4 bureau for africa i 4 - pdf.usaid.gov
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4
BUREAU FOR AFRICA I
4
LIBERIA
LIBERIA PROGRAM GRANT
PROJECT NUMBER 669-K-602 U
Authorizrtion Piackge
IrojeIct As ii nce Authorization Document
Atilt i a 17 19HOoI)lIlDocermbfr
4
ACTION MEMORANDUM FOR THE AS ISTA T ADMINISTRATOR FOR AFRICA
FROM AAAAFRDR John W Koehring
SUBJECT Liberia Program Grant (669-K-602)
Problem Your approval is required to execute a program grant(cash) of $7 million from the ESF appropriation to the Republicof Liberia
Discussion A $5 million program grant was provided to the Government of Liberia in August 1980 The purpose of this grant was to help the Liberian Government overcome an immediate fiscal crisis meet its international obligations and maintain its development capability
Since that time Liberias economic situation has deteriorated The inexperience of Liberias new Government has led to excesshysive expenditures and reduced international and local business confidence which in turn has led to lost iinestment capitalflight declining credit availabilities and a rapidly increasing budget deficit
The Liberian Government now realizes the seriousness of the problem and the need for drastic corrective measures As a result the Government has concluded an agreement with theInternational Monetary Fund (IMF) which establishes a programwhich if successful will stabilize Liberias economy
However a period of time is likely to pass before this econoshymic stabilization program can take hold and the economic decline can be halted During this period Government revenues will not be adequate to continue ongoing development programs or even maintain existing development capabilities The purposeof this program grant is to help provide the Government of Liberia with the resources to meet its minimal fiscal requireshyments until the stabilization program begins to take hold
The prcvision of this program grant will strengthen USLiberianrelations by once again illustrating our willingness to come toLiberias aid in their time of greatest need It will also reconfirm the wisdom of Liberias present policy of maintainingclose ties with free world economic and financial systemsTherefore this grant is in direct support of US immediate and long-term interests in Liberia
While it is in the bes-t interest of the United Statre to show support to Liboria during the iminediate crisis e must continue to minimize vntang emnt in Liberias day-to day political process By prov1dinq our a I s taw- as (Jnera I hutdg 0t supportto the development minintries and by defining this support atan expression of US desire to annint in the building of Liberias
-2shy
future we are able to assist in meeting Liberias immediate problem and promote equitable economic and social development without becoming too closely identified with any individual or faction
It is proposed that upon the meeting of the conditions preceshydent contained in a Grant Agreement $7 million be immediately transferred into a special bank account owned by the Government of Liberia Disbursements from this account will be used to meet the immediate needs of selected development-oriented Minisshytries It is anticipated that disbursements from this account will be completed within 30 to 60 days of the signing of the Crant Agreement
A special covenant will be included in the Grant Agreement reaffirming that the GOL will provide the funds required to support certain development projects
On nncember 1 1980 the Congress was notified of our intent to provioe a $7 million cash grant to the GOL The waiting period expired on December 15 1980 with no congressional objections having been raised
Mr Dante De Antonio USAIDLiberia Controller will be the field manager of the grant Mr Edward H Smith Jr AFRDRCAWARAP will be the responsible officer in AIDW
Recommendation That you sign the attached PAAD and thereby authorize the proposed program grant (cash)
Attachment as
Clearances AFRDHCAWAPAP ESmi th bull AFRDRCAWARAPL3ond AFRCWA FScordato_______ AFRDRSDP Jilester AFRDPFM SLiapi s GCAFREDragon bull AFRDR NCohen i
Drafted byAFPIDPCAWARAPESmlthcel121680
___CLASSIFICATION AFR- 8 1-2 AIo IIO-I
1 PAAD NO
DEPARTMENT OF STATE AFR-81-2AGENCY FOR a COUNTRY
INTERNATIONAL DEVELOPMENT ILiberia 8 CATEGONY
PAAD PROGRAM ASSISTANCE Program Grant (Cash) - 669-K-602 APPROVAL DOCUMENT ProgramGrant_(Cash)_669-K_602
4 0eAr ~121780
S1Too4 OYM CHANCE NO
Mrs Goler T But(her AAAFR 6aVI INCREASE
TO as TAKEN FROMMr John W Koehring AAAAFRDR 9 APPROV1L NEQUEST[O FOR COMITMNT OF 10 APPROPRIATION - ALLOTMENTS 7000000 72-1111-037 137-61-698-00-50-11
Is TYPE FUNOING 111 LCCAL CURqINCY ARRANGEMENT ETIMATSII O DELIVERY PERIOD I4 TANSACTION1 ISiTVCLOAN
C]Lo r-NFORMA C-FORMAL MNON DATE 6 1980-Feb 11 Deec 16 19801S COMMOOITIRS FINANCIO
tIo PERMITTELD SO IRC4 17 ESTIMATO SOURCE
US only US
Limited FW Industrialised CountriesFro World LocalCash $7000000 Other
1I SUMMARY DES1CRIPTION
The purpose of this program grant (cash) is to assist the Government ofLiberia to weather its current fiscal crisis until the IMF-sponsored stabilizshytion program can take effect This grant will enable the Government of Liberiato keep its development capability intict during this interim period
The grant will have a favorable impact on USLiberian relations byonce again showing our willingness to help during a period of crisis Howeverit is structured to minimize US entanglement in Liberias day-to-day political process
IS I ARANCIII 51e SO CTOA11DRCAWARApESmt h F4- AP OIvD flAPPROVII0 VRDR AWARAPLBo -1(- g ITi ~ -
L)PA SAL 4 hV Fom deg1
CCAFRDron 7Aiint Admintrator forAfrica
CLASSIP ICATIONI
TABLE OF CONTENTS
Page
I Summary and Recommendation 1
A Recommendations and Implementation Plan 1 B Summary Justification i
II Current Economic Situation 3
A General 3B Government Budget 3 C IMF Stabilization Package 4 D Revenues 5 E Expenditures 6 F Government Cash Flow 6 G Debt Servicing and Rescheduling 8 H The Oil Bill 9 I The Monetary Situation and Private Sector Liquidity 10
III AID Response 11
IV Proposed US Assistance 11
A Implementation Procedures 11 B Special Covenants 12
Annex A - Proposed List of Ministries to Receive 13 General Budget Support Under Program Grant (Cash)
Annex B - Proposed List of Projects to be Included in the 14 Special Covenant to the Grant Agreement
Annex C - Liberias Balance of Payments 1976-1979
Annex D - Statutory Check List
Annex E - Initial Environmental Examination
I~Summary and Recommendations
A Recommendation and Implementation Plan
Authorization ofaaProgram Grant (cash) to the Government of Liberia in the amount of $7 million is recommended Thiagrant will be obligated upon the signing of a grant agreement with the Government of LiberA (GL) The grant agreeent will provide uponsatisfaction of the necessary conditions precedentforimmediate disbursement of $7million into a specialbank account owned by the GOL
Disbursements from this account will be made for general budget support for the development ministries listed inAnnex A It is anticipated that all disburseshyments from the special accountl financed by this programgrant (cash) will be completed within 30 to 60 days after the signing of the grant agreement Within 120 days after the signing of the grant agreementr the GOL will provideUSAIDLiberia with a report of all expenditures made from this account
A special covenant in the Grant Agreement will reaffirm the GObs willingness and ability to meet its financial obligations for selected joint GObAIDdevelopment projects The covenant will contain an agreed upon list of such projects Annex B contains a proposed list of projects to be included in the covenant
B Summary of Justification
InAugust 1980 a five million dollar program grantwas provided to the Government of Liberia The granthelped the Liberian Government overcome an imediatefiscal crisis maintain its development capability and signaled continued US interest inand support of the future development of the country Humerous publicstatements by important members of the Liberian governshyment indicate their appreciation for the grant and theimportance they place upon continued close ties to the United States
Since August Liberias fiscal crisis has worsened even as pregrams were being developed to strengthen thecountrys economy The major reason for the continuingcrisis was the inexperience of Liberias now Government
which resulted inexcessive expenditures and reduced
international and local business confidence This combination of factors led to continued capital flighta-reduction in-avail able-cred i t4lostnvestmentad rapidly growing public deficit
As these ominous trends continued an awareness was growing within the Liberian Government of the seriousness of the problem and the drastic corrective measures needed if the countrys economy was not to be overwhelmed With the assistance of the international Monetary Fund (IMtF) the Government has designed and implemented a program which if successful will stabilize the fiscal situation and create a framework in which the private sector can resume normal activity -
However before the Governments fiscal program can take effect one can expect a period of time during which the economic downturn will continue to worsen and available Government revenues from both internal and foreign sources will not be adequate to continue ongoing developmenttprograms or even maintain existing Government capabilitis The purpose of this program grant is to help provide the Government of Liberia with funds to meet its minimal fiscal requirements until Government revenues adequate for these requirements are realized as a result of the countrys new fiscal policies
The timely provision of the proposed program grant will strengthen USLiberian relationa by once again illusturating our ability to effectively respond to Liberias time of crLsis and reconfirm the wisdom of Liberias present policy of laintaining close ties with the free world economic and financial systems All of this is In direct support of immediate and long term US interests inLiberia
