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The Liberian authorities and IMF staff have reached a staff-level agreement on a new lending programme subject to fulfilment of significant prior actions in the fiscal and monetary areas. The key objectives of the programme are to restore macroeconomic stability, provide a foundation for fiscal sustainability, inclusive growth, and address weaknesses in governance.

One of the key elements of the programme is implementation of a 2020 budget that constrains expenditure to available resources and avoids inflationary and reserve-depleting borrowing from the Central Bank of Liberia.
 
IMF staff welcomed the Liberian authorities’ determination to restructure the wage bill, a key policy reform considered necessary to free up fiscal space and make a credible and viable budget possible, while also increasing transparency, accountability, and equity. IMF said all three branches of the Liberian government participated in the discussions, and that the process yielded a progressive outcome, in that the burden was borne by the higher paid employees with the poorest benefiting from salary increases, including among teachers, health workers and line security forces.

It is anticipated that the IMF Executive Board would consider approval of Liberia’s formal request for financial support under the Extended Credit Facility as early as the first half of December 2019 if the country meets set conditions.

According to the World Bank, Liberia’s economy is challenged by rising inflation as a result of the depreciation of its currency against the US dollar. Data from the African Development Bank shows the Liberian dollar depreciated by 24.5 percent against the US dollar in 2017 and by 27 percent by the end of June 2018. Liberia’s public debt was 41.3 percent of GDP in 2017.