Financial Sector Development Implementation Plan (FSDIP) in Liberia

Project Development Objective (PDO)

The main objective of the proposed technical assistance is to facilitate financial sector reforms in Liberia by helping national authorities develop a comprehensive Financial Sector Development Implementation Plan (FSDIP) that has a well-sequenced, time-bound, and prioritized roadmap for implementing reforms.


While Liberia received technical assistance from various developing partners that introduced ad-hoc reforms, a coherent and fully integrated vision of the financial sector is needed to ensure the development of a stable, safe, efficient, and accessible financial sector. This vision entails (a) addressing the cross-sectoral issues in the financial sector and the objectives of stability and inclusion and (b) prioritizing the reforms needed to further develop the stability, safety, efficiency, and accessibility of the financial sector. Against this background, Liberian authorities requested help in developing a strategic FSDIP that is coordinated, prioritized, and well-sequenced. 


The main output of the project is a FSDIP that, while building on recent and past relevant work in the sector and additional analysis as necessary, will propose a coherent and sequenced implementation-focused strategy to broaden and deepen Liberia’s financial sector. This strategy will identify priority areas of intervention, keeping in mind the constraints inherent in Liberia’s small size, geographical specificities, and postconflict status, with a view to contributing to economic growth. The FSDIP will complement and support several ongoing implementation activities on the basis of the following activities:

1.  Stocktaking: Prepare a stocktaking report of completed and ongoing work on the financial sector.

2.  Additional analysis and substudies: Undertake additional analysis and deeper substudies for
    which the recommendations and actions will be incorporated into the FSDIP. Additional areas to
    be included are as follows:

     •  Legal framework. Assess the current laws and regulations for the financial sector, note any 
        areas of conflict and means to harmonize the legal framework, and recommend laws and
        regulations that require updating or development. 
     •  Bank resolution review. Review underlying causes and consequences of consistent and high
        nonperforming loans and propose regulatory response.
     •  Basel II and III. Review any remaining reform needs in the supervisory and regulatory
        framework for the potential implementation of Basel II and Basel III. 
     •  Crisis management. Review the tools for intervention, monitoring, and enforcement in response
         to distress in the financial system. 
     •  SME finance. Assess the financial landscape with a particular focus on SMEs finance. 
     •  Nonbank Financial Institution (NBFI) supervision and regulation. Review remaining reform areas,
         such as intervention, to ensure that NBFIs can (a) invest premiums and appropriately manage
         risks and (b) develop long-term savings and investment options. 

3.  FSDIP preparation: Work with authorities to provide a medium-term strategic plan to develop the
    financial sector by prioritizing reforms on the basis of the above review. The final prioritization
    will include budgeted and actionable activities that constitute a locally owned comprehensive and
    cohesive strategy. The strategy will have a detailed roadmap for interventions. 

4.  Workshops: Three to four workshops or seminars will elaborate on and disseminate information
    about the FSDIP. Included will be a donor workshop to solicit money to implement the strategy at
    the end of the project

Expected Outcomes

The FSDIP will provide the government of Liberia and public and private stakeholders with roadmaps in key policy areas for financial sector development. The roadmaps will be included in a unified and well-prioritized and sequenced implementation plan that will help authorities implement key financial sector reforms to achieve a more efficient, sound, and inclusive financial sector in Liberia. The project will improve interagency coordination at the government and will promote the ownership of reforms by the respective agencies.