Recent economic developments have been broadly encouraging. Preliminary estimates indicate a boost of real GDP growth to 6-7 percent in 2011, the exchange rate against the US dollar has been broadly stable, and international reserves have increased. Strong exports were supported by high rubber prices and the restart of iron ore production after more than two decades. However, persistent high food and oil prices in global commodity markets contributed to an uptick in inflation and an increase in trade deficit.
Performance under the ECF-supported program has remained strong through end-December 2011. All quantitative performance criteria and an indicative target were comfortably met. Progress has been made in implementing the structural reform program: the Central Bank of Liberia (CBL) roadmap for capital market development is under preparation; and the expansion of the integrated financial management system continued and is planned to extend into line ministries during 2012.
Economic prospects for 2012 and over the medium term remain favorable. The expansion of iron ore exports will support high GDP growth in 2013 and in the medium term. Downward risks are mostly linked to the increased volatility of international commodity prices, which could raise inflationary pressures and depress private consumption growth.
The FY2013 budget is being prepared for the first time with a medium-term expenditure framework. The mission strongly supports the authorities’ plans to expand spending on programs and projects, notably for infrastructure, agriculture and youth. To this end, steps will be taken to consolidate the FY2012 good tax revenue performance and to contain discretionary recurrent spending.
The mission welcomes the authorities’ commitment to enhance financial oversight of state owned enterprises and to re-define their mandates while strengthening the governance framework in line with best practices. In addition, measures will be taken to further improve the banking supervision framework, establish a loan recovery unit, and build a national payments system that will substantially contribute to financial sector development.
The mission wishes to thank the Liberian authorities and its other counterparts for the constructive and cooperative discussions that took place in Monrovia.
IMF Mission To Liberia.