While itis in the best interest of the United States to show support for Liberia during the immediate crisis we continue to minimize entanglement inLiberias day-to-day political prooess By providing our assisshytance as general budget support to the developmentministries and by defining this support as an expressionof American assistance inLiberias future we are able to assist inmeeting Liberias immediate problem and promote equitable economic and social developmentwithout becoming too closely identified with anyindividual or faction
The fiscal crinis and the governents program for overshycoming itare detailed in section II
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
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a
a
madCurr by adconof Station Donbo98I
-
44$1
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prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
ACTION MEMORANDUM FOR THE AS ISTA T ADMINISTRATOR FOR AFRICA
FROM AAAAFRDR John W Koehring
SUBJECT Liberia Program Grant (669-K-602)
Problem Your approval is required to execute a program grant(cash) of $7 million from the ESF appropriation to the Republicof Liberia
Discussion A $5 million program grant was provided to the Government of Liberia in August 1980 The purpose of this grant was to help the Liberian Government overcome an immediate fiscal crisis meet its international obligations and maintain its development capability
Since that time Liberias economic situation has deteriorated The inexperience of Liberias new Government has led to excesshysive expenditures and reduced international and local business confidence which in turn has led to lost iinestment capitalflight declining credit availabilities and a rapidly increasing budget deficit
The Liberian Government now realizes the seriousness of the problem and the need for drastic corrective measures As a result the Government has concluded an agreement with theInternational Monetary Fund (IMF) which establishes a programwhich if successful will stabilize Liberias economy
However a period of time is likely to pass before this econoshymic stabilization program can take hold and the economic decline can be halted During this period Government revenues will not be adequate to continue ongoing development programs or even maintain existing development capabilities The purposeof this program grant is to help provide the Government of Liberia with the resources to meet its minimal fiscal requireshyments until the stabilization program begins to take hold
The prcvision of this program grant will strengthen USLiberianrelations by once again illustrating our willingness to come toLiberias aid in their time of greatest need It will also reconfirm the wisdom of Liberias present policy of maintainingclose ties with free world economic and financial systemsTherefore this grant is in direct support of US immediate and long-term interests in Liberia
While it is in the bes-t interest of the United Statre to show support to Liboria during the iminediate crisis e must continue to minimize vntang emnt in Liberias day-to day political process By prov1dinq our a I s taw- as (Jnera I hutdg 0t supportto the development minintries and by defining this support atan expression of US desire to annint in the building of Liberias
-2shy
future we are able to assist in meeting Liberias immediate problem and promote equitable economic and social development without becoming too closely identified with any individual or faction
It is proposed that upon the meeting of the conditions preceshydent contained in a Grant Agreement $7 million be immediately transferred into a special bank account owned by the Government of Liberia Disbursements from this account will be used to meet the immediate needs of selected development-oriented Minisshytries It is anticipated that disbursements from this account will be completed within 30 to 60 days of the signing of the Crant Agreement
A special covenant will be included in the Grant Agreement reaffirming that the GOL will provide the funds required to support certain development projects
On nncember 1 1980 the Congress was notified of our intent to provioe a $7 million cash grant to the GOL The waiting period expired on December 15 1980 with no congressional objections having been raised
Mr Dante De Antonio USAIDLiberia Controller will be the field manager of the grant Mr Edward H Smith Jr AFRDRCAWARAP will be the responsible officer in AIDW
Recommendation That you sign the attached PAAD and thereby authorize the proposed program grant (cash)
Attachment as
Clearances AFRDHCAWAPAP ESmi th bull AFRDRCAWARAPL3ond AFRCWA FScordato_______ AFRDRSDP Jilester AFRDPFM SLiapi s GCAFREDragon bull AFRDR NCohen i
Drafted byAFPIDPCAWARAPESmlthcel121680
___CLASSIFICATION AFR- 8 1-2 AIo IIO-I
1 PAAD NO
DEPARTMENT OF STATE AFR-81-2AGENCY FOR a COUNTRY
INTERNATIONAL DEVELOPMENT ILiberia 8 CATEGONY
PAAD PROGRAM ASSISTANCE Program Grant (Cash) - 669-K-602 APPROVAL DOCUMENT ProgramGrant_(Cash)_669-K_602
4 0eAr ~121780
S1Too4 OYM CHANCE NO
Mrs Goler T But(her AAAFR 6aVI INCREASE
TO as TAKEN FROMMr John W Koehring AAAAFRDR 9 APPROV1L NEQUEST[O FOR COMITMNT OF 10 APPROPRIATION - ALLOTMENTS 7000000 72-1111-037 137-61-698-00-50-11
Is TYPE FUNOING 111 LCCAL CURqINCY ARRANGEMENT ETIMATSII O DELIVERY PERIOD I4 TANSACTION1 ISiTVCLOAN
C]Lo r-NFORMA C-FORMAL MNON DATE 6 1980-Feb 11 Deec 16 19801S COMMOOITIRS FINANCIO
tIo PERMITTELD SO IRC4 17 ESTIMATO SOURCE
US only US
Limited FW Industrialised CountriesFro World LocalCash $7000000 Other
1I SUMMARY DES1CRIPTION
The purpose of this program grant (cash) is to assist the Government ofLiberia to weather its current fiscal crisis until the IMF-sponsored stabilizshytion program can take effect This grant will enable the Government of Liberiato keep its development capability intict during this interim period
The grant will have a favorable impact on USLiberian relations byonce again showing our willingness to help during a period of crisis Howeverit is structured to minimize US entanglement in Liberias day-to-day political process
IS I ARANCIII 51e SO CTOA11DRCAWARApESmt h F4- AP OIvD flAPPROVII0 VRDR AWARAPLBo -1(- g ITi ~ -
L)PA SAL 4 hV Fom deg1
CCAFRDron 7Aiint Admintrator forAfrica
CLASSIP ICATIONI
TABLE OF CONTENTS
Page
I Summary and Recommendation 1
A Recommendations and Implementation Plan 1 B Summary Justification i
II Current Economic Situation 3
A General 3B Government Budget 3 C IMF Stabilization Package 4 D Revenues 5 E Expenditures 6 F Government Cash Flow 6 G Debt Servicing and Rescheduling 8 H The Oil Bill 9 I The Monetary Situation and Private Sector Liquidity 10
III AID Response 11
IV Proposed US Assistance 11
A Implementation Procedures 11 B Special Covenants 12
Annex A - Proposed List of Ministries to Receive 13 General Budget Support Under Program Grant (Cash)
Annex B - Proposed List of Projects to be Included in the 14 Special Covenant to the Grant Agreement
Annex C - Liberias Balance of Payments 1976-1979
Annex D - Statutory Check List
Annex E - Initial Environmental Examination
I~Summary and Recommendations
A Recommendation and Implementation Plan
Authorization ofaaProgram Grant (cash) to the Government of Liberia in the amount of $7 million is recommended Thiagrant will be obligated upon the signing of a grant agreement with the Government of LiberA (GL) The grant agreeent will provide uponsatisfaction of the necessary conditions precedentforimmediate disbursement of $7million into a specialbank account owned by the GOL
Disbursements from this account will be made for general budget support for the development ministries listed inAnnex A It is anticipated that all disburseshyments from the special accountl financed by this programgrant (cash) will be completed within 30 to 60 days after the signing of the grant agreement Within 120 days after the signing of the grant agreementr the GOL will provideUSAIDLiberia with a report of all expenditures made from this account
A special covenant in the Grant Agreement will reaffirm the GObs willingness and ability to meet its financial obligations for selected joint GObAIDdevelopment projects The covenant will contain an agreed upon list of such projects Annex B contains a proposed list of projects to be included in the covenant
B Summary of Justification
InAugust 1980 a five million dollar program grantwas provided to the Government of Liberia The granthelped the Liberian Government overcome an imediatefiscal crisis maintain its development capability and signaled continued US interest inand support of the future development of the country Humerous publicstatements by important members of the Liberian governshyment indicate their appreciation for the grant and theimportance they place upon continued close ties to the United States
Since August Liberias fiscal crisis has worsened even as pregrams were being developed to strengthen thecountrys economy The major reason for the continuingcrisis was the inexperience of Liberias now Government
which resulted inexcessive expenditures and reduced
international and local business confidence This combination of factors led to continued capital flighta-reduction in-avail able-cred i t4lostnvestmentad rapidly growing public deficit
As these ominous trends continued an awareness was growing within the Liberian Government of the seriousness of the problem and the drastic corrective measures needed if the countrys economy was not to be overwhelmed With the assistance of the international Monetary Fund (IMtF) the Government has designed and implemented a program which if successful will stabilize the fiscal situation and create a framework in which the private sector can resume normal activity -
However before the Governments fiscal program can take effect one can expect a period of time during which the economic downturn will continue to worsen and available Government revenues from both internal and foreign sources will not be adequate to continue ongoing developmenttprograms or even maintain existing Government capabilitis The purpose of this program grant is to help provide the Government of Liberia with funds to meet its minimal fiscal requirements until Government revenues adequate for these requirements are realized as a result of the countrys new fiscal policies
