of us to attain our freedom?
    our land is troubled.

    but I am an incurable pessimist and like Mother Cassel says in her wonderful song, Liberia and its people are lifted.

    Peace

    • Dear Joe,

      First, my warmest greeting and greatest wish for a joyous and wonderful stay in San Francisco. Relieve yourself of all strains and pains and live life to the fullest in the USA boy! I suggest you stop reading Liberian politics and have fun time. I know where you are from; close to hell hole on planet earth. But we (Cummings and apologists) will once again make it a better place for mankind, believe me Joe! Yes, we can!

      Joe, do not despair. There is truly light at the end of the tunnel. When you find yourself advising a child all the time not to do something, and for every time you turn your back the child wants to do that thing, just sit by one day and let the child feel the heat. When the child finds out that it was a nuisance rather than a help to do that thing, s/he may never do it again, provided s/he is meant to be intelligent lest the parents use their rod; experience is the best teacher!

      We yelled and pleaded over all the rooftops for these people who claimed to love Liberia to forget about politics but to no avail. I recommend you read our (Movement for the Restoration of the Dignity of Liberia = MRDL) letter to them on the Liberian Forum in 2005, when we begged them on our knees to back down from politics. We still have their reply on files as evidence.

      Joe, I think they are feeling the heat. I think they have become wise enough to understand. No such group of people will ever again endeavor, in the history of our country, to vie for the Liberian leadership, nor will Liberians ever listen to such empty kernels to give them their votes, this is my firm believe and hope.

      Joe, when you see my intellectual reasoning through my writing on this blog, though you have not seen me, I am sure you will conclude that I (Petarus Dolo) am someone sound. Yes indeed, I am. But Joe, I am NOT qualified, at this stage, to run as president of Liberia. Were I to develop such ambition, I would have to undertake complementary philosophical studies (formal or informal) on my country, in diplomacy, law, public administration or history before I embark on that endeavor. In so doing, I will surely be helpful to my people and country at large.

      After more than 14 years of fratricide, and from reading the financial burdens borne thereof by friendly governments and the UN as outlined by James Davis on this blog (which I am yet to ascertain), we should show gratitude by caring for one another, beginning to learn how to eradicate tribalism and nepotism, binding the wounds by massive job creation and intercounty voluntary civil services.

      There is hope because for the first time, a God-fearing and qualified group of Liberians have decided to sacrifice their personal ambition for Liberia.
      There is hope because Alexander B. Cummings has accepted to lead that army of God to bring relief to the suffering children of Liberia.
      There is hope because Liberians have begun to speak out for their rights in a peaceful manner.
      There is hope, most of all, because no one will allow those war mongers and seasoned sorcerers and witchcrafts to ever temper with our hard-fetched and high-earned peace, rest assured Joe.

      May the peace of God Almighty dwell in your heart always, Joe!

  3. The Nigerian government backed military force took upon itself the financial burden and responsibility, and on the other hand for the Liberian government( if there was one in administrative charged)for then it was no pain no gain. Meaning where the government did not have to foot the financial responsibility for the war , it was considered free. Since it was freed and no financial pain , no gain through lessons learned. And so it was with the UN and its peacekeeping force at a cost of one trillion US dollars in in sixteen years. For Liberians, it was no financial pain on them or the country. So no pain , no gain through lessons learned. And then it was the debt relief of almost 4 billion dollars owed to foreign governments and other creditors. The country did not perhaps had to pay back a cent. In short, it was freed that had to be paid by some other sources. No pain, or hardship, no gain in lessons learned. It seems that Liberia always got away with all things free. Spare the rod, spoil the child . This is how the International community has treated that country, by trying to tell themselves and believe that through their efforts of financial assistance, Liberia Is A Successful Story that can be a roadmap in helping others nations. But look at what sparing the rod has done to that country ? It created a spoiled child, that has become financially fiscally challenged child. Now the International Monetary Fund has been called in to do some teeth pulling to stabilize the financially challenged and spoiled child that some nations and organizations at one time basted and considered a successful story. And that was after one trillion US dollars were spent. So let look at the warning from the IMF.
    To the Liberian government, ” Given that a small worsening of the terms of debt, or failure sufficiently adjust fiscal stance could edged Liberia closer to high risk of external debt distress , the authorities are committed adhere to ceiling on non-concessional borrowing and to refrain from non-transparent collateralized agreements under the Fund-supported program”. If the government understands, signed on this line. Given that any small foolish that will worsened the terms of the debt, or failure to sufficiently adjust fiscal stance could lead Liberia closer to high risk of external debt distress. No borrowing and refrain from non-transparent collateralized agreements while under the Fund-supported program. And what is the initial money ? 27 million US dollars to be handcuffed to the International Monetary Fund for the next four years. One thing though , the economy will still be under stress , with the government being unable to borrow while under the program. The government so far has not done a very good job in explaining what is ahead for the regime and the nation. The fund spoke about good governance. Whether in all categories such as political or economic. The regime has a failed record to punish corrupt officials in engaged in financial corruption. If one should compared the amount from the IMF and the amount from the US MCC program that the regime failed to meet, implementation is a political headache for the regime. The road funds that the Associate Justice was impeached for, the regime failed to provide the necessary fund for the road constructions. That disqualified the regime from receiving 15 million US dollars from the MCC programs. Now go back and read the warning from the IMF concerning any small worsening of the terms of the debt , or failure to sufficiently adjust…… This regime has failed at every turn and twist, with its own program of Dig hole,cover hole of donor’s funds. Can it carry on with the IMF tooth pulling. But one thing though , the regime has to come clean and address the issue before citizens start to form different opinions about whether the money from the IMF was for government to use . Or it was for specific projects of the IMF which are detailed in the agreements. One important note, the IMF credit to Argentina is 57 billion US dollars. And herhaps , about more than half have been spent. And there are protest in the streets that led to the election of a new President. Than again, Jamaica just passed the IMF program, and things are getting better in that country. It took about three to four years, but they are up running. For Liberia, partisans politics, political parties politic, corruption, transparency, accountability, dialogue, civil servants unions, the regime has some serious selling to do . Jamaica had to bring all on board to be a IMF successful story.

