Liberia’s economy, institutions, and human capacity were completely devastated by the country’s 14-year civil war, which ended in 2003. Since then, this West African country of 3 million people has made significant progress despite considerable challenges and risks that remain. It has held elections, re-established a public financial management system, begun rebuilding public sector institutions, reestablished the delivery of some essential public services and laid the foundations for a local government system.

The government has made great strides over the past year. The clearance of more than $1.5 billion in arrears with the World Bank, the IMF, and the African Development Bank has opened the door for full development programs with the international financial institutions and unblocked the path to full debt relief under the Multilateral Debt Reduction Initiative. Prospects are good for settling a large commercial debt inherited from past regimes. In addition, Liberia has shown its commitment to maintaining its strong macroeconomic program and the good governance reforms and anti-corruption efforts that underpinned a first development policy operation under the World Bank’s new programme.

Development Policy

The government’s first full Poverty Reduction Strategy (PRS), introduced in March 2008, covers the period 2008–2011 and is based on extensive consultations and a thorough poverty analysis. The PRS has four core strategic areas of intervention: peace and security; economic revitalization; governance and rule of law; and infrastructure and basic services. In addition, it pursues a number of priority crosscutting themes, including gender equity, peace-building, environmental issues, HIV and AIDS, children and youth, and monitoring and evaluation (M&E).

Bank Group Strategy

The African Development Bank’s Country Assistance Strategy for Liberia was developed and is managed jointly with the World Bank and the International Finance Corporation prepared. The outlines both lending and non-lending support planned for Liberia by the AfDB and the World Bank over the period July 2008-June 2011.

A twelve-month Joint Interim Strategy for mid-2007 to mid-2008 provided a framework for the AfDB and the World Bank Group to support Liberia through Interim Poverty Reduction Strategy (PRS). The Interim Strategy focused on rebuilding the shattered institutions of the state, as well as infrastructure desperately needed to jump-start economic growth. Most of the activities pursued under this strategy are still in progress.

The African Development Bank resumed its full support to Liberia, putting in place more than $39 million for economic governance reform, road rehabilitation, rehabilitation and extension of water supply and sanitation, and governance of natural resources. An equity investment through the African Development Bank’s private sector window supports microfinance institutions and small and medium size enterprises.