Identifier
Created
Classification
Origin
08MONROVIA906
2008-11-05 16:24:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Monrovia
Cable title:  

LIBERIA: IMF PREVIEWS ARTICLE IV

Tags:  PGOV ECON EFIN LI 
pdf how-to read a cable
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DE RUEHMV #0906 3101624
ZNR UUUUU ZZH
R 051624Z NOV 08
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 0500
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UNCLAS MONROVIA 000906 

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: PGOV ECON EFIN LI
SUBJECT: LIBERIA: IMF PREVIEWS ARTICLE IV

REF A) MONROVIA 891; B) MONROVIA 817; C) MONROVIA 750; D) MONROVIA
727

UNCLAS MONROVIA 000906

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: PGOV ECON EFIN LI
SUBJECT: LIBERIA: IMF PREVIEWS ARTICLE IV

REF A) MONROVIA 891; B) MONROVIA 817; C) MONROVIA 750; D) MONROVIA
727


1. (SBU) SUMMARY: Visiting IMF mission leader Robert Powell told
Ambassador October 30 that Liberia was on track to reach HIPC
Completion Point (CP) in mid-2010. The schedule for the CP is
largely dependent upon implementation of the PFM Act (ref A) and the
Anti-Corruption Commission (ref C) for one year. The team
reiterated the importance of GEMAP and Liberia's pledge not to incur
additional debt ahead of the Completion Point. They also noted the
IMF had revised estimates for Liberia's growth rate down from 8.5%
to 7.0% due to expected lower revenue from rubber, diamonds and
timber. In a subsequent meeting, President Sirleaf told the
Ambassador she felt the IMF visit went well. END SUMMARY.


2. (SBU) An IMF mission led by Robert Powell visited Liberia October
20-31 to conduct the Article IV review and evaluate an extension
through 2009. They anticipate a follow up visit in June 2009.
Powell said HIPC Completion Point remains a moving target, with the
binding constraints passage and implementation of the PFM law and
functioning of the Anti-Corruption Commission for one year. If the
legislature passes the law soon after it reconvenes in late January
2009, the earliest Liberia would be able to qualify for Completion
Point would be early 2010. The team said that a January 2010
timeframe was "possible" but mid-2010 was "more likely," and noted
that it would be challenging to draft and implement the complex
supporting regulations and procedures for the PFM law and to show
the Anti-Corruption Commission was operational. Further, the IMF
would unlikely make a determination before another review in
mid-2009. Powell confirmed the 2009 program will likely focus on
banking supervision and national accounts.

Good progress so far
--------------


3. (SBU) Powell said Liberia has done "very well" on meeting
quantitative and structural targets, including the passage of the
act to merge the Bureau of the Budget with the Ministry of Finance
(ref D),the submission of a draft PFM law, and the establishment of
the Anti-Corruption Commission (ref C). He noted that the move from
"strategy" to "legislation" to "implementation" was the most
difficult part of the program. Nevertheless, he described Liberia
as a "good story" that is "on track in an extremely tough
environment." He emphasized that "there is no better government to
work with," though noting that cooperation with the Central Bank of
Liberia (CBL) remained strained.

Central Bank still a challenge
--------------


4. (SBU) Regarding the CBL, Powell stated that bank supervision had
improved and bank capitalization has increased. The CBL's decision
to increase the number of commercial banks from four to nine this
year was a concern, and the IMF team counseled against a further
increase in the number of banks in the short term, but did not find
any major vulnerabilities in the banks currently operating. The
team stated that GEMAP or some other robust governance program
remained necessary, saying "things would deteriorate quickly" at the
CBL without a strict program that monitored transactions. They
acknowledged recent progress by the General Auditing Commission in
auditing regular government accounts, but explained that most
government entities do not yet prepare statements that are auditable
and that GEMAP remained an essential "ongoing audit" of key
institutions.


5. (SBU) Powell also emphasized the importance that the GOL adhere
to its commitment not to incur any additional debt prior to HIPC
Completion Point and not to draw down reserves that have increased
to almost $50 million. They said President Sirleaf had assured them
of her resolve to keep the program on track through Completion
Point.


6. (SBU) Powell noted they were revising estimates for Liberia's
growth rate down from 8.5% to 7.0% due to expected declines in
revenues from rubber, diamonds and timber. However, they still
expect double-digit growth in the out years. The IMF expects
foreign direct investment to grow more slowly on account of falling
commodity prices and tighter credit markets. Inflation is expected
to remain under control.

THOMAS-GREENFIELD