Monrovia, Liberia – Following the initial evaluation of the agreement under the Extended Credit Facility (ECF), the International Monetary Fund’s (IMF) Executive Board has authorized Liberia to access US$46 million.
The purpose of these monies is to strengthen Liberia’s status as an international reserve. The IMF Board authorized a US$210 million ECF deal for Liberia in September 2024.
With the goal of resolving macroeconomic imbalances, bolstering debt sustainability, and establishing the groundwork for more inclusive, private sector-led growth that extends beyond the enclave sector, this 40-month financing package is intended to support the nation’s Economic Reform Agenda under the ARREST Agenda for Inclusive Development (AAID).
“Liberia’s economic growth has remained strong,” the IMF says, adding that real GDP is predicted to increase from 4.8 percent in 2024 to 5.6 percent in 2025. The current account deficit continues to keep getting smaller while inflation and exchange rates remain steady.
In order to preserve macro-financial stability, the authorities have effectively reestablished budgetary restraint. Significant consolidation of the fiscal primary balance is reflected in the beginning fall of the public debt-to-GDP ratio.
The IMF adds: “It is heartening to see recent progress in stabilizing the financial system, reducing recurring spending, and mobilizing tax collections. In order to ensure debt sustainability and provide budgetary space for more investment, the government’s dedication to reforming the tax system, including the implementation of the VAT, will be essential.”
The government’ increased emphasis on strengthening public institution governance and tackling issues in weak banks is encouraging. According to the Ministry of Finance and Development Planning, the IMF’s February 5 statement emphasizes that “addressing the sizable and persistent stock of non-performing loans (NPLs) remains a priority to strengthen financial stability.”
Additionally, the IMF Executive Board approved the Liberian authorities’ request for a waiver of non-accumulation of external arrears, acknowledging the minor nature of the issue and the corrective actions taken.
The following was said by Mr. Bo Li, Deputy Managing Director and Acting Chair, after the Executive Board’s discussion:
“positive macroeconomic policies and structural reforms are being implemented by the Liberian government with positive results. In general, the program is proceeding according to plan, and the authorities’ initiatives to improve budgetary sustainability, replenish global reserves, and strengthen public institution governance are progressively bearing fruit.”
