Liberia - Financial Sector Assessment

Overview & Synopsis

Liberia’s economy is recovering after a decade of shocks including commodity price declines, the Ebola crisis, and COVID-19 but remains fragile due to structural constraints and external vulnerabilities. Economic growth, which slowed significantly over the past decade, has begun to rebound under an IMF-supported program, with GDP expanding to 4.0 percent in 2024 and projected to rise further. Fiscal consolidation has improved revenues and stabilized public debt, yet risks persist, including high borrowing costs, dollarization, and limited external buffers. The financial sector remains small, bank-centric, and underdeveloped, with high non-performing loans, weak supervision capacity, and limited contribution to economic development. The Central Bank of Liberia (CBL) faces institutional and operational challenges, including resource constraints, weak enforcement mechanisms, and insufficient supervisory tools. Although the new Banking Financial Institutions Act strengthens regulatory powers, effective implementation requires capacity building. The non-bank financial sector remains largely unsupervised, fragmented, and informal, necessitating modernization, clearer regulatory boundaries, and digitalization. Access to finance is constrained by structural and institutional weaknesses, including poor credit infrastructure and legal enforcement systems. Strengthening financial stability, enhancing regulatory frameworks, improving digital financial services, and rebuilding trust in the financial system are critical to supporting private sector growth, financial inclusion, and Liberia’s long-term development objectives.