IMF Director Here to Discuss Liberia’s Recovery Plan

Lagard says the IMF has worked closely with President Ellen Johnson Sirleaf and her government to confront the outbreak (file photo).

After seeing ‘firsthand the progress that the Liberian people have made in the fight against Ebola’, Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF) is in Liberia for two days beginning today, September 10, to engage with policymakers and other representatives of the Liberian society.

At the head of a high-powered IMF delegation, Ms. Lagarde will hold series of discussions with government officials, representatives of women organizations and the private sector, including business and community leaders.

The delegation, which includes Liberia’s former Finance Minister, Dr. Antoinette Sayeh, will meet with President Ellen Johnson Sirleaf, the leadership of the 53rd National Legislature, members of the Cabinet and Diplomatic Corps, as well as other development partners and civil society organizations in the country.

On Friday, September 11, toward the end of her visit, the IMF Managing Director will deliver a speech to a cross section of Liberians at the Monrovia City Hall in Sinkor.

Prior to her arrival, the IMF Managing Director granted the Daily Observer an exclusive interview in which she discusses Liberia’s economic journey through the Ebola outbreak and the journey ahead. Below is a transcript of the interview.

Daily Observer: What is the objective of your visit to Liberia?

Christine Lagarde: On my first visit to Liberia, I have come to pay tribute to the heroism and resilience of the people of Liberia in the battle against Ebola. I am also here to offer the IMF’s continued support in the recovery and reconstruction that is now underway in the wake of the pandemic. This reaffirms the long-standing partnership between Liberia and the IMF, which started when Liberia joined the IMF in 1963, but has taken on a renewed focus in recent times. Since the crisis began, we have worked closely to support the efforts of President Ellen Johnson Sirleaf and her government in confronting the Ebola outbreak. I have been profoundly moved by what the Liberian people have achieved in bringing the disease under control, and I have no doubt the nation will continue to work to prevent further outbreak and recover from this tragedy.

DO: Liberia has gone through almost a year of an Ebola epidemic. Is the IMF prepared to provide some financial support to the rebuilding of its economy and infrastructure?

CL: The Ebola crisis derailed the implementation of Liberia’s ambitious poverty reduction strategy, the Agenda for Transformation, which aimed to bring the country to middle income status by 2030 by closing infrastructure gaps, investing in health and education, supporting agriculture, developing the private sector and creating jobs. Your achievements before the pandemic were impressive–as exemplified by the 8.7 percent growth rate you achieved in 2013. Then Ebola hit.

As you know, the IMF is not a front-line health provider, but among financial institutions we play a role akin to that of a fire-fighter–we are always among the first to respond by providing financing and policy advice to help countries respond to crises. Since the Ebola outbreak, the Fund has provided $130 million to Liberia, in the form of direct budget support and debt relief. This provided additional space for the government to increase its spending and prevent a greater recession. The IMF has supported Liberia’s development strategy financially since 2012 under the current Extended Credit Facility Arrangement; we will also continue to help mobilize additional financial assistance from other development partners. Beyond financing, the IMF will also continue to support Liberia’s recovery efforts in the areas of macroeconomic management and capacity building, including by helping Liberia to develop administrative and governance capacity in key areas.

DO: As you noted earlier, this is the first time that a high ranking IMF head is paying an official visit to Liberia. Does it then suggest that the IMF has seen the need to encourage the government in its economic development initiative?

CL: This is indeed the first visit to Liberia by an IMF Managing Director. But other senior IMF officials, including the IMF’s then First Deputy Managing Director, John Lipsky, have been here in the recent past. Let me reiterate that I am here to see firsthand the progress that the Liberian people have made in the fight against Ebola, discuss the Economic Stabilization and Recovery Plan that has been prepared by the government, and see how best the IMF can support this effort.

DO: The IMF made significant contributions towards the Ebola fight in Liberia. Is the IMF satisfied with Liberia’s management of its resources during the Ebola tragedy?

CL: We are glad that the exceptional budget support the IMF provided allowed the government to spend more than it would have otherwise been able to, and prevent an even larger recession. In addition, the IMF’s writing off of debt owed by Liberia means that the country doesn’t have any repayments to make on IMF loans until late 2018, freeing further domestic resources to support the recovery. We are working with the authorities and other development partners to help improve public financial management to ensure that all budgetary resources are used effectively and transparently.

DO: The issue of dual currency in Liberia has been discussed and many Liberians are of the opinion that the Liberian government’s inability to control the exchange rate to the Liberian dollar is paramount to the arbitrary increase of commodities, for example the recent increase in petroleum products. What is your expert opinion about this prevailing financial situation?

CL: In Liberia the prices of petroleum products largely follow movements in international oil prices. What is unique to Liberia, however, is its dual currency system. Combined with high dollarization, this limits considerably the scope for monetary policy. In this context, continuing to develop domestic monetary policy instruments such as Treasury bills and Central Bank notes would be important to allow for greater control over domestic inflation.

DO: What would be the IMF’s advice to ensure improvement in its financial management that could benefit a greater majority of the people? What is the expectation of the IMF about Liberia in the next five years?

CL: Transparency and accountability in the use of public resources are essential to ensure the efficiency and quality of public spending so as not to waste scarce public resources. The IMF is working with the government and other development partners to help improve public financial management in these areas. We are also working with the Liberia Revenue Authority to support their strategy to improve tax collection. These initiatives will allow the government to create additional fiscal space that could be used for priority spending on health, education, social safety nets to protect the poorest, and road and energy infrastructure. In turn, these expenditures will also help support higher private investment and create jobs for Liberia’s youth, thereby raising living standards for everyone. It is also crucial to increase the role of women in the economy by giving them equal opportunities and access to higher-productivity jobs to unleash all of the energy and creativity needed to achieve prosperity.

DO: How does Liberia stand with regard to debt to the IMF?

CL: Liberia, like many other low-income countries, makes use of the Fund’s concessional financing facilities to help smooth what would otherwise be an abrupt economic adjustment. We don’t charge any interest on this financing. The Fund is there for its members to use resources in their time of need, and it is good that Liberia makes use of these resources.

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Source: Liberian Observer

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