-Completes First Review Under Extended Credit Facility Arrangement for Liberia
By Jerromie S. Walters
Washington, DC – The Executive Board of the International Monetary Fund (IMF) has completed the first review of Liberia’s 40-month arrangement under the Extended Credit Facility (ECF), approving an immediate disbursement of SDR 34.3 million (approximately US$46 million). This funding will bolster Liberia’s international reserves and support the country’s ongoing economic reform agenda.
The ECF arrangement, designed to address structural challenges and promote sustainable growth, aligns with Liberia’s recently adopted economic reform program. Key priorities include enhancing fiscal sustainability, addressing financial sector vulnerabilities, and improving governance. The Liberian authorities have committed to creating fiscal space through domestic revenue mobilization, rationalizing expenditures, and tackling weaknesses in the banking sector.
Strong Economic Performance Amid Reforms
Liberia’s economic performance has remained robust, with real GDP growth projected to accelerate to 5.6% in 2025, up from 4.8% in 2024. Inflation and exchange rate stability have been maintained, while the current account deficit has continued to narrow. Fiscal discipline has been restored, contributing to a decline in the public debt-to-GDP ratio, reflecting significant consolidation of the fiscal primary balance.
Progress in tax revenue mobilization, control of recurrent spending, and financial stability has been encouraging. The adoption of a modernized taxation regime, including the implementation of a Value-Added Tax (VAT), is expected to create fiscal space for higher public investments while ensuring debt sustainability.
Addressing Governance and Financial Sector Challenges
The Liberian authorities have reaffirmed their commitment to addressing governance shortcomings and strengthening public institutions. Efforts to tackle non-performing loans (NPLs) and improve the financial health of weak banks remain a priority. The Executive Board approved a waiver for the nonobservance of the continuous performance criterion on external arrears, citing its minor nature and the corrective actions taken.
Following the Board’s discussion, Mr. Bo Li, Deputy Managing Director and Acting Chair, commended Liberia’s progress: “The Liberian authorities are making good progress in implementing sound macroeconomic policies and structural reforms. The program is broadly on track, and efforts to enhance fiscal sustainability, rebuild international reserves, and address governance weaknesses are gradually taking effect.”
Key Priorities for Sustained Reform
Mr. Li emphasized the importance of maintaining momentum in fiscal and governance reforms:
“Efforts to strengthen fiscal sustainability and mitigate debt vulnerabilities should continue over the medium term. The 2025 budget aims to improve revenue mobilization, rationalize unproductive spending, and safeguard priority expenditures. Medium-term fiscal reforms will enhance domestic revenue mobilization and public finance management, creating fiscal space for critical public investments.”
He also highlighted the need to address governance weaknesses at the Central Bank of Liberia (CBL): “Swift implementation of compliance and forensic audit recommendations, an updated IMF safeguards assessment, and an independent legal review of unconventional financial support to two small banks are critical to restoring the CBL’s credibility and strengthening its governance and independence.”
Broader Governance and Financial Sector Reforms
Mr. Li underscored the importance of broader governance reforms for Liberia’s long-term development: “Strengthening integrity institutions, amending anti-corruption legislation, and rigorously enforcing public laws and regulations are critical. The upcoming governance diagnostic study will guide these efforts.”
In the financial sector, expediting the adoption of the new Bank-Financial Institutions and Bank Financial Holding Companies Act, restructuring a state-owned bank, and addressing weaknesses in two troubled banks are essential steps to enhance stability.
Commitment to Sustainable and Inclusive Growth
The Liberian authorities remain firmly committed to revitalizing the reform agenda to address development challenges and support sustainable, inclusive economic growth. The successful implementation of the National Development Strategy will be pivotal in achieving these objectives.