The timely provision of the proposed program grant will strengthen USLiberian relationa by once again illusturating our ability to effectively respond to Liberias time of crLsis and reconfirm the wisdom of Liberias present policy of laintaining close ties with the free world economic and financial systems All of this is In direct support of immediate and long term US interests inLiberia
While itis in the best interest of the United States to show support for Liberia during the immediate crisis we continue to minimize entanglement inLiberias day-to-day political prooess By providing our assisshytance as general budget support to the developmentministries and by defining this support as an expressionof American assistance inLiberias future we are able to assist inmeeting Liberias immediate problem and promote equitable economic and social developmentwithout becoming too closely identified with anyindividual or faction
The fiscal crinis and the governents program for overshycoming itare detailed in section II
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
thog
sove
A4 deeirtn ecnoi an isa4statooebr181fredteGvrmn to faeahrac ispe-n iclc4ss
final~~ anlss4sapolmwihol ieih
Exera 4oeoffnnilassac
fIiei h
a
a
madCurr by adconof Station Donbo98I
-
44$1
V
prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
-2shy
future we are able to assist in meeting Liberias immediate problem and promote equitable economic and social development without becoming too closely identified with any individual or faction
It is proposed that upon the meeting of the conditions preceshydent contained in a Grant Agreement $7 million be immediately transferred into a special bank account owned by the Government of Liberia Disbursements from this account will be used to meet the immediate needs of selected development-oriented Minisshytries It is anticipated that disbursements from this account will be completed within 30 to 60 days of the signing of the Crant Agreement
A special covenant will be included in the Grant Agreement reaffirming that the GOL will provide the funds required to support certain development projects
On nncember 1 1980 the Congress was notified of our intent to provioe a $7 million cash grant to the GOL The waiting period expired on December 15 1980 with no congressional objections having been raised
Mr Dante De Antonio USAIDLiberia Controller will be the field manager of the grant Mr Edward H Smith Jr AFRDRCAWARAP will be the responsible officer in AIDW
Recommendation That you sign the attached PAAD and thereby authorize the proposed program grant (cash)
Attachment as
Clearances AFRDHCAWAPAP ESmi th bull AFRDRCAWARAPL3ond AFRCWA FScordato_______ AFRDRSDP Jilester AFRDPFM SLiapi s GCAFREDragon bull AFRDR NCohen i
Drafted byAFPIDPCAWARAPESmlthcel121680
___CLASSIFICATION AFR- 8 1-2 AIo IIO-I
1 PAAD NO
DEPARTMENT OF STATE AFR-81-2AGENCY FOR a COUNTRY
INTERNATIONAL DEVELOPMENT ILiberia 8 CATEGONY
PAAD PROGRAM ASSISTANCE Program Grant (Cash) - 669-K-602 APPROVAL DOCUMENT ProgramGrant_(Cash)_669-K_602
4 0eAr ~121780
S1Too4 OYM CHANCE NO
Mrs Goler T But(her AAAFR 6aVI INCREASE
TO as TAKEN FROMMr John W Koehring AAAAFRDR 9 APPROV1L NEQUEST[O FOR COMITMNT OF 10 APPROPRIATION - ALLOTMENTS 7000000 72-1111-037 137-61-698-00-50-11
Is TYPE FUNOING 111 LCCAL CURqINCY ARRANGEMENT ETIMATSII O DELIVERY PERIOD I4 TANSACTION1 ISiTVCLOAN
C]Lo r-NFORMA C-FORMAL MNON DATE 6 1980-Feb 11 Deec 16 19801S COMMOOITIRS FINANCIO
tIo PERMITTELD SO IRC4 17 ESTIMATO SOURCE
US only US
Limited FW Industrialised CountriesFro World LocalCash $7000000 Other
1I SUMMARY DES1CRIPTION
The purpose of this program grant (cash) is to assist the Government ofLiberia to weather its current fiscal crisis until the IMF-sponsored stabilizshytion program can take effect This grant will enable the Government of Liberiato keep its development capability intict during this interim period
The grant will have a favorable impact on USLiberian relations byonce again showing our willingness to help during a period of crisis Howeverit is structured to minimize US entanglement in Liberias day-to-day political process
IS I ARANCIII 51e SO CTOA11DRCAWARApESmt h F4- AP OIvD flAPPROVII0 VRDR AWARAPLBo -1(- g ITi ~ -
L)PA SAL 4 hV Fom deg1
CCAFRDron 7Aiint Admintrator forAfrica
CLASSIP ICATIONI
TABLE OF CONTENTS
Page
I Summary and Recommendation 1
A Recommendations and Implementation Plan 1 B Summary Justification i
II Current Economic Situation 3
A General 3B Government Budget 3 C IMF Stabilization Package 4 D Revenues 5 E Expenditures 6 F Government Cash Flow 6 G Debt Servicing and Rescheduling 8 H The Oil Bill 9 I The Monetary Situation and Private Sector Liquidity 10
III AID Response 11
IV Proposed US Assistance 11
A Implementation Procedures 11 B Special Covenants 12
Annex A - Proposed List of Ministries to Receive 13 General Budget Support Under Program Grant (Cash)
Annex B - Proposed List of Projects to be Included in the 14 Special Covenant to the Grant Agreement
Annex C - Liberias Balance of Payments 1976-1979
Annex D - Statutory Check List
Annex E - Initial Environmental Examination
I~Summary and Recommendations
A Recommendation and Implementation Plan
Authorization ofaaProgram Grant (cash) to the Government of Liberia in the amount of $7 million is recommended Thiagrant will be obligated upon the signing of a grant agreement with the Government of LiberA (GL) The grant agreeent will provide uponsatisfaction of the necessary conditions precedentforimmediate disbursement of $7million into a specialbank account owned by the GOL
Disbursements from this account will be made for general budget support for the development ministries listed inAnnex A It is anticipated that all disburseshyments from the special accountl financed by this programgrant (cash) will be completed within 30 to 60 days after the signing of the grant agreement Within 120 days after the signing of the grant agreementr the GOL will provideUSAIDLiberia with a report of all expenditures made from this account
A special covenant in the Grant Agreement will reaffirm the GObs willingness and ability to meet its financial obligations for selected joint GObAIDdevelopment projects The covenant will contain an agreed upon list of such projects Annex B contains a proposed list of projects to be included in the covenant
B Summary of Justification
InAugust 1980 a five million dollar program grantwas provided to the Government of Liberia The granthelped the Liberian Government overcome an imediatefiscal crisis maintain its development capability and signaled continued US interest inand support of the future development of the country Humerous publicstatements by important members of the Liberian governshyment indicate their appreciation for the grant and theimportance they place upon continued close ties to the United States
Since August Liberias fiscal crisis has worsened even as pregrams were being developed to strengthen thecountrys economy The major reason for the continuingcrisis was the inexperience of Liberias now Government
which resulted inexcessive expenditures and reduced
international and local business confidence This combination of factors led to continued capital flighta-reduction in-avail able-cred i t4lostnvestmentad rapidly growing public deficit
As these ominous trends continued an awareness was growing within the Liberian Government of the seriousness of the problem and the drastic corrective measures needed if the countrys economy was not to be overwhelmed With the assistance of the international Monetary Fund (IMtF) the Government has designed and implemented a program which if successful will stabilize the fiscal situation and create a framework in which the private sector can resume normal activity -
However before the Governments fiscal program can take effect one can expect a period of time during which the economic downturn will continue to worsen and available Government revenues from both internal and foreign sources will not be adequate to continue ongoing developmenttprograms or even maintain existing Government capabilitis The purpose of this program grant is to help provide the Government of Liberia with funds to meet its minimal fiscal requirements until Government revenues adequate for these requirements are realized as a result of the countrys new fiscal policies
The timely provision of the proposed program grant will strengthen USLiberian relationa by once again illusturating our ability to effectively respond to Liberias time of crLsis and reconfirm the wisdom of Liberias present policy of laintaining close ties with the free world economic and financial systems All of this is In direct support of immediate and long term US interests inLiberia
While itis in the best interest of the United States to show support for Liberia during the immediate crisis we continue to minimize entanglement inLiberias day-to-day political prooess By providing our assisshytance as general budget support to the developmentministries and by defining this support as an expressionof American assistance inLiberias future we are able to assist inmeeting Liberias immediate problem and promote equitable economic and social developmentwithout becoming too closely identified with anyindividual or faction
The fiscal crinis and the governents program for overshycoming itare detailed in section II
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
thog
sove
A4 deeirtn ecnoi an isa4statooebr181fredteGvrmn to faeahrac ispe-n iclc4ss
final~~ anlss4sapolmwihol ieih
Exera 4oeoffnnilassac
fIiei h
a
a
madCurr by adconof Station Donbo98I
-
44$1
V
prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
___CLASSIFICATION AFR- 8 1-2 AIo IIO-I
1 PAAD NO
DEPARTMENT OF STATE AFR-81-2AGENCY FOR a COUNTRY
INTERNATIONAL DEVELOPMENT ILiberia 8 CATEGONY
PAAD PROGRAM ASSISTANCE Program Grant (Cash) - 669-K-602 APPROVAL DOCUMENT ProgramGrant_(Cash)_669-K_602
4 0eAr ~121780
S1Too4 OYM CHANCE NO
Mrs Goler T But(her AAAFR 6aVI INCREASE
