2010-04-19
WASHINGTON (Reuters) - The International Monetary Fund said on Monday it will submit the fourth review of Liberia's loan program to its board in June, which could result in the country receiving an additional $6.8 million.

In a statement, the IMF said it also expected a document to pave the way for Liberia to clear its debt under the Heavily Indebted Poor Countries initiative would be reviewed by the IMF and World Bank management, parallel to the loan review.

"Significant progress was achieved in advancing structural reforms critical to the extended credit facility program and the Heavily Indebted Poor Countries (HIPC) initiative," the IMF said.

It said a preliminary understanding had been reached with Liberia on fiscal policies for the financial year beginning July 1 and on a revised debt strategy to prevent the reemergence of unsustainable levels of debt.

The West African country cut its foreign debt to $1.7 billion in August through a $1.2 billion buyback of outstanding government debt that had been in default since the 1980s, a key step in normalizing relations with the investment community.

Most of the remaining debt will likely be canceled when Liberia reaches the HIPC completion point, either through the HIPC program or under World Bank and African Development programs.

"The draft budget envisages concessional external financing and moderate domestic financing from a newly created treasury bill framework. The central government deficit is projected to remain below 2 percent of GDP," the IMF said.

Liberia, Africa's oldest independent republic, is still recovering from a 1989-2003 civil war, and the IMF said it expected economic output to rise at a faster pace in 2010 than last year, with growth estimated in the range of 6 percent.