14 February 2007
analysis
The Johnson-Sirleaf Administration inherited a US $3.7 billion debt which World Bank sources say is 30 times its total per annual export earnings and eight times its GDP.
Also the administration inherited a devastated infrastructure, a chronic lack of basic social services, and an unemployment rate of 85%. Its task is to service the debt even though the economy had malfunctioned for close to two decades, to restore basic social services, and to create jobs for the exasperated, war-afflicted population.
All of this must happen almost immediately lest the nation slips back into chaos. But the administration grossly lacks the wherewithal to meet these demands even as it fends off corruption.
The nation needs foreign assistance so badly to jumpstart the economy, but no creditor nation will lend a hand unless the debt is serviced significantly.
It was in this catch-22 situation that a partnership conference of creditor and donor nations and institutions was convened in Washington D.C. this week. Now that conference is paying off beginning with the U.S.
With Abdoulaye W. Dukulé and others in Washington D.C., The Analyst Staff Writer reports.
Besides waiving the $391M bilateral debt Liberia owed the U.S., the Bush Administration has committed $200 million in the next year to help Liberia.
US Secretary of State Condoleezza Rice announced the waiver and the new financial commitment to Liberia's reconstruction yesterday during the opening of the Liberia Partners' Forum currently convening in Washington D.C., U.S.A.
Secretary Rice said the United States was taking the decision to assist Liberia address the critical needs of its people and address the debt burden which the people of Liberia do not deserve.
Besides the waiver and the new commitment to Liberia's reconstruction, the top US Foreign Service official said, the United States will work with other multi-lateral institutions such as the IMF and the World Bank to address the debt issue.
The Associated Press (AP) quoting Washington insiders say that the World Bank has made considerable progress in figuring out a way to write off the $466m that Liberia owes it.
However, the AP report said, by convention the Bank cannot regularize its relations with Liberia independently of the IMF, which does not legally own most of its reserves.
Therefore, according to the AP reports quoting insiders, the IMF needs its shareholder governments such as the U.S., Britain, and others to agree to finance the $781m write-off.
"So far agreement remains elusive. Organizers hope this week's conference will put pressure on the IMF shareholder governments to find the money to write the debt off," the report said.
This statement prompt observers to note, yesterday, that indeed the pressure has already begun to mount and that it was paying off beginning with the U.S. government's announcement of debt waiver.
At present, Liberia - which has total debts outstanding of $3.7bn - owes the World Bank $466m and the International Monetary Fund $781m in overdue repayments and interest.
On Monday this week, the Times of London reported that World Bank President Paul Wolfowitz had urged the G7 industrial powers at a weekend meeting to help Liberia cancel its debt.
Wolfowitz called on G7 finance ministers, who met in Germany, to endorse plans to clear the country's arrears, the newspaper reported. Under current rules the bank is only able to write off Liberia's debts when its arrears have been repaid, he said.
The World Bank boss told the Times he had received a "sympathetic reaction" and that Britain had agreed to the plans. The most important discussions, however, are likely to be between the big donors on how to break the debt relief deadlock.
Liberia has a foreign debt of some $3.7 billion, mainly run up since the 1980s under the William Tolbert administration and the dictatorships of Samuel Doe and Charles Taylor. The country's ratio of debt to gross domestic product is among the highest in the world. Debt is equivalent to 30 times annual exports or eight times GDP.
It is perhaps in view of this dismal financial position of Liberia that Dr. Rice urged the conference to work concertedly to stabilize the small West African nation, which is Africa's oldest independent nation.
She then disclosed that the US government was planning to sign a Trade and Investment Framework Agreement with the Liberian government, tomorrow, while steps are being taken to resume direct flights between Liberian and the United States.
The signing of the Trade and Investment Framework Agreement, according to her, would culminate into the signing of an open Skies Agreement, "which will deepen the connection between our people, our businesses and economies."
"These efforts are aimed at helping the government and people of Liberia in the country's transformation," the US Secretary of State told a full capacity opening session. She recounted the United States government's role in helping to stabilize Liberia during and following years of conflict.
The US official praised Pres. Ellen Johnson-Sirleaf's policies and programs aimed at reviving the country.
"Thank you for your outstanding and inspirational leadership; we will continue to provide fullest support to this new government," the Secretary of State assured Liberia and the international community.
She noted that the holding of the Private Sector Forum organized by the government of Liberia through the Corporate Council on Africa would provide another forum for further discussions on the steps the US was taking in encouraging the development of a vibrant sector in Liberia.
The Private Sector Forum begins later on this week, according to organizers.
Observers describing the waiving of Liberia's debt by the U.S. government as the most dramatic on a bilateral level by the U.S. government for many years are optimistic that it would effectively impact the future of many Liberians.
"The cancellation of this debt, most of which occurred between 1980-1984 will provide the government of Liberia some breathing room but most importantly, it could serve as an example to other debtors.
China made a similar move two weeks ago when it also cancelled the totality of its debt," said one observer upon hearing Dr. Rice's announcement.
