The Executive Board of the International Monetary Fund (IMF) on Friday approved the disbursement of $50 million to Liberia to respond to COVID-19 pandemic.
The money would be drawn under the Rapid Credit Facility (RCF) which provides rapid concessional financial assistance with limited conditionality to low-income countries (LICs) facing an urgent balance of payments need.
The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis like in the current era of COVID-19.
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The disbursement of $50 million on Friday together with debt relief approved in April 13, “will help meet Liberia’s urgent balance of payment needs, mostly stemming from fiscal needs necessary to respond to the pandemic,” IMF said in a statement from Washington D.C.
According to the IMF, the pandemic is hitting Liberia at a time, when economic activity was already declining, and money is needed now.
Mr. Tao Zhang, Deputy Managing Director and Acting IMF Chair explained that the COVID-19 pandemic “came at a time when a consensus on the need for broad-based reform in Liberia had finally emerged, but when macroeconomic conditions remained challenging.”
He said the pandemic will likely disproportionately affect the most vulnerable as social safety nets are rudimentary, food insecurity is rising, and the healthcare system is underdeveloped.
“The full extent of the impact of COVID-19 is not known, but growth is now projected at -2.5 percent for 2020, largely due to lockdown at home and abroad which are negatively impacting domestic demand, net remittances, capital inflows, and the banking sector.
“In the absence of support, the poorest will feel the impact the most as there is little social safety net, and the food security of those relying on uncertain daily income is a pressing concern. The pandemic opens a balance of payment need of US$150 million (5.1 percent of GDP) in 2020, which largely arises from a domestic revenue shortfall projected at US$119 million,” he said.