Liberia: World Bank and IMF cancel debt on basis of reforms implemented

Ellen Unveils Govt Next 'Major Priority'
D. Kaihenneh Sengbeh
1 July 2010, The Informer (Monrovia)
Following Tuesday's historic debt cancellation against Liberia by the World Bank and the IMF, President Ellen Johnson Sirleaf Wednesday morning told the nation that her administration's next challenge remains the restoration of infrastructure particularly roads.
"Right now we are very concerned about our primary roads...We have to try to pave them...that's our major challenge now as a government," President declared yesterday during a live phone-in talk show broadcast on major radio stations in Monrovia, including the UN radio which covers the country.
President Sirleaf said should the government take any loan (now or later) it would fully use it for infrastructure development of which the country and people are in dire need.
Making special emphasis on road, the Liberian leader said her administration was very concerned about major feeder roads including the Gbarnga (Bong County)-Voinjama (Lofa County) and the Fish Town (River Gee)-Harper (Maryland County) routes.
These are among the most deplorable roads in the country, especially during the rainy season like now.
The deplorable conditions of these roads, especially in the south east, often abort free movements of people and goods and services and cutoff people in those regions from the Monrovia, thereby creating thorny economic realities for the masses.
The Liberian leaders said the best solution to the problem was the paving of these roads.
According to her, even when the Ministry of Public Works rehabilitates them, they become mud-spattered and impassable to vehicles during the rainy seasons.
President Sirleaf said the paving of these roads would increase mobility, attract investments and boost employment opportunities, thereby changing the lives of the people.
President Sirleaf said with the staggering debt burden gone, the government will also use its resources to undertake development projects such as building of schools and health facilities across the country.
"[Therefore] anything [money] we borrow will be for infrastructure, roads in particular," President Sirleaf who told Liberians Tuesday evening to celebrate because of the debt US$4.9Bn debt relief, said.
Difficult Reforms
"Today is a great day for Liberia! We have reached the HIPC completion point," the President stated in her nation-wide address, when the good news came from Washington.
"When we came into Government, Liberia owed a staggering US$4.9 billion debt. Just to explain what that means: Our budget for 2009-2010 is US$350 million. To settle that US$4.9 billion debt, we would have had to pay our creditors our entire budget for 28 years!" the President noted in her 1,106-worded statement, speaking for the least man in the street to understand.
Previous Liberian governments had borrowed from the World Bank, the International Monetary Fund (IMF), other countries, and companies, and had not paid back any of the loans.
"Since the 1980 coup d'état, followed by our 14-year civil war, none of our loans were serviced, and so the interest and the penalties grew and grew," the President noted.
"My Administration," she told the nation, "inherited this huge debt, which has been hanging heavily around the country's neck. From the day I came into office, I promised to do everything in my power to put our economic and financial house in order, and to get this unbearable burden, which was holding back our recovery and development, off our backs.
"To get to where we are today, our Government was forced to carry out difficult reforms. The two largest international institutions we owed money to - the World Bank and the IMF - prescribed tough medicine which we had to swallow, but which enabled us to better manage our economy and our finances," President Sirleaf said.
Not Over Yet
President said in her nation-wide address attributed the success of debt relief to "the way we tightened our belts and conducted ourselves, by not borrowing from anybody and spending only the revenues we collected, including your taxes, the World Bank and the IMF have just announced that we don't have to pay them back."
She said as of Tuesday, June 29, 2010, Liberians were well on their way to shedding the massive debt the country owed.
She however warned: "But it's not over just yet. Next month, we have to go before another institution, the Paris Club, to ask them to cancel the rest of our debt."
The Government if Liberia, she disclosed owes Kuwait US$12 million and the Paris Club will, too, have to finally cancel all the debts Liberia owes it.
"Back in 1978, I personally went to Kuwait and signed that loan myself, for US$6.7 million. We built the Cape Mount road from that money, and that road is still good today," the Liberian leader disclosed. "But because we didn't pay back the loan, the debt has grown to US$12 million. The Kuwaitis want to come back to help us with other roads, once we settle this matter."
Government To Do More
The President said Tuesday's debt cancellation set a new stage in the country's history and relationship with the international community.
"By this announcement, the world is saying it can trust Liberia again. Because we have regained that trust, others will want to invest in our development priorities - our roads, our power-generation capacity, our ports, as well as our mineral and agricultural sectors."
She said this also means the Government will be able to do more through its own budget by creating badly needed jobs, by building roads, bridges, providing more electricity and more water, which will improve the lives of our people.
The Government, she intimated, will have to do this carefully by putting the new money we have into activities that will produce more money and more jobs so that we do not get our country in big debt again.