Organized by the World Bank and the Government of Liberia and co-hosted by the US government, the European Community, the African Development Bank, the (ADB), International Monetary Fund (IMF) and the United Nations (UN), according to organizers, the conference will cover every aspect of Liberia's transition from emergency and humanitarian state to sustainable development.
In his opening remarks earlier, President of the World Bank, Mr. Paul Wolfowitz said that the international community needs to do much more, faster, and take advantage of the unique opportunity that Liberians have now, after 25 years of instability, to take control of their destiny.
He set the tone of the agenda by saying that Liberia's $3.7 billion debt was clearly unsustainable and an unacceptable burden. The World Bank president called on the international community to work together to clear the arrears so Liberia could move forward.
He paid tribute to what he termed the "inspirational leadership of Pres. Johnson Sirleaf," and added that this new hope must not be allowed to fade away.
"Those who remember the horror of the past," Mr. Wolfowitz noted, "can hardly imagine that Liberia has now become a place of hope." Also speaking earlier, President Ellen Johnson-Sirleaf lauded the international community for the level of attention and support given Liberia.
She however noted that those attentions and supports needed to be reviewed with the aim of strengthening certain unacceptable weaknesses and delays on all sides.
She said, "I hope we can discuss the strengths and weaknesses of our approach so far, the areas where we as a government and you as partners have done well, the areas where we have not done so well, and how we can all strengthen our efforts going forward."
While cognizant and grateful for their help to Liberia, she said there was no need for "anyone to boast of a $500 million commitment if the money does not make a difference in the life of our people."
She pointed to the deficiencies of the partnership between Liberia and the international community, emphasizing the nation's needs for direct life-impacting programs and projects.
"[Liberians] don't really care about IPRSPs, or harmonization and coordination. They have never heard of a multi-donor trust fund, and they don't care about joint action plans, workshop proceedings, or thick consultant reports.
What they want is security, freedom, and opportunity: security in their everyday lives, freedom from abuse and oppression, and basic economic opportunities so they can provide for their families," she told the conference of donor and creditors.
The IPRSPs is initials for the Johnson-Sirleaf Administration's stopgap social security agenda called the Interim Poverty Reduction Strategy.
She said also, echoing Mr. Paul Wolfowitz's admonition: "Time is pressing, and we must never forget that we are here for the Liberian people. Liberia is still in a fragile state."
President Johnson-Sirleaf noted that once the means was made available by Liberia's partners, the Liberian government would embark on efforts to strengthen Liberia's security and fight corruption, ignorance, and disease, the three major vices that she said have eaten away the fabric of the society.
"Finally, it is time to move forward on debt relief. We have done our part in this regard by building up a strong record of policy performance and we are pleased that the IMF has publicly recognized this achievement.
We now look forward to the shareholders of the multilateral institutions to do their part to arrange the necessary financing. No other HIPC country so far has had to wait for financing to be arranged. Debt relief is urgent to free up new resources from the African Development Bank, the World Bank, and others.
It will help us deliver a clear peace dividend to the Liberian people," the African Continent's first female president said.
Mr. Louis Michel, Commissioner for Development and Humanitarian Aid of the European Community, Mr. Donald Kaberuka, President of AfDB, and Mr. Alan Doss, Special representative of the UN Secretary General, each took turn to the podium to reecho the words of both presidents Sirleaf and Paul Wolfowitz by insisting that Liberia's debt was unsustainable and needed immediate attention.
Organizers say the Partners' Forum will last two days with discussions between Liberian delegates and representatives of Partners.
They said Foreign Minister George Wallace will lead the Liberian delegation during the talks. Issues discussed at the different sessions will include "Macroeconomic Policies and Outturns", "Progress with Democratic Transition", and "Economic and Social Development Challenges" with parallel discussions on National Security, Economic Revitalization, Health and all other social and economic sectors of the government.
Observers say if the tone that was set at the opening by the sponsors of the conference lingers, the Liberian government could walk away with a very good package, not only in terms of palpable funding but also a new strategic partnership to fund her development.
They did not elaborate, but noted that a few days ago Johnson-Sirleaf said it was not so much the amount that people would commit at this gathering that would matter as much as the approach that would be taken to address the real needs of Liberia and what can be done immediately.
In the next few days, according to a Liberian government insider, the Liberian government delegation will be looking up to other lender institutions and nations such as the United Kingdom, France, and a number of EU countries to follow Washington's example. China started the process a fortnight ago in Liberia by forgiving Liberia's debts that mature before 2005.
Among the delegates attending the opening session, the presence of George Manneh Weah and the Deputy Speaker of the House of Representatives, Mulbah K. Topka, according to analysts, was a welcome sign of Liberians united for a national cause.
In a short press interview with the press, George Weah said he flew in to show his support for the national agenda under the leadership of President Johnson-Sirleaf.
"This is not about partisanship, this is our country and we must be united and do whatever we can to move things," Weah told newsmen.
Be the first to Write a Comment!
Copyright © 2007 The Analyst. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
