The country was cleared for debt relief on Monday after IMF member countries finally agreed, after delays of more than a year, on how to fund the debt cancellation.

The agreement opens the way for Liberia to enter the global debt relief program, known as the Heavily Indebted Poor Countries Initiative, managed by the World Bank and IMF. Another round of debt relief will follow the country completes the HIPC process, which requires an IMF program.

"It will enable us now to complete the arrears clearance and be in a position for the delivery of HIPC for Liberia and complete the debt relief," said Abdoulaye Bio-Tchane, director of the IMF's Africa Department.

"It will put them in a position that will allow other creditors to start financing the country," he added.

Bio-Tchane said an IMF team will travel to the capital Monrovia within the next few weeks to begin talks with the government on a three-year IMF-supported Poverty Reduction and Growth Facility, or PRGF.

"We hope that by early next year, we will be in a position to start a new program," he said, adding that at that point, Liberia would qualify for HIPC interim debt relief.

VOTE OF CONFIDENCE

An IMF-backed program will be a vital endorsement of the economic policies of Liberian President Ellen Johnson-Sirleaf, Africa's first woman head of state, and will be a signal to donors and investors to support the country.

Since taking the reins of Liberia following 2005 elections, Johnson-Sirleaf traveled the world pressing creditor nations to cancel the country's debts and give it a chance to rebuild from a brutal 14-year civil war that left 200,000 dead.

Years of political strife, corruption and economic mismanagement left the country with foreign debts of around $4.5 billion, accumulated by previous governments. Much of the debt is owed to global financial institutions such as the IMF, World Bank and African Development Bank, but also to the Paris Club of creditor nations and commercial banks.

Bio-Tchane said Johnson-Sirleaf's government had made important advances in rebuilding the country's economy and within two years had balanced the budget, launched a battle against corruption and paved the way for the private sector to invest.

He said discussions on an IMF program would include aspects of the government's budget and social reforms, as well as work being done with the World Bank on the private sector and infrastructure development.

Bio-Tchane said one of the biggest constraints on Liberia's government was to disburse its budget quicker and more effectively, especially in sectors most in need.

Asked if the government was being too cautious in its spending, Bio-Tchane said, "I don't think they are too cautious. They're doing the right thing. They're trying to spend effectively and to make sure their dollars and cents go to exactly what they're supposed to finance."