  4. Thanks be to our Lord for the IMF. To President WEAH, this is your test but I trust you that the money will be use for the intended purpose…

    • This is not a loan or money given to the government like in the case of the loan to reconstruct the RIA. This is a bailout of the economy and with what is known as Extended credit or with someone else’s money. The regime is in a bailout program with the IMF. And the initial stage to get that bailout money from the IMF, the regime must do several things. One on the IMF list , cut waste in salaries and the regime will get assistance through the credit line. As one can already see the difficulties and opposition being generated from the so-called salaries harmonization , should the regime refuses , there will be no line of credit with the Monetary Fund, under the program. Under program the regime is not to borrow money. In short , the regime is handcuffed to the Monetary Fund for the next four years. The economy will still be under stress , as the regime must abide with the jacket rules of the Monetary Fund. As stated before, Argentina received from the Fund 57 billion US dollars. The highest amount in the history of the Fund, protest in the streets, a new President was elected. This is not money for government to use on governmental services or governmental programs. But a bailout out package of the economy with set of rules. On a personal level, someone going through bankruptcy or bailout program, in some cases, that person might have to sell their car , sell their home, not allowed to borrow money again while going through bankruptcy or bailout, if they are determined to get out of debt and start anew . This is where the regime happened to find itself , in debt and cannot pay its bills and must be bailout. So the Monetary Fund is at hand to set the administrative rules of the terms of agreement. Demanding the practice of good governance, and transparency while the regime is in the program. Read the warning from the Monetary Fund to the regime again. This time pulling the tooth out going to hurt. For that country, it has always been no pain, no gain. Easy come easy go. Not this time around. Someone has to teach that spoiled child at 172 years an administrative lesson in management and financial principles and practices. It’s about time that someone does that. For love of country, it is very grateful on your part to say thanks to the IMF for coming and accepting the applications from the regime.

  5. I believe the top five incompetent, unqualified currupt official leading this clown government have thier eyes set on the RIA due to the fact that as soon as that check is cut the cash will be arriving by air and it’s a guarantee 90% of it will go missing as usual,

  6. In order to “restore macroeconomic stability”, t in Liberia, the IMF has approved of $213.6 million bucks. At this point, there’s some kind of confusion. The issue is the technical name that the loan is being called. Again, there’s uncertainty as to whether it is a loan. Extended Credit Facility. Never unheard of.

    Well, whatever it is, I hope and pray that the Liberian authorities will spend the money wisely. My suggestion is this: Spend the money on roads, schools, running water, electricity, etc.

    Make your enemies marvel at you. Do it right.
    Peace.

  7. Regardless how much debited or credited in the Liberian economy, the best solution is to immediately exchange the account payable into Liberian currency reserved in the coffer of the Liberian nation, instead reliable stance on the United States Dollars. For instance, it was a good move to pay Legislators in Liberian dollars instead USD. Let us see if such officials and lawmakers who act as though they are so nationalistic know the value of the Liberian currency. Let us see how much they care about the economy of the Liberian nation. Let’s see how and where they will take or spend their own currency.
    No more free knowledge. Do not reply my box. Show the Liberian people.
    Gone to 57% silent majority.

  8. How could Weah gladly receive IMF largesse, when his behavior and pronouncement strongly shows he is an avowed anti-education crusader? The man says education cannot build Liberia; however, he commits his government to receiving IMF assistance. Well, can he not see the IMF is a pool of educated people?

    Weah must understand that it is through the instrumentality of the well educated men and women, who work with the IMForganization and their profound, intellectual capabilities the making of this assistance is being made fruitful.

    A man of principles often has little tolerance for gyration because he is guided by his core believes. A prime example was the late Guinean president and respected statesman, Ahmed SekouToure. The saying is often stated of him he was anti-imperialistic and although his stance kept his nation back warded for years, yet in spite of the controversies surrounding some of his policies, he was loved, feared and respected by both friends and foes because they felt he was a principled individual.

    The name Sekou Toure was not synonymous with incorrigibility for he stood his ground when it came to protecting some of the pristine resources of his country as he believed that if the resources of his country were to be tapped, then his people should be the prime beneficiaries and not the other way around.

    So, what does Weah stand for? He stands for nothing. The saying goes, “If an individual cannot stand for anything, he will fall for anything.” So, here we are. Liberia is stuck with a spineless and pretentious president, who wallows in the pigpen of avarice and cares nothing about the welfare of its impoverished population.

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