TO as TAKEN FROMMr John W Koehring AAAAFRDR 9 APPROV1L NEQUEST[O FOR COMITMNT OF 10 APPROPRIATION - ALLOTMENTS 7000000 72-1111-037 137-61-698-00-50-11
Is TYPE FUNOING 111 LCCAL CURqINCY ARRANGEMENT ETIMATSII O DELIVERY PERIOD I4 TANSACTION1 ISiTVCLOAN
C]Lo r-NFORMA C-FORMAL MNON DATE 6 1980-Feb 11 Deec 16 19801S COMMOOITIRS FINANCIO
tIo PERMITTELD SO IRC4 17 ESTIMATO SOURCE
US only US
Limited FW Industrialised CountriesFro World LocalCash $7000000 Other
1I SUMMARY DES1CRIPTION
The purpose of this program grant (cash) is to assist the Government ofLiberia to weather its current fiscal crisis until the IMF-sponsored stabilizshytion program can take effect This grant will enable the Government of Liberiato keep its development capability intict during this interim period
The grant will have a favorable impact on USLiberian relations byonce again showing our willingness to help during a period of crisis Howeverit is structured to minimize US entanglement in Liberias day-to-day political process
IS I ARANCIII 51e SO CTOA11DRCAWARApESmt h F4- AP OIvD flAPPROVII0 VRDR AWARAPLBo -1(- g ITi ~ -
L)PA SAL 4 hV Fom deg1
CCAFRDron 7Aiint Admintrator forAfrica
CLASSIP ICATIONI
TABLE OF CONTENTS
Page
I Summary and Recommendation 1
A Recommendations and Implementation Plan 1 B Summary Justification i
II Current Economic Situation 3
A General 3B Government Budget 3 C IMF Stabilization Package 4 D Revenues 5 E Expenditures 6 F Government Cash Flow 6 G Debt Servicing and Rescheduling 8 H The Oil Bill 9 I The Monetary Situation and Private Sector Liquidity 10
III AID Response 11
IV Proposed US Assistance 11
A Implementation Procedures 11 B Special Covenants 12
Annex A - Proposed List of Ministries to Receive 13 General Budget Support Under Program Grant (Cash)
Annex B - Proposed List of Projects to be Included in the 14 Special Covenant to the Grant Agreement
Annex C - Liberias Balance of Payments 1976-1979
Annex D - Statutory Check List
Annex E - Initial Environmental Examination
I~Summary and Recommendations
A Recommendation and Implementation Plan
Authorization ofaaProgram Grant (cash) to the Government of Liberia in the amount of $7 million is recommended Thiagrant will be obligated upon the signing of a grant agreement with the Government of LiberA (GL) The grant agreeent will provide uponsatisfaction of the necessary conditions precedentforimmediate disbursement of $7million into a specialbank account owned by the GOL
Disbursements from this account will be made for general budget support for the development ministries listed inAnnex A It is anticipated that all disburseshyments from the special accountl financed by this programgrant (cash) will be completed within 30 to 60 days after the signing of the grant agreement Within 120 days after the signing of the grant agreementr the GOL will provideUSAIDLiberia with a report of all expenditures made from this account
A special covenant in the Grant Agreement will reaffirm the GObs willingness and ability to meet its financial obligations for selected joint GObAIDdevelopment projects The covenant will contain an agreed upon list of such projects Annex B contains a proposed list of projects to be included in the covenant
B Summary of Justification
InAugust 1980 a five million dollar program grantwas provided to the Government of Liberia The granthelped the Liberian Government overcome an imediatefiscal crisis maintain its development capability and signaled continued US interest inand support of the future development of the country Humerous publicstatements by important members of the Liberian governshyment indicate their appreciation for the grant and theimportance they place upon continued close ties to the United States
Since August Liberias fiscal crisis has worsened even as pregrams were being developed to strengthen thecountrys economy The major reason for the continuingcrisis was the inexperience of Liberias now Government
which resulted inexcessive expenditures and reduced
international and local business confidence This combination of factors led to continued capital flighta-reduction in-avail able-cred i t4lostnvestmentad rapidly growing public deficit
As these ominous trends continued an awareness was growing within the Liberian Government of the seriousness of the problem and the drastic corrective measures needed if the countrys economy was not to be overwhelmed With the assistance of the international Monetary Fund (IMtF) the Government has designed and implemented a program which if successful will stabilize the fiscal situation and create a framework in which the private sector can resume normal activity -
However before the Governments fiscal program can take effect one can expect a period of time during which the economic downturn will continue to worsen and available Government revenues from both internal and foreign sources will not be adequate to continue ongoing developmenttprograms or even maintain existing Government capabilitis The purpose of this program grant is to help provide the Government of Liberia with funds to meet its minimal fiscal requirements until Government revenues adequate for these requirements are realized as a result of the countrys new fiscal policies
The timely provision of the proposed program grant will strengthen USLiberian relationa by once again illusturating our ability to effectively respond to Liberias time of crLsis and reconfirm the wisdom of Liberias present policy of laintaining close ties with the free world economic and financial systems All of this is In direct support of immediate and long term US interests inLiberia
While itis in the best interest of the United States to show support for Liberia during the immediate crisis we continue to minimize entanglement inLiberias day-to-day political prooess By providing our assisshytance as general budget support to the developmentministries and by defining this support as an expressionof American assistance inLiberias future we are able to assist inmeeting Liberias immediate problem and promote equitable economic and social developmentwithout becoming too closely identified with anyindividual or faction
The fiscal crinis and the governents program for overshycoming itare detailed in section II
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
thog
sove
A4 deeirtn ecnoi an isa4statooebr181fredteGvrmn to faeahrac ispe-n iclc4ss
final~~ anlss4sapolmwihol ieih
Exera 4oeoffnnilassac
fIiei h
a
a
madCurr by adconof Station Donbo98I
-
44$1
V
prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
TABLE OF CONTENTS
Page
I Summary and Recommendation 1
A Recommendations and Implementation Plan 1 B Summary Justification i
II Current Economic Situation 3
A General 3B Government Budget 3 C IMF Stabilization Package 4 D Revenues 5 E Expenditures 6 F Government Cash Flow 6 G Debt Servicing and Rescheduling 8 H The Oil Bill 9 I The Monetary Situation and Private Sector Liquidity 10
III AID Response 11
IV Proposed US Assistance 11
A Implementation Procedures 11 B Special Covenants 12
Annex A - Proposed List of Ministries to Receive 13 General Budget Support Under Program Grant (Cash)
Annex B - Proposed List of Projects to be Included in the 14 Special Covenant to the Grant Agreement
Annex C - Liberias Balance of Payments 1976-1979
Annex D - Statutory Check List
Annex E - Initial Environmental Examination
I~Summary and Recommendations
A Recommendation and Implementation Plan
Authorization ofaaProgram Grant (cash) to the Government of Liberia in the amount of $7 million is recommended Thiagrant will be obligated upon the signing of a grant agreement with the Government of LiberA (GL) The grant agreeent will provide uponsatisfaction of the necessary conditions precedentforimmediate disbursement of $7million into a specialbank account owned by the GOL
Disbursements from this account will be made for general budget support for the development ministries listed inAnnex A It is anticipated that all disburseshyments from the special accountl financed by this programgrant (cash) will be completed within 30 to 60 days after the signing of the grant agreement Within 120 days after the signing of the grant agreementr the GOL will provideUSAIDLiberia with a report of all expenditures made from this account
A special covenant in the Grant Agreement will reaffirm the GObs willingness and ability to meet its financial obligations for selected joint GObAIDdevelopment projects The covenant will contain an agreed upon list of such projects Annex B contains a proposed list of projects to be included in the covenant
B Summary of Justification
InAugust 1980 a five million dollar program grantwas provided to the Government of Liberia The granthelped the Liberian Government overcome an imediatefiscal crisis maintain its development capability and signaled continued US interest inand support of the future development of the country Humerous publicstatements by important members of the Liberian governshyment indicate their appreciation for the grant and theimportance they place upon continued close ties to the United States
Since August Liberias fiscal crisis has worsened even as pregrams were being developed to strengthen thecountrys economy The major reason for the continuingcrisis was the inexperience of Liberias now Government
which resulted inexcessive expenditures and reduced
international and local business confidence This combination of factors led to continued capital flighta-reduction in-avail able-cred i t4lostnvestmentad rapidly growing public deficit
As these ominous trends continued an awareness was growing within the Liberian Government of the seriousness of the problem and the drastic corrective measures needed if the countrys economy was not to be overwhelmed With the assistance of the international Monetary Fund (IMtF) the Government has designed and implemented a program which if successful will stabilize the fiscal situation and create a framework in which the private sector can resume normal activity -
