Press Release No. 14/441

Press Release: IMF Executive Board Approves US$130 Million in Immediate Assistance to Guinea, Liberia, and Sierra Leone in Response to the Ebola Outbreak

September 26, 2014

The Executive Board of the International Monetary Fund (IMF) today approved—in an expedited decision supported by a joint statement of all Directors—emergency financial assistance to Guinea, Liberia, and Sierra Leone totaling US$130 million to help respond to the Ebola outbreak. The IMF financing will be made available to the three countries immediately, in the amounts of US$41 million for Guinea, US$49 million for Liberia and US$40 million for Sierra Leone. This emergency financing comes in addition to the assistance provided under existing programs for these countries. It will help cover part of the immediate balance of payments and fiscal needs currently estimated at about US$100 million for each country.

“The Ebola outbreak in Guinea, Liberia, and Sierra Leone has already cost too many lives,” said IMF Managing Director Christine Lagarde. “This humanitarian crisis could also have deep economic consequences. The governments of Guinea, Liberia and Sierra Leone requested IMF support to enhance their efforts to contain this unprecedented epidemic that is disproportionately affecting the most vulnerable in their populations. The IMF is working hard with the authorities of the affected countries and their development partners to ensure that the outbreak is quickly brought under control and to assist the economic rebuilding effort that must follow.”

The Ebola Outbreak affecting the three countries has created a significant social and humanitarian crisis, and has so far proven difficult to contain despite efforts by the respective governments and their development partners. It is also having an acute macroeconomic and social impact on the three already-fragile countries. The crisis is still unfolding, but preliminary IMF estimates indicate that growth could decline by at least 3-3½ percent in Liberia and Sierra Leone and by about 1½ percent in Guinea in 2014. Inflationary pressures have flared up in the affected countries, and significant fiscal financing needs have emerged as the outbreak has caused sharp declines in tax revenues and Ebola-related spending had to be increased substantially. Additional and sizeable budget support from bilateral and multilateral development partners is urgently needed to avoid painful domestic adjustment measures and help eradicate the disease.

The Executive Board of the IMF today approved an augmentation of access of 25 percent of quota under the current Extended Credit Facility¹ (ECF) arrangements for Liberia and for Sierra Leone, resulting in an increase of almost 50 percent in financing under their existing arrangements; and a 25 percent of quota financing under the Rapid Credit Facility² (RCF) arrangement for Guinea.

Following the Executive Board’s discussion, Ms. Christine Lagarde, Managing Director and Chair, made the following statement:

“The Ebola outbreak is taking a very high human toll in Guinea, Liberia, and Sierra Leone. Unless brought under control, the epidemic will reverse the advances that these countries have made in recent years under Fund-supported programs toward mending their still fragile economies. Large-scale and well-coordinated assistance by the international community is urgently needed to support the national authorities’ efforts to contain the devastating impact of the disease. Against this background, the Fund’s Executive Board strongly and expeditiously supported the authorities’ request for financial assistance.

“The outbreak is affecting Guinea, Liberia, and Sierra Leone in different ways, but in all cases it is expected to reduce economic growth significantly and fuel inflationary pressures. The poorest and most vulnerable segments of the population are being disproportionately affected by disruptions in commerce and the higher prices of food and basic commodities. Fiscal deficits are projected to widen due to lower revenues as economic activity slows as well as higher additional outlays on emergency programs. Current account balances are also projected to worsen owing to the decline in exports and the increase in food and other critical imports. Preliminary staff estimates put the combined financing gap at about US$300 million, provided that contagion is stopped early next year.

“The Fund resources made available today will cover almost half of this financing need. Additional balance of payments and budget support from multilateral and bilateral donors is needed to avoid painful adjustment measures and safeguard macroeconomic stability. The rapidly deteriorating health situation underscores the urgency of this support.

“The Fund is closely monitoring the situation and stands ready to provide further assistance through this challenging period.”

Background:

Liberia: The ECF arrangement for Liberia of about US$79.9 million was approved by the IMF’s Executive Board on November 19, 2012 (see Press Release No. 12/449). The additional and immediate financing of US$49 million increases the funds available under the ECF to US$130 million.

Sierra Leone: The ECF arrangement for Sierra Leone of about US$ 95.84 million was approved by the IMF Executive Board on October 21, 2013 (see Press Release No. 13/410). The additional and immediate financing of US$40 million brings the funds available under the ECF to US$136 million.

Guinea: The ECF arrangement for Guinea of about US$198.9 million was approved by the IMF’s Executive Board on February 24, 2012 (see Press Release No. 12/57). Guinea is making satisfactory progress under this existing ECF arrangement, but will receive emergency funding of US$41 million under the RCF due to a pending ECF review.

¹ The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems.

² The RCF is a lending arrangement that provides rapid financial support in a single, up-front payout for low-income countries facing urgent financing needs.