By Festus Poquie
“With development partner support declining and limited prospects for substantial increases in foreign direct investment, relying on non-concessional borrowing to fund the ambitious development social spending could jeopardize macroeconomic stability and external sustainability.”
The International Monetary Fund has told Liberian authorities that the country’s flagship US$8.4 billion National Development Plan is not achievable in its current form and that pressing ahead could trigger a severe economic collapse, according to a report published on the Fund’s website.
The plan — the ARREST Agenda for Inclusive Development (AAID) envisages nearly US$8.4 billion of investment over 2025–29, almost twice Liberia’s 2024 GDP, to be financed largely by development partners and private investors (70 percent) with the government covering the rest (30 percent).
The IMF said this financing mix is no longer realistic after a dramatic decline in external support and warned that relying on costly, non-concessional borrowing would jeopardize macroeconomic stability and external sustainability.
“With development partner support declining and limited prospects for substantial increases in foreign direct investment, relying on non-concessional borrowing to fund the ambitious development social spending could jeopardize macroeconomic stability and external sustainability,” the Fund said, adding that “relatively weak implementation capacity calls for a cautious and measured approach.”
The IMF highlighted an immediate shock to Liberia’s financing picture: in February 2025 nearly all active USAID projects totaling US$434 million, roughly 7 percent of GDP over the next four years were permanently canceled.
The Fund said the move will have wide-ranging economic and social effects, including job losses among locally hired staff, reduced opportunities for contractors, higher non-performing loans and a projected tax revenue shortfall.
It also warned the cancellations will create major funding gaps in education, health and agriculture programs that disproportionately affect the most vulnerable.
The IMF paper outlines persistent structural challenges that make implementation difficult: years of conflict have left deep infrastructure deficits, depleted human capital and weakened institutions; poverty remains widespread with the World Bank estimating around 60 percent of Liberians live below the poverty line; and the economy remains heavily dependent on agriculture and mining, sectors that are vulnerable to external shocks and provide limited broad-based employment.
Launched in January 2025, the AAID groups policy priorities under six pillars — economic transformation, infrastructure, rule of law, governance and anti-corruption, environmental sustainability and human capital — and targets annual growth of 6 percent to reach a per capita income of US$1,000 by 2029.
The IMF said the plan’s goals are broadly well conceived, but that the scope and financing of the AAID must be revisited in light of lower external assistance and weak domestic revenue mobilization.
The Fund urged Liberian authorities to reprioritize the AAID, scale down projects where necessary, and substantially increase the domestic revenue contribution while seeking more grants and concessional financing to preserve debt sustainability.
It also recommended strengthening public investment management and improving implementation capacity to ensure value for money and to rebuild confidence among development partners.
“Investing in critical infrastructure is essential to unlock growth potential,” the report said, “but prudent financing is critical to preserve debt sustainability.”
The IMF said a refocused strategy, stronger commitment to policy reforms under the Extended Credit Facility supported program and timely implementation will be essential to mobilize both domestic and external funding and to avoid endangering Liberia’s fragile macroeconomic foundations.