However before the Governments fiscal program can take effect one can expect a period of time during which the economic downturn will continue to worsen and available Government revenues from both internal and foreign sources will not be adequate to continue ongoing developmenttprograms or even maintain existing Government capabilitis The purpose of this program grant is to help provide the Government of Liberia with funds to meet its minimal fiscal requirements until Government revenues adequate for these requirements are realized as a result of the countrys new fiscal policies
The timely provision of the proposed program grant will strengthen USLiberian relationa by once again illusturating our ability to effectively respond to Liberias time of crLsis and reconfirm the wisdom of Liberias present policy of laintaining close ties with the free world economic and financial systems All of this is In direct support of immediate and long term US interests inLiberia
While itis in the best interest of the United States to show support for Liberia during the immediate crisis we continue to minimize entanglement inLiberias day-to-day political prooess By providing our assisshytance as general budget support to the developmentministries and by defining this support as an expressionof American assistance inLiberias future we are able to assist inmeeting Liberias immediate problem and promote equitable economic and social developmentwithout becoming too closely identified with anyindividual or faction
The fiscal crinis and the governents program for overshycoming itare detailed in section II
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
thog
sove
A4 deeirtn ecnoi an isa4statooebr181fredteGvrmn to faeahrac ispe-n iclc4ss
final~~ anlss4sapolmwihol ieih
Exera 4oeoffnnilassac
fIiei h
a
a
madCurr by adconof Station Donbo98I
-
44$1
V
prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
I~Summary and Recommendations
A Recommendation and Implementation Plan
Authorization ofaaProgram Grant (cash) to the Government of Liberia in the amount of $7 million is recommended Thiagrant will be obligated upon the signing of a grant agreement with the Government of LiberA (GL) The grant agreeent will provide uponsatisfaction of the necessary conditions precedentforimmediate disbursement of $7million into a specialbank account owned by the GOL
Disbursements from this account will be made for general budget support for the development ministries listed inAnnex A It is anticipated that all disburseshyments from the special accountl financed by this programgrant (cash) will be completed within 30 to 60 days after the signing of the grant agreement Within 120 days after the signing of the grant agreementr the GOL will provideUSAIDLiberia with a report of all expenditures made from this account
A special covenant in the Grant Agreement will reaffirm the GObs willingness and ability to meet its financial obligations for selected joint GObAIDdevelopment projects The covenant will contain an agreed upon list of such projects Annex B contains a proposed list of projects to be included in the covenant
B Summary of Justification
InAugust 1980 a five million dollar program grantwas provided to the Government of Liberia The granthelped the Liberian Government overcome an imediatefiscal crisis maintain its development capability and signaled continued US interest inand support of the future development of the country Humerous publicstatements by important members of the Liberian governshyment indicate their appreciation for the grant and theimportance they place upon continued close ties to the United States
Since August Liberias fiscal crisis has worsened even as pregrams were being developed to strengthen thecountrys economy The major reason for the continuingcrisis was the inexperience of Liberias now Government
which resulted inexcessive expenditures and reduced
international and local business confidence This combination of factors led to continued capital flighta-reduction in-avail able-cred i t4lostnvestmentad rapidly growing public deficit
As these ominous trends continued an awareness was growing within the Liberian Government of the seriousness of the problem and the drastic corrective measures needed if the countrys economy was not to be overwhelmed With the assistance of the international Monetary Fund (IMtF) the Government has designed and implemented a program which if successful will stabilize the fiscal situation and create a framework in which the private sector can resume normal activity -
However before the Governments fiscal program can take effect one can expect a period of time during which the economic downturn will continue to worsen and available Government revenues from both internal and foreign sources will not be adequate to continue ongoing developmenttprograms or even maintain existing Government capabilitis The purpose of this program grant is to help provide the Government of Liberia with funds to meet its minimal fiscal requirements until Government revenues adequate for these requirements are realized as a result of the countrys new fiscal policies
The timely provision of the proposed program grant will strengthen USLiberian relationa by once again illusturating our ability to effectively respond to Liberias time of crLsis and reconfirm the wisdom of Liberias present policy of laintaining close ties with the free world economic and financial systems All of this is In direct support of immediate and long term US interests inLiberia
While itis in the best interest of the United States to show support for Liberia during the immediate crisis we continue to minimize entanglement inLiberias day-to-day political prooess By providing our assisshytance as general budget support to the developmentministries and by defining this support as an expressionof American assistance inLiberias future we are able to assist inmeeting Liberias immediate problem and promote equitable economic and social developmentwithout becoming too closely identified with anyindividual or faction
The fiscal crinis and the governents program for overshycoming itare detailed in section II
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
thog
sove
A4 deeirtn ecnoi an isa4statooebr181fredteGvrmn to faeahrac ispe-n iclc4ss
final~~ anlss4sapolmwihol ieih
Exera 4oeoffnnilassac
fIiei h
a
a
madCurr by adconof Station Donbo98I
-
44$1
V
prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
international and local business confidence This combination of factors led to continued capital flighta-reduction in-avail able-cred i t4lostnvestmentad rapidly growing public deficit
As these ominous trends continued an awareness was growing within the Liberian Government of the seriousness of the problem and the drastic corrective measures needed if the countrys economy was not to be overwhelmed With the assistance of the international Monetary Fund (IMtF) the Government has designed and implemented a program which if successful will stabilize the fiscal situation and create a framework in which the private sector can resume normal activity -
However before the Governments fiscal program can take effect one can expect a period of time during which the economic downturn will continue to worsen and available Government revenues from both internal and foreign sources will not be adequate to continue ongoing developmenttprograms or even maintain existing Government capabilitis The purpose of this program grant is to help provide the Government of Liberia with funds to meet its minimal fiscal requirements until Government revenues adequate for these requirements are realized as a result of the countrys new fiscal policies
The timely provision of the proposed program grant will strengthen USLiberian relationa by once again illusturating our ability to effectively respond to Liberias time of crLsis and reconfirm the wisdom of Liberias present policy of laintaining close ties with the free world economic and financial systems All of this is In direct support of immediate and long term US interests inLiberia
While itis in the best interest of the United States to show support for Liberia during the immediate crisis we continue to minimize entanglement inLiberias day-to-day political prooess By providing our assisshytance as general budget support to the developmentministries and by defining this support as an expressionof American assistance inLiberias future we are able to assist inmeeting Liberias immediate problem and promote equitable economic and social developmentwithout becoming too closely identified with anyindividual or faction
The fiscal crinis and the governents program for overshycoming itare detailed in section II
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
thog
sove
A4 deeirtn ecnoi an isa4statooebr181fredteGvrmn to faeahrac ispe-n iclc4ss
final~~ anlss4sapolmwihol ieih
Exera 4oeoffnnilassac
fIiei h
a
a
madCurr by adconof Station Donbo98I
-
44$1
V
prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
jj~
44~~444
444 4~4
Current44 Ecoomi
4
Situation
3
444- _ -- General 44 4~
thog
sove
A4 deeirtn ecnoi an isa4statooebr181fredteGvrmn to faeahrac ispe-n iclc4ss
final~~ anlss4sapolmwihol ieih
Exera 4oeoffnnilassac
fIiei h
a
a
madCurr by adconof Station Donbo98I
-
44$1
V
prgam udeer iaih eaoloslad Liicans ditentiongonthour nomber 1980purcase Goverment avng Lbonds eutocee oartaco iothspreaent fallcrsisarined
fivenmenalssreveauesTie wichgaonysiberanse canysolved Erervnl Liberias onfinnga asisanc crsanonlyMP isupr L~ibrn ofLrasefforts tohelethmslvesTi its the essence of acihard-oitting a coreus spaeec ts spete pertf ormne announeda forcaied saIngshpreetabunderawich pall salaried agrbedionsdpedingotherinco hetwill purca oenetsvng od4
eualto onetoto monbthsinsalar Thallt oaareDeieberan par s rticei th eisasefleffort it0willienerae bdtwenls t50-6miolionmint aditoloGovernmn reveuesi s willygovecoierbl an
tard rhesolving Liberia cotinungh fisa difiul Thberi the ineogitind o Lberian ipettionreolvits continuing financial prlemsThs eneotd somlelfte onfiecieri contasinedcince tht the dovrawmont ofacnthet ssernceo t iaca
4
adibmoeri hasnot yeityslvd itse reinancialpobls
bTthe siouatinmayoberiottomingot month oftiDeclembern1960 is critil togeibeasefforts o restre fiscal Iablnty Tncahfoil pments toalnge
