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IMF Team Finds Good And Bad News

UN Integrated Regional Information Network, 9 October 2000

ABIDJAN - September found that following broadly satisfactory implementation of a January-June 2000 programme in the first quarter, overall performance deteriorated significantly in the second quarter of the year.

The deterioration largely reflected the weak fiscal policy stance in the second quarter, as extrabudgetary expenditure rose sharply, the report said. In addition, key structural measures related to the liberalisation of rice and petroleum imports were not implemented as planned, though in part this reflected a delay in the provision of donor technical assistance.

The report cited Liberian authorities as saying that some of the additional spending in the second quarter went to border security related to the resurgence of fighting in Sierra Leone. Expenditures on security and presidential affairs were a key factor in the deterioration of the performance of fiscal policy, the report said. Liberia also has been waging a low-scale conflict on the border with Guinea.

The IMF staff team and Liberian officials discussed measures needed to improve performance, such as enhancing fiscal transparency and control, eliminating wage and nonwage domestic arrears, and making substantial progress toward liberalisation of rice and petroleum imports. As of the end of August, civil servants were owed three months' wages.

The team said it noted with concern the recent deterioration in Liberia's relations with donors and external creditors, including the freezing of a new US $45-50 million post-conflict assistance programme by a key donor.

The report said economic developments were largely positive during the first half of the year. Real GDP is estimated to expand by about 15-20 percent in 2000, after rising by some 20 percent last year. However, despite these recent gains, per capita income remains at about one-third of pre-war levels and unemployment, particularly in urban areas, is widespread, the report said.

The government received US $2 million in donor grants to assist in restoring electricity in the capital, Monrovia, which resulted in limited power for a small section of the city, the staff team said.