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International Monetary Fund. African Dept.
This paper discusses Liberia’s Request for an Extension of the Arrangement Under the Extended Credit Facility (ECF). From mid-2014 to mid-2015, Liberia faced a serious Ebola virus disease crisis, which triggered the declaration of a state of emergency. End-June 2014 performance criteria (PCs) and indicative targets were met, except the revenue floor and the floor net foreign exchange position of the Central Bank of Liberia (CBL), and the ceiling on net domestic assets. The authorities are expected to request waivers for the missed PCs in light of corrective actions undertaken to improve revenue collection and strengthen the net foreign exchange position of the CBL. The IMF staff supports the authorities’ request to extend the ECF arrangement.
International Monetary Fund. African Dept.

-related imports of materials and machinery in 2014–15, with the current account deficit falling to 31 percent. 1 Text Chart 1. Effective Exchange Rate (Index, 2011=100) Source: IMF staff estimates. The CBL’s net foreign exchange position has declined in 2015 . Gross reserves have risen from US$411 million in 2014 to US$446 million in 2015 (2.6 months of imports). In contrast, the net foreign exchange position of the CBL declined from US$179 million to US$164 million due to operational losses and liquidity support to the banking sector. In 2016, gross reserves are

International Monetary Fund. African Dept.

September 2014, was postponed . Since the start of the epidemics, the government had to devote its limited resources to fighting the health crisis. Furthermore, the Fund-wide travel ban to Ebola-affected countries hampered normal staff operations. As a result, the ECF-supported program was effectively put on hold until the spring of this year. 4. Program performance has been mixed : End-June 2014 performance criteria (PCs) and indicative targets (ITs) were met, except the revenue floor and the floor net foreign exchange position of the CBL (both PCs), and the

International Monetary Fund. African Dept.

. Financial sector policy In the recent past, the CBL has endeavored to transform the Liberian financial landscape and enhance the soundness of the financial system. This has involved improving access to financial services and taking steps to ensure a relatively stable exchange rate, while strengthening the reserve position of the CBL. Going forward, financial sector policy will continue on the path of reform to promote viability of the banking system, with emphasis on further improving the credit environment and reducing the level of non-performing loans. Furthermore

International Monetary Fund. African Dept.

. Program Performance In spite of the difficult environment related to the Ebola crisis, most end-June 2014 performance criteria (PCs) and indicative targets (ITs) required for fourth review were met, except the revenue floor (PC) owing to shortfalls in tax and non–tax collection, the floor on net foreign exchange position of the CBL (PC), and the ceiling on net domestic assets (NDA) (IT), missed with a small margin. Constrained by a limited functioning of public services, the implementation of structural benchmarks was difficult. Nevertheless, the authorities made

International Monetary Fund. African Dept.

control frameworks of the CBL . The lack of a permanent Board for almost two years and changes to the Governor, both Deputy Governors, and senior management have impacted the CBL’s governance and accountability. In addition, the financial position of the CBL has deteriorated following the extension of credit to government in excess of legal limits and new risks have emerged in domestic currency operations as highlighted in the recent external investigation reports. Going forward, fundamental steps are needed to address these vulnerabilities. To this end, many of the

International Monetary Fund

extensive list of duty exemptions. Directors noted that the weak financial position of the CBL continues to affect the rebuilding of scarce foreign exchange reserves and the capacity to implement effective monetary and exchange rate policies. While they welcomed efforts to minimize the CBL’s cash deficit in 2006, Directors urged the new management to take appropriate measures to eliminate this deficit as soon as possible. They called for a strengthening of the regulatory functions of the central bank, and emphasized that it will also be essential to continue with

International Monetary Fund. African Dept.

. The lack of a permanent Board for almost two years and changes to the Governor, both Deputy Governors, and senior management impacted the CBL’s governance and accountability. In addition, the financial position of the CBL had deteriorated following the extension of credit to government in excess of legal limits and new risks have emerged in domestic currency operations as highlighted in the recent external investigation reports. Fundamental steps were needed to address these vulnerabilities. To this end, many of the priority recommendations included as structural

International Monetary Fund. African Dept.

/A Oct 6, 2021 3.10 3.10 N/A December 15, 2021 7.94 7.94 Safeguards Assessment The 2019 safeguards assessment noted a significant deterioration in the governance and control frameworks of the CBL . The lack of a permanent Board for almost two years and changes to the Governor, both Deputy Governors, and senior management impacted the CBL’s governance and accountability. In addition, the financial position of the CBL had deteriorated following the extension of credit to government in excess of legal limits and new risks have emerged in

International Monetary Fund

excluding CBL purchases of treasury bills in the secondary market and non-competitive purchases in the primary market. The gross credit to government is expressed in U.S. dollars. Claims denominated in Liberian dollars are valued at a fixed rate of the Liberian dollar against the U.S. dollar denominated claims, 72.00 as of September 30, 2009. Other currencies are valued at cross-rates against the U.S. dollar as of September 30, 2009. 15. The net foreign exchange position of the CBL is defined as the difference between (a) the CBL’s gross foreign reserves including SDR