proposedanttogetherowithb udgtheaethmer 1ytohlin9ieiatrug
Zaadopawnghsdicl
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
444
BUDGET SUMMARY m)
Overal SupuDfct7C t E x p
TtalF Staip zti o 277ag
IurnSexptenditre the 2043 4ndteM4aredt
t-erstabiliebt o pacag Sujc0 eti+ on BUDGET SUMMARY ($+ +++ ~l++gt44 +++++a m +++n++++ +++++++++++++++++++++i+- 4444
TaleRec awSR63lipeurrentn tudo $84 22 Foreoig La (4
++++C +++++ rren Surp+++u+++1sdefit l +5++l1 i
i++6+ L l L n) i + f++ 1t 2557gt4 Oveal Surpl8 -759081aloato0uDefict
worke on nt 4Current Surplusdefiit +51 444ionDevlon ovependiur 1R2609 ($375
conSdiiztionontedawn nof 8D
otncaimd por necieithe bahGovernment was
sition itdng98 and million thillise on)878
has7been (eJheued019or er inDe eAtth
Octb+r whil drwn of SDR 68 millio ($9+ milion
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
-~ 4~5
$103milionbySetem~r30rJ98
$103 million by DSepember30 1980 _________________$110 million by March 31 1981 ~
m -1~117ion-byune10771981 -------- --
Gross claims on Public Corporations by the~~ banking system standing at $67 million at June 30
gt
1980 were not to exceed $117 million by September30 1980
$267 million by December 31 1980 $167 million by tiarch311981
$117million by June 30s 1981
2 External Borrowing l
During 198081 Government must not-~contract oguaratee any n~o 4ternal loans wi th mtrt
between 1 and 12 years except for loans obtained to refinance existingdebt or loans obtained-on concessional terms (loans with atileast a 25~ percent grant element)
3 Trade and Payments
Trade and exchange systems are to continue~to b~efre of retrictions
4 Budget Deficit
The budget deficit for NY 198081 isnot to exceed $75 million
D Government Revenues
Domestic revenues for the first quarter of NY 198081 totaled $453 milliong this constitutes a
shortfall from projections of $93 million Except forJuly revenue collections have consistently fallenshr of the stimate despite the fact that new measures aimed at increasing revenues by $55 million
during the current fiscal year went into effect in September The major reason for the shortfall has beenthe decline inreceipte from internationa tradeparticularly import duties ewe pi and the end of September customs and excise receipts estimated at$495 million amounted to only $341 million if this Kshytrend continuesp it will be impossible toiachieve the revenue target of $2518 million projected inthe budget
The major reason for the shortfall in customs receipts isthe unsettled busIness atmosphere following
-shy
- ~the coup and agreater thanprojected reduction the-~in
level of Imports inaddition the foreign assets of the-National Bank and the commrcial banking system have
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
16
-been exhausted Commercial~banks are reluctant to issue letters of credit and have stopped issuing______
--daftrimport rlarm~thamtha- y havetu lineso credit abroad to import or travel abroad with cash to7
buy the necessary imports This has led to a generalcash shortage
E Government Expenditures
The lack of effctive expenditure control is yetanother problem During the first four months of the current fiscal year Government qxpenditures totaled $102179000 while current revenues totaled only $66709000 Part of the problem derives from the salary increases for low-level Government employees and military personnel decreed by the PRC immediatelyafter it assumed power and from increased hiring to absorb some unemployment This adds $34 million to the annual Government payroll The other part of the problem lies in the extra-budgetary expenditures generated by members of the military which already insecure civil servants and National Bank staff are unable or unwillinI to block The IMFs first SDR tranche of $15 million received inOctober and the US Government ES grant of $5 million helped cover part of this shortfall between expenditures and revenues while the rest was financed through ever-increasing GOL overdrafts with the National Bank
The expenditure situation appears to be gettingunder contnol with the strong backing of the Head of State The Minsitry of Finance is now only approving payment for priority categories of budget expendituresand has imposed a temporary ban on others The DeputyMinister of Finance for Expenditure and Debt Service has one of the Ministrys Est staffs working under him They are having some success inchecking the military-inspired spending spree while militaryinterference at the Ministry itself isbeing curbed All this cannot be solved overnight given the situation but progress is be4ng made
F Government Cash Flow
The precarious situation in the Governments financial position isclearly illustrated bannlysof its Cash flow On July 1the start of Ythso198011afinancial the governments cash flow showed a deficit of $375 million By the end of October it amounted to $53 million an would have been $73 million had it not been for the assistance of the IMF and the 1)8Government These deficits were financed mainly by GOL
---shyoverdrafts at the National Bank-The reserve position
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
-7shy
of the National Bank has become so precarious that there is little possibility for further lending to government It is clear that unless the National Bank is to receive a sizeable infusion of funcs the governshyment will not be able to meet its financial obligations The National Bank has managed to meet obligations thus far by using commercial banking sector funds deposited at the bank for transfer abroad This has severely affected the net foreign assets position of the entire banking system as shown in the following table
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
Dec 7 Ml J 8S
For4ig Assets 9071on 78 31 4 8
ForeiNationaln aBankilti 5743 30023 X95Q18002614 4 86
Comercial Banks 254 1 77427 608 31 Nattinal Bank -743 6043 - 861 4566 NoeuPoii i -3047 -6202 8001-91230 Comerc B
392 402 8 6314 Net t p and R a sc itSiion 22 _____i
(ooadditian 271 - 8 45lco-48tand45l i 7ii14144 ii71i= ~i1i=7ilt i 7 117iiil i1i1i lt
official debtii i of4$250205ii~iii~ iii 1ii m36i pound iI ii~i7ofJuyfiurs 71i)=iiiiiliiliiii i~1711iilii~i~iii -4ed i 14 ilgtI I iii q i gti I i
deg K D il lt i i ii~i ii~i i iTiii~iii]Ii 7i~ii~i]iiI~iiik i lt1 I~i I i I~)i iii~i =lt i lii i i~ii
i~ii 1i ~ii~~i1ii~i~ii)I iil lt i 44I I iii7- i i7 i ii gt Ig~~liilgl i
lt4 iil l iii lIi m ~i lii i m gt 1 4gt444444ii II rJ gt
ii~i~ I4444have toibe assusiod by the Government)
I
lt lt7I centi iii 1 ii]+1i iit) ii 4 44
hallts pates availabe ao sarenabl totnd repac ~ otfis debt fro c5065millouus(endIt reJlfpyment Val
77 ne d h c roaiu r u a l o tp yithil7 revenue and it gti 44444idebtrom eurteut repayment viii il laquoI 44w
~4444 t 4 bhae 444 assmedby he vermenc gt44444 44A44~4Kgt 4 f 4I
44iii44 4
44244441 44444244I4 4 444
44 4 4 44 44I44 I444444444444i 44gtgt gt 7 l44i 4 I -4gt4 1
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
The outstandngbailateral loansa isstructurd 44l44z t418812517 l 45(of + 5 44i owed toteUS
The_6tmianin baTneisoncsttue pecn GovKes 3olow ofpojected-4
an ilatmemeratoans haeare to82aSmeetingof th COluioedstothU)lt
in uppgininris frel xelncreditsnentoa rating$- 913O
occasionsi+ in ingo++i l ymees- -other patci f heprole is4 ha- LEO which has difficulties collecting Us billForin the currseenmtsa ser prbemsis ifrequently overdue in+ i
yea n his ostst + ++ the imperuetb76ll ioThei Consittii a te roctd
-
Refinr 3PeRCena f ovnmenareene-theSud Aorabiaofhiberh cannioIt tprlysuportaothleve ofsis dhebt Rerie adghst cusoeay fae thetiraonremie one soberloanshpaecrtiocity Ctarpiration pogrand the Government IfOilehiamentsre inaed
- in advanthe natios avr aoreting ofnk 4
through ed o whihenlettfePris ocrdi - -K
- -
rn ehedle reanof meetin ha beethiCtouItsannd hetih al nsud foipulated daes teep oila thitacinrkabilit vibeeTeepaymentsshdlvi eItis
hagred ponmdat rthismetigh thie NaionalownkLi eatoal thenkfis stwepsrin benauingis formerl eed
--
ent Itefrnatonsasct ra sti atothe
he bipas in-t ocaorso beshopameengmonth hAohrpoh problemmetighsailto- bahenksChrough tse wbeos tithe Nio iav sas meetbil te pira iery Corporahich ( intrafessthe abirpoti has aney
meudtbhic comit-itto hhesoi baiageeMeproblemnalready-wi thdr ibe aboe s sorageof ashintheecooofacltonh ah fiey quant of thde oilbillis acroens tfnsnd markted lonacal Thobem aefey larestrbe a~ov~Se$hirag or cahins the LiberiN -MEecturicit Caroratein taken) aods the so-ermt oil -shints refimnnedsinc avnc ruighe ionore fcorneis toakeadvaic opaentes fof crit
++ + inth dlinsore ++e to banks il+l probablyh+mak this eas
+++ +++such+as+-request+ cmpaniesto make avance ayment for o++ilr+ ++ -++ -nhesoffho Boe measures
K44444 - -shy shotag priombntshortage++ 2long++i+il hmoresuchm aseveoenesee in+the aIns Teref aeon aiuc problem tern------------4---th be
44shy4 (+LI++p i n iiieuro+ ll + + Lh ++) h++ 44-44--4444+4- -4+ t4l+
44-iiii4i4i i 4 T a 4 no 4 + i 4-44 $gt 4 4) I4444 4l il i~sh 4 4 4 4 4il 4
++4+ 44 4 4++ +++ gt4 4444+ ~ ~ 4 4 4 4l 44+i +ms + +7ii 4 t
44-4i4-i ~444-- r i V4~i4-l 4 4 4 441~~2(~ ~6 9~4
4 + 7 +4 44R7
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
- 10 -
Due to the Governments fiscal problems November payments to the oil facilitywere too late to enable a tanker of crude to be loaded in Saudi Arabia on time to meet Liberias normal demand for finished products in December and JanuaryTherefore in addition to having to meet two oil bills to the facility in December totaling $204 million the Refinery has opened a letter of credit for $42 million to purchase refined fuel that has to be repaid in March
I The Monetary Situation and Private Sector Liquidity
Between April and August 1980 the recorded money supply (MI - currency anddemand deposits) dropped from $846 million to $715 uillion while the quasishymoney supply (M2- savings time deposits etc) wos reduced from $910 to$623 million for a total money supply loss of $420 million This capitalflight has resulted in a virtual cessation of domestic credit a the bankingsystem operating under a 5 prcent margin requirement on demand depositslost $87 million of potcntially lendable funds Domestic savings and timedeposiL were reduced by $287 million further restricting already stagnatingdomestic investment There is also evidence that businessmen are retaining more cash then nor ial in their own vaults rather than banking it
