Poverty Reduction Support Credit III

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This program document proposes a Third Poverty Reduction Support Development Policy Operation (PRSDPO-III) to the Republic of Liberia for SDR 28.7 million (US$40 million equivalent) in grants which includes US$8 million from the Crisis Response Window (CRW). The increase in the amount of the operation from the initial US$20 million credit is intended to support the government’s strong policy efforts to adjust to the twin shocks from the Ebola crisis and the slump in commodity prices in a way that builds resilience and contains the debt. The operation is the third in a programmatic series of four single-tranche operations to support the implementation of the government’s Agenda for Transformation (AfT), which remains Liberia’s extant medium-term strategy even in the aftermath of the Ebola crisis. Liberia’s primary development challenges, which the AfT launched in 2012 aims to address, relate to sustaining the peace, achieving economic transformation, developing human capital and improving governance and public institutions. Addressing a history of exclusion, inequality and corruption is critical to sustaining the peace in Liberia following nearly 15 years of conflict. This challenge is complicated by the exit of the United Nations Mission in Liberia (UNMIL) and the limited fiscal space for scaling up the government’s security apparatus. Economic transformation, critical for achieving inclusive growth is constrained by weak infrastructure, including electricity, roads and telecommunication that limits connectivity to markets, and consequently increases fragility. Liberia’s low level of human capital development also limits access to economic opportunities. To support the government in addressing the primary development challenges, the operation focuses on three principal areas: (i) governance and civil service reforms; (ii) economic transformation; and (iii) human capital development. Within these three areas, the operation is selective of reforms that directly or indirectly address the issues of fragility and conflict. Consequently, the operation focuses on reforms that are expected to contribute to: (i) improving transparency in key aspects of government operation; (ii) increasing accountability in the management of public assets and reducing opportunity for corruption; (iii) building capacity for equitable service delivery, and (iv) enhancing inclusive growth and employment opportunities.