Washington, DC – The Executive Board of the International Monetary Fund (IMF) has approved a 40-month Extended Credit Facility (ECF) arrangement for Liberia, totaling SDR155 million (60% of the quota, or about US$210 million).
This support is designed to assist Liberia in implementing economic reforms to address macroeconomic imbalances and foster sustainable, private-sector-led growth beyond the natural resource sector. Following this approval, Liberia will receive an immediate disbursement of SDR4.3 million (approximately US$5.8 million), which will help meet its balance of payments needs amid significant and growing development gaps.
According to an IMF’s release, the authorities’ economic reform program, supported by the ECF, outlines a comprehensive strategy to strengthen fiscal sustainability and create space for critical public investments.
This includes rationalizing unproductive spending and mobilizing domestic revenue. The reforms aim to reduce debt vulnerability and promote robust, sustainable growth. Key policy measures include reducing unproductive government expenditures, implementing new tax measures, including the introduction of a Value Added Tax (VAT) and streamlining extensive tax incentives, increasing public spending on key infrastructure and nhancing financial stability by addressing the issue of non-performing loans.
A central goal of the program is to protect and enhance social spending, particularly in education and healthcare, the release said.
IMF’s Assessment
Following the Executive Board’s discussion, IMF Deputy Managing Director and Acting Chair, Mr. Bo Li, emphasized that Liberia’s economic vulnerability has worsened in recent years. He noted that fiscal slippages have undermined public debt sustainability, leading to a sharp decline in international reserves, while governance issues have persisted.
To address these challenges, Liberia’s new administration, which took office in early 2024, requested the 40-month ECF arrangement to support its broad-based reform agenda. Mr. Li praised the government’s focus on restoring fiscal credibility by reducing unproductive spending and reallocating resources toward public investment, while safeguarding social programs.
Over the program period, the Liberian authorities are expected to continue strengthening fiscal discipline and improving domestic revenue mobilization, including through the introduction of the VAT and the reduction of generous tax incentives. Enhancing the government’s debt management capacity and seeking concessional loans and grants for infrastructure development will also be crucial.
In the financial sector, Mr. Li stressed the importance of adopting the new Banking and Financial Institutions Act to modernize bank supervisory and resolution frameworks. Strengthening the banking sector and the governance of the Central Bank of Liberia (CBL) are also key priorities.
“The authorities are committed to revitalizing reforms to support macroeconomic stability, promote broad-based economic development, and reduce poverty. Structural reforms aimed at improving governance and transparency will be critical to achieving these objectives. Maintaining strong program ownership and continued donor support will be vital for the success of this program,” Mr. Li concluded.