These developments have had adverse consequences for the economy Tle reductionIn loans to the private sector had led to a contraction of imports and growingunemployment The tight credit situation contraction of imports and theGovernment salary increases have combined to exert an upward push on consumer prices These developments have also adversely affected Government revenues particularly import duties and corporate and partnership taxes
In the face of these Interrelated problems the Government has developed a simplebut complete program to limit expenditures while it increases Government revenuesThe IMF assinted in the development of this program and by advancing the datesfor drawing SDIn has endorsed the Governments attempt to Implement it The GOL has also accepted additional Fund assistance In tile form of a resiident representative during this period The COLs attempt to raise between $50-60 million through Its enforced savings campaign indicates the Governments understanding of the scope of the problem it faces and the political price it1jwilling to pay to overcome it If even partially successful (ie tileGovernment realizes only $25-34 million from the savings scheme) the savings program will enab le the Covernment to ease some of the most imnediate pressureswhile vreit lng the atrmphere requlred for in increaise in businesti activityncrent-d b115nein confidence expri-ased In renewed inveoctments is the key tu
tile long tvrm idl utIon of the prevent crnit
IlCe ( 1-nmelntI at tempt to enforc exp)ndLture dl scipline also indicates itswill I Iee to pi y the political priCe required to regain control of thattcoflofny
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
~~K~- laquogtLiberias economic potential isgoodlaquo Its development strategy issoundis~eeedisthe-effective managemenWht of the econmy4amplow his basic-tnghtoatstefndtonfra-nwpid of acIonomic~anid
providing this managemnt ~ i~h~frt tpi
III AID Response
The nextjseveral months arecritical to the fiscal survival of theGovernmentof Liberia During this period the Government sfiscal position is expected from its newly implemented~stabilization program Unless additional resources are found immeditelyl there exist a realdanger of a complete breakdown in ~Government srvs andy a reduction of its ability to manage-the econoqyeven after the increased revenuebecome available The IMP7 has recognizedthe seriousness of the situation and the Governments comumitmsnt to overcommits problems It has responded by allowing a somewha~t increased drawndownshy(SDRs 68 million) in December Host of these funds will ho used to maintain a flow of petroleu= products to Liberias transport and energy infrastructure~ The balance of t1his drawing is not~enough to keep the Governments essentialservices operating at a minimally acceptable levels The Government of Liberiais looking to theUnited States traditionally its most influential and powerfulinternational friend for assistance during this critical period This grantwill represent tha US Governments timely assistance to a friend in troubleand endorsement of Liberias efforts to overcome Its current problems
IV Proposed US Assistance
The $7 million program grant proposed in this paper is considered to be aminimal response to Liberiasa current problems This $rant is not enough tomeet all of Liberias current critical needs Even when combined with the resources being made available by the DVI and with available Government revenues these funds will not n themselves be adequate to maintain Liberiasexisting institutional and fiscal ability to manage the countrys economicrecovery Withholding this grant will make it much more difficult notif impossible for the GOL to maintain these abilities and-will delays endangeror weaken the countrys eventual economic recovery The Incesing politicaland economic instability that would result from a delay in Liberia a economic recovery would directly endanger important US economic and political interestsTherefore In the best Interests of Liberia and the UnitedStates it isproposed that a_$7 million program grant be authorized to the Government of
4 - Liberia for general budget support for selected development ministries
A Implementation Procedures
Because of the seriousness of Liberias economic and fiscal position It isappropriate that this proposed program be implemented expeditiously wi~thth
4 m~inimum of -administrative procedures consistent with prudent managemente 77Therefore the total -grant of $7million vwLl1 be deposited in a OOL ovnedbank account i011distely after satisfaction of the conditions precedent to dibuseen
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
- 12 -
Disbursements from the special account will be used for general budget support for the development ministries listed in Annex A Within 120 days from the signing of the Grant Agreement the GOL will provide USAIDLiberia with a report of all expenditures from the special account This report will be accompanied by appropriate supporting documentation The form and content of the report as well as the supporting documentation required will be the subject of an implementation letter
B Special Covenants
1 It is agreed by the parties that the proceeds of the grant will be used for general budget support for the development ministries listed in Annex A
2 The Government of Liberia reaffirms that they will provide in a timely manner the funds required to support the development projects listed in Annex B
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
- 13 -
Annex A
Proposed List of Ministries to Receive General Budget Support Under Program Grant (Cash)
1 Ministry of Agriculture
2 Ministry of Education
3 Ministry of Health and Social Welfare
4 Ministry of Public Works
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
- 14 -
Annex B
Proposed List of Prolects to be Included in the Special Covenant to the Grant Agreement
A Infrastructure
1 Paynesward-Robertsfield Highway 2 Paynesward-Totota Highway 3 Camp Mechlin (Road Maintenance) 4 Monrovia Streets and Drainage
B Health
1 Cape Mt Hospital (Conat) 2 Tappita Hospital (Const) 3 JFK Memorial Hospital (Const) 4 Rehabiliation Center (Const)
C Regional Development - Assistance to 9 counties and 6 territories
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
Annex C
Liberias Balance nf Payrents 1976 (r)
Exports (FOB) 4571 lImports (CIF) 392
of W1hich Oil (560) Other (3432)
Perchandise Trade Balance 579 Services (net) -1473
Iari ti rePevenue 163 Jnvest~rent Icre-1349
of Nhich Interest on External Debt (-56) Other Services (net) -287 Unrequi ted Transfers (net) -e9 CurrentAccountBalance -983 Official Capital 293
Drawi ngs (44-S) Pinort za tion -1)
Private Capital (mclerrors Aomisions) M~62 CoitalAccountBalance 135 Allocation of SoRs
SurplusorDeficit 37o2
Financing -372 lofnetaryAuthorities -17 EPosit flbney Banks -293
Central (1ovt Deposit Abroad -62
--1979
4474 486d 56366
4635 4CO19 5017
(645) (246) (1032) (3990) (396q3) (4035)
-161 55 299
-1390 -1335 -1361
120) 136 117 -1259 -1V80 -1039
(-78) (-132) (-220) -268 -391 -439 -9S -114 -70
-1655 -13 1132
544 644 1107
(743) (787) 1731)
-199) (-142) -S41)
1040 498 -584 1040 498 -504
49
-71 -251 -480
71 251 480 -128 133 255 154 98 225
4 23 0
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
-A110DANOWNO 4~App 3A r 406 November 2 1977 3A 2 1
WA21 - NONPROJECT ASSISACCECLT
The criteria listed in Part Aare applicable generally to FAA funds and should be usedirrespective of the programs funding source in Part 6adistinction is made between the __criteria aplicable to Security Supporting Assistance and the criteria applicabe tDevelopeAssistance Selection ofthe App pi q p on thepo t-7
CROSS-REUERENCESt ISCOUNTRY CHECKLIST UP TO OATE IDENTIFY HAS STANDARD ITEM CHECKLIST SEENREVIEWED
A GENERAL CRITERIA FOR NOMPROJECT ASSISTANCE
1 Apo Unnmbered FM Sec f53(b)
(a)Describe how Cosmitteei on Appropria Cogrs thog a fogmal Congrssionaltions of Senate and House have been or Notification has beenl informed of AIDSwill be notified concerning the nonproject intent to obligate these funds
M~ Is assistance within (OperationalNo Year Mudet) country or Internationalorganize to allocation reported to theCongres (or not more than $1mlI Ion over that figure plus IDS)
2FASc 14M If further legit-NtreurdfIveacion qisre~fd within recipient No reued INepeCtdion that such action will be comleted In tim to permit orderlyaccompllshment of purpose of the
3 A IS 9091 Io assistance Mere mous and Liberian interests will0f1cioitly Aifectively given through beat be served byr a direct Oovunmentregional or multilaterl organtions to Govemnument agreementIf so why is assistancnot so gIvenInformationadcnlso whte assistshyance will encourg regional deve egenProl 0sIf assis a Is for noulyIndependent country Is It furnishiedthrough multilateral organizations or inaccordanc with mltilateral plans to the MaIIO extent Appropriate
4 FM SmJla an All f01IF proposed grant will help protectfohe aOMO zLberias present free enterprise
~~a~~incrthreb theflwf ntrntina td e f of initiaters - - _nb)fes piat pivt
And comptitions Wc encourage develop- 6 meat and via of coprtve WceIt
nsano 0aig and loan associatiorstd disoug monepu le practices a Pimprove eicl efficiency of 4
It= free bor unions 417yl
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
____________
A
Infomatonan-Byprot~ecting trachtional USLiberiannd
A S prvttrade and investment abroa manti_______oiciteetsi
and encourage pr vateM participation Lbera Lbr ~ Including- ------- ~g~
us fpiae rd 6hl and the services of US private enterprise)
6 81Ju i fbDscribe NA
maxzimu extent possible the country Iscontributing 6-loc urrmcIes to meetthe-cost of contractual and other servicesand foreimn currencies owed by the United States are utilied to meet the cost ofcontratal and other services
7F 1 The US does not oim excss LiberianSe olthe United States ownxces TW19curency amped If soCreny
