IMF Staff Completes 2016 Article IV Mission to Liberia

By International Monetary Fund (IMF)

An International Monetary Fund (IMF) mission led by Mr. Carlo Sdralevich, visited Monrovia from April 20 to May 4, 2016 to conduct the 2016 Article IV consultations and initiate discussions on the fifth review of the government's economic program supported by the IMF under an Extended Credit Facility (ECF) arrangement.

At the end of the visit, Mr. Sdralevich issued the following statement:

“Discussions during the mission focused on recent economic developments, policies for 2016/17 and beyond, and performance under the authorities' ECF-supported program. There appears to have been no economic expansion in 2015, reflecting the impact of lower commodity prices and lingering effects of the Ebola epidemic. Going forward, the economic outlook is set to remain challenging. Real GDP growth in 2016 is projected to recover to 2.5 percent, buoyed by increased gold production and a rebound in services and construction sectors. However, downside risks are high, particularly in light of the possible deeper-than-estimated second-round effects of the commodity price shock. Over the medium term, economic growth is projected to stabilize at around 6 percent. This is markedly lower than the 8 percent projected before, reflecting the scaling-back of investment and production plans in the mining sector. Inflation is expected to remain at around 7 percent.

“The budget has been negatively affected by the lower commodity prices. Relative to the original budget, revenues for FY2016 have been revised downward by over 3 percentage points of GDP, mainly reflecting lower collection from mining activity. Revenues from the natural resource sector will continue to be weak in FY2017, while on the spending side there will be pressure from election-related costs. In addition, donor support is expected to decline significantly. Against this difficult backdrop, the mission welcomes the government's intentions to adopt revenue measures, mainly focused on strengthening indirect taxation, to address the shortfall in tax receipts. These resources will allow maintaining a level of expenditures that safeguards social spending to shield the poor and vulnerable, and promote Liberia's development. However, additional donor support will be needed to finance key unfunded projects items.

“The modest pace of the post-Ebola recovery is affecting the banking sector, which continues to be weighed down by a large volume of non-performing loans.

“The mission also held useful discussions on the fifth review of the authorities' ECF-supported program. These discussions will continue in the coming weeks.

“During its visit, the mission met with President Ellen Johnson-Sirleaf, President Pro-Tempore of the Senate Armah Zolu Jallah, Speaker of the House of Representatives Alex J. Tyler, Minister of Finance and Development Planning Amara Konneh, Central Bank Acting Executive Governor Charles Sirleaf, other high-level government officials, representatives of the private sector, civil society organizations, and the donor community. The team expresses its deep appreciation to the authorities and technical staff for their cooperation and the quality of the policy dialogue.”