Climate-related shocks are no longer a distant threat for Liberia but are already undermining economic stability, fiscal resilience and living standards, the International Monetary Fund said in a new assessment released this week.
In a Climate Policy Diagnostic, the IMF said climate change poses “macro-critical” risks to the West African country, where extreme weather events are disrupting food production, pushing up prices and weighing on economic output.
The report warned that, without effective adaptation, Liberia could suffer significant long-term losses. Under a high-emissions scenario, real gross domestic product per capita could fall by around two percent by 2050 and as much as five percent by 2100, it said.
Extreme rainfall and flooding are already having measurable economic effects. According to the IMF’s analysis, heavy precipitation alone is estimated to reduce food production by about 1.6 percentage points, cut per-capita GDP growth by more than three percentage points and add to inflationary pressures.
“These impacts threaten near-term balance-of-payments stability as well as long-term development prospects,” the Fund said.
Liberia is among the most climate-vulnerable economies in the region, with roughly 70 percent of its population lacking access to electricity. The IMF said limited energy access not only constrains growth but also weakens the country’s ability to adapt to climate shocks.
Expanding electricity access is therefore central to both development and climate resilience, the report said, calling for a package of fiscal and regulatory reforms to scale up renewable energy, reduce dependence on imported fossil fuels and attract private investment.
Recommended measures include the introduction of net-metering rules to support rooftop solar, feed-in tariffs for renewable power producers and competitive procurement for utility-scale renewable projects. The IMF also urged gradual reform of electricity tariffs, coupled with targeted social protections, to improve cost recovery while keeping power affordable for vulnerable households.
Beyond the energy sector, the Fund highlighted structural weaknesses in water management, forestry governance and disaster risk financing.
Flooding and extreme rainfall are placing growing strain on water systems and agriculture, while fragmented institutional responsibilities limit the effectiveness of policy responses, it said.
To address these gaps, the IMF recommended the adoption of a comprehensive water resources law to improve coordination and planning, reforms to forestry taxation to incentivise sustainable practices, and stronger disaster risk financing mechanisms to reduce reliance on ad hoc donor assistance after shocks occur.
The report also found that Liberia’s climate finance framework remains at an early stage, hampered by limited institutional capacity and weak coordination among agencies.
It called for the development of a national climate finance strategy to identify funding gaps, engage development partners and private investors, and expand green lending frameworks aligned with international standards.
Stronger climate governance was identified as a prerequisite for progress. The IMF urged clearer mandates across government institutions, improved cross-ministerial coordination and updated climate-related legislation to ensure that policy commitments translate into concrete action.
While focused on Liberia, the assessment carries a broader warning for climate-vulnerable economies, the Fund said.
“Without coordinated fiscal, energy and governance reforms, climate shocks will increasingly translate into macroeconomic instability,” the report said, adding that early and sustained policy action could significantly reduce long-term costs.
The IMF said that strengthening resilience now would help Liberia safeguard growth, protect living standards and reduce the economic volatility associated with climate change in the decades ahead.