what arregWt have been made for Itsrelease
1 FUNDING CAITERIA FMR NONPECT ASSISTANCt 10 CSC frScrt This $rant In coordiniation with an
operating fu stabiizsation program At FMSee Howampwill this assistanee will help bridge a gap Ln MOL gt
suu pnuilecens1c or political recurent costs untiL newly implementedsTablity ts the country an the It fiscal Policies designed to increase
countries Inwhich Supportiig Assistanc oerma revenues can take effects smy be provided In this fiscal year) This wil prmt both economic and
Crieri DevlowentPolitical stability in Liberia2 1ac fg
a a I 3WU~fLI i grant Will suppot the Lnediatsc i 111Seaes 261Lispoundatnto WIa v~y11 1) fffec needs of deve loisnteoriented
Ivov increasig lbrnesIva productin these Xinstris to oontijwe to function spreadin Investment out fIM citle to and provide support for the GOLs
d teowncoead rural 21Np
tiel te w ndevelomento Pldti of th OO it wil alo
helsa ongoing efforts to provie greaterdevban poor t vs mist rum5am4 development bnf tt the poorest better liee and otherwise encourage15o iO MdAni priat and local goverauentInstitutions b FAFqSec IFL
PUcludely aplicable paragraph L ~ Ohich coleP Isbe Usources of funids used If mer tan
one fund source is used for ssistance ~~ a include relevant paragrph for eah MWn
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
~Arniex D Paae- - 4~
AI94OU 4App 3A 41 Noavetr 2o197 3A2) 3
92b
(1)(1031 for agriculture rural develop-ment or nutrition if so exettowhich activity is specifalal designedto Increase productivity and Income of research is full account taken ofneeds of wall farmersi
(z)oi for population planning or tM Ifso etnt to which activityetnslow-cost integrted delivery
ystms to provile hea th and follyplanning services especially to rural armas qan poor extent to which assistshy
gaeives attetion to interrelationshyhip between (A)population got n8)1 devlopmet and overel inrovowet
in living standards Indevelopingontis Isactivity designed to
build mtivation for small folilies in prges such as education In and out
10sholmaternal and child healthsericesIagricul tore productionrural devoet and lsistaxce to
NA
W
(3)COf] for education public admintstre-tIon or Mwm resorces developmentsif so6 extet to Aich activity
~t~thnS nnformal education makesed=ation mor relevant
4saily for rurel fallaWi 1
capebi mows or 1 ~trlm =t ipoor to participate Indevelopmets
(4)(10S] for technical ussistance energresearch recontruction and selecteddevelement problmi If so extent activity Isl (a) to help alleviate energ oste (b)reconstcion after noautrel oruad disastert
NA
xA
V
A
- ~
()frspeial developimt lotSam enable prope utilize ion of
ler US infrearcture otc NA
(4C)for pror of uran deelpmntespecfally Wallabor-jistnsv
s1601mrketingq s oswiftInanI or other lasti =tion to
hlurbaW porw 914oi
(6) 1071 fyrant for ecoorintod priaet eX10 to develop aid dissminate
intermediate technellote aampro~ Ate var eveoping Muunies
NA
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
_19- Annex D Page 4 PAGI 0090 MWO NO3A(2) 4 INovenher 2 1977 I 4 AID KANO100Ki 4 App 3A
82
Sdapted decentr1e intqrgratWhic assstanc reV jpropriate rural development as the means of promotingWhasis ont (1) encouraging developmentS in econmic and social growth in Liberia This7ciall sial itittot (2 slf-hl in approach provides for greater 7demoratization 7 meeting the Country$ food negas (3) ofpoliticaland ecnoi institutions andImproving availability of trined promotes ground up development By focusshyworker-pWr in the coufntrl7(4) programs in U support upon the development-orienshydesigned to meet the countrys heasth tate ini i t i sist anc i ll a lneeds (5)other important areas oftadmiiteshiasiane ilaloeconomic political and social develop the GOt to continue to implementito ongoingsentt Including Industryamp free labor intergrated rural development effortsunions cooperatives a VoluntaryAgencies transportation and mnicationit planning and pub)ic aftiniStrationt urban117 neratdevelomeet end modrnization of existing18Mo -5 interati ~Woe Into therecipient countrys nat oal coniomy
1i~~OOi oflted Sec281b Describe extent to As described in the this assistance willWficW i7ijze theparticular provide the development-orientated ministries eeds esrs rd cpacites of the the means to continue normal o rations
coutrys Inte Mle esto t will sumprt the needs desz an cashyc andenO=rage institutional developmnt and paoities of Liberia as reflected in thesupports civic education and trainij in countrys development effortskills required for effctivepartic pajtion In governmental andOplitical
-
procese essential to selfogoverawet -
I FM Se2 201(b2i41and ($)I This assistance is designed to help maintain I S-1-zI IRu(0ARWOthe fiscalrand political stability of Liberiae ea g eM soMOO Such stability is a precondition for effective
0f contributing to the developmet of economic or social developmentecOnoMic resou rce to the inrease ofproductive cpcfties VWd seluinigieconomic gIorof educational orotherrf Ittfutisdieted toWerd social
prores IIs it related toand onsistentV~toherdevelopmt ectivities andwill it contribute to reeliuble fong
range obJectives
h~ ~ The direct effects of this assistance on the ISi i1 + Wblefftsof testanc o U economy will be minimal iO10100 + By helpingIgtlt+
thspecia wa rAs to protect US access to the Liberian 1 Sr of sm | tial labor sarplus And- Went7S 5lt77 lt will have 5S market and raw materials it ato Which US cooit AM Assistance positive indirect effect upon the US are ftfwise Inasmpe consistalt With
aInfomation and M Ity of IFIRMnn
Private 5OUnnwihnUnted Sat
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
-20- Annex D Paqe 5
AID I4ANDOOOK 4 App 3A A7
a 46
O IPPICTIVE OAT9 November 2 1977
PAGE NO 3A(2)-5
83
b FAA Sec 201(b)(2) 201(d)Infonnation and conclusion on (1)capac-ity of the country to repay the oan including reasonableness of repayment prospects and (2) reasonableness and legality (under laws of country and United States) of lending and relending terms of the loan
NA
c FM Sec 201(eJ If loan is nut made pursuant to a tiitilateral plan and the amount of the loan exceeds $100000 has country submitted to AID an application for such funds together with assurances to indicate that funds will be used In an economically and technically sound manner
NA
d FAA SK 202(a) Total amount of money under loan which is going directly to private enterprise is going to intermediate credit institutions or other borrowers for use by private enterprise Is being used to finance imports from private sources or Is otherwise being used to finance procurements from private sources
NA
4 Additional Criteria for Alliance for NA
Prress
[Note Alliance for Progress assistance should add the following two Items to a nonproject checkllst)
a FAA Sec 251(b)(I)-(8) Does assistance take into account principles of the Act of Bogota and Charter of Punta del Este and to what extent will the activity contribute to the economic or political integration of Latin America
11A
b has
FAA Sec (b)j251(h) For loans there been ten Into account the
1A
effort made by recipient nation to repashytriate capital Invested In other countries by their own Citlzens Is loan consistent with the findings and recarrendatlons of the Inter-Akerican Corrittee for the Alliance for Progress (now CEPCIES0 tha Permanent Executive Copmittee of the GAS) in Its annual review of national development activities
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
- 21 - Annex E Page 1
INITIAL ENVIRONMENTAL EXAMINATION
Project Country Liberia
Project Title Program Grant (Cash)
Funding FY(s) 1981 $ 7000000
Period of Project FY 1981
IEE Prepared by Chuck Husick USAIDLiberia
Environmental Action Recommended Negative Determination
Africa Bureau Environmental Coordinator Decision
APPROVED bull
DISAPPROVED
DATE
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
-22- Annex E Page 2
I Description of Project
This project is a cash grant to the Government of Liberia The grant will allow development-orientated rnistries to continue their normal operationsthus maintaining Liberias institutibnal development capacity The loss of this capacity due to Liberias current fiscal crisis which prevents the GOL from adequately fundling the recurrent budgets of these Ministries would be critical to the future ecrnamic and social development of the country
I Examination of Nature Scope and Magnitude of Environmental Impacts
(In terms of items on attached Impact and Evaluation Form)
The prcposed pinJect wil have no direct sig-ificant inpact upon the envirocFrnt
III Recommended Environmental Action
A negative deternition rMuirin no further environental exnminashytion iz rc ed
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
__ __ __ __
Mznex ZPage3
- U14PACT L4rltA1t A114 IALUATV00 Kfl
Identification
_______gin Cu -m ra 1the ch s te o thland __ _ _
m Lan cooWI
j~~~~ Cnanghe charctr h edtruh
2 Altering natur4g dgfgmes _______
3 Farecia9 ig Jiqtact uses
IJeop dsug msm or his vorks
Ohrractor
BeWTR UL
1pkysuo state or vater
~ChumiciL ad biologLo1 states I 3ZoIaim balance N
h other facton
291ll 1et 2 fbr this bra V Use the rolloving syulbols Ile A vwmua Ipc
TONuvm ti~t-
Auv 17
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
nex A Page 4
~~ ~ r
-FF +]7DF7 7
DNATURALRESOURCES
F4
2o IIrrvesile
t~
ineficen itments
f i17 i
leAltringo hysial sboamp
-i-- -
-Fgt
3
DltiF of cultural traditions
OtervLfactors A ~ ~ ~A771i $tklt cent 7 V7 2 i cent ] 7 D~tf i 2 F F 0 D t7[7 772cent f
tr o 77F Fgt -s
+ lt 7
FF2F Fcentcent7 7 7r 77 7 7 77 f7 7777lt~ ~ 1gt Nlt lt
7 7 F7tF-FF r
+ )FF4
ESO RCE i Lf7 -
FFlt 7j7]7
-
D L F y777777cent7771
F]li-] 4 = Fg+
20~~~-A oa Chgso
- Oter fctr
-Fl t ii ii
I
i~ii~iI-vatew
FIII I
F NI
-Fi
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt
3
-25- Annex E Page 5
IMPACT IDENTIFICATION AND EVALUATION FORM
0 HEALTH
1 Changing 5 naural enirorent N
2 Eliminating ecosystem element N
3 Other factors
I GENERAL
International impacts N Controverxiai impacts N
3 Larger progr-um impacts _N
he Other factor
lll )S3I l (Itit I ted abov )IKI [AC
) tahl5ul nfIPt