WASHINGTON, Jan 24 (Reuters) - The International Monetary Fund said on Thursday it had reached an agreement in principle with Liberia on a three-year $920 million IMF-supported loan program, the first for the West African nation since 1984.

"This in-principle agreement, which is subject to the approval of IMF management and executive board, is a key step towards clearing Liberia's arrears to the IMF and the commencement of debt relief," IMF mission chief to Liberia, Robert Powell, said in a statement.

Approval of the loan program will allow Liberia to enter the global Heavily Indebted Poor Countries (HIPC) debt relief initiative managed by the IMF and the World Bank.

Years of political strife, corruption and economic mismanagement left Liberia's new government with foreign debts of around $4.5 billion.

Following 2005 elections, Liberian President Ellen Johnson-Sirleaf, Africa's first woman head of state, struggled to convince IMF member countries to cancel the country's debts and give it a chance to rebuild from a 14-year civil war that left 200,000 dead.

The IMF loan program will be an important endorsement of the economies policies of the government and will signal to donors and investors to support the country.

Powell said Liberia's economy was expected to recover further in 2008, with growth reaching about 9.6 percent and inflation falling to single digits.

The focus of the program will be on economic reconstruction by maintaining a stable economic environment that could facilitate economic growth, job creation and poverty reduction, Powell said.

It would also focus on strengthening financial management and the financial sector, and deepening the government's anti-corruption and other reforms, he added.

"Effective implementation of this program will be critical to achieving the government's economic goals, including continued strong and sustained growth and obtaining comprehensive debt relief on the full stock of outstanding debt," Powell said. (Reporting by Lesley Wroughton, editing by Richard Chang)

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