Liberia: First Review Under the Extended Credit Facility Arrangement and Request for a Waiver of Nonobservance of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Liberia

FIRST REVIEW UNDER THE EXTENDED CREDIT FACILITYARRANGEMENTANDREQUEST FOR A WAIVER OFNONOBSERVANCE OF A PERFORMANCE CRITERION—PRESS RELEASE;STAFF REPORT;AND STATEMENT BYTHE EXECUTIVE DIRECTOR FORLIBERIA In the context of theFirstReviewUnder the Extended Credit Facility ArrangementandRequest for a Waiver of Nonobservance of a Performance Criterion,the followingdocuments have been released andare included in this package: •APress Releaseincluding a statement by the Chair of the Executive Board. •TheStaff Reportprepared by a staff team of the IMF for the Executive Board’sconsideration onFebruary 5, 2025, following discussions that ended onNovember19, 2024, with the officials ofLiberiaon economic developments andpolicies underpinning the IMF arrangement under theExtended Credit Facility. Basedon information available at the time of these discussions, the staff report wascompleted onJanuary 21, 2025. •AStatement by the Executive DirectorforLiberia. TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. IMF Executive Board Completes the First Review Under theExtended Credit Facility (ECF) Arrangement for Liberia FOR IMMEDIATE RELEASE •The IMF Executive Board completed the first review of the 40-month arrangementunder the Extended Credit Facility (ECF), enabling a disbursement of SDR 34.3 million(about US$46 million). •The ECF arrangement will support the economic reform agendarecently adopted bythe authorities. To achieve thisreformobjective, the authorities have committed tocreating fiscal space through domestic revenue mobilization and expenditurerationalization, addressingfinancialsectorweaknesses, and tacklinggovernanceshortcomings. •Program performancehas been broadlysatisfactory,meeting most ofthequantitativetargets and implementingall structural reforms,although somewith delays. Washington, DC–February 5, 2025: The Executive Board of the International MonetaryFund (IMF)completedthe first review of thearrangement under theExtended Credit Facility(ECF)1for Liberia, allowingLiberiato draw SDR 34.3 million (equivalent to about 13.3 percentof quota or US$46 million), which will be used to strengthen Liberia’s international reserveposition. Liberia’seconomic growth has remained strong, with therealGDPgrowthexpected toaccelerate to 5.6percent in 2025 from 4.8 percent in 2024. Inflationand exchange ratehasremainedstable, and the current account deficithas continuedto narrow. Theauthorities havesuccessfully restored fiscal discipline, which is key for maintaining macro-financialstability.The public debt-to-GDP ratio has started to fall, reflectinga sizable consolidation ofthe fiscal primary balance. Recent progress in mobilizing tax revenues, reining in recurrent spending, and anchoringfinancial stability is promising. The authorities’ commitment to modernize the taxation regime,including the adoption of the VAT, will play a crucial role in creatingfiscal space for higherinvestments, while preserving debt sustainability. The authorities’renewed commitmentstourgentlytackleissues in weak banksand improvegovernancein public institutionsare encouraging.Addressingthe large and persistent non-performing loans(NPLs) stock remains a priority to enhance financial stability. The Executive Boardapproved the authorities’ request fora waiver of nonobservance ofthecontinuousperformance criterion onthenon-accumulation of external arrearsbased onitsminor nature andadoptedcorrectiveactions. Following the Executive Board discussion, Mr. Bo Li, Deputy Managing Director, and ActingChair, made the following statement: “The Liberian authorities are making good progress in implementing soundmacroeconomicpolicies and structural reforms. The program is broadly on track, and theauthorities’efforts toenhancefiscal sustainability, rebuild international reserves, and address governanceweaknesses within public institutionsaregraduallytaking effect. “Efforts to strengthen fiscal sustainability and mitigate debt vulnerabilitiesshould continueoverthe medium term.In line with these efforts, the approved budget for 2025 aims toimproverevenue mobilization, while continuing to rationalizeunproductivespendingand safeguardpriorityspending. Medium-term fiscal reforms designed to enhance domestic revenuemobilization and improve public finance management will help create fiscal space to bolsterpublic investment. “The authorities should press ahead with addressing weaknesses in the Central Bank ofLiberia’s (CBL) governance. Swift implementation of the recommendations of the complianceand forensic audit reports, an update IMF sa