The New Dawn (Monrovia)

6 May 2013

Liberia: Government Replies CDC

The Liberian Government through the Ministry of Finance has sharply reacted to criticism from the Congress for Democratic Change (CDC) that the Sirleaf administration was walloping in debts due to huge international borrowings.

The Ministry of Finance has termed the criticism coming from CDC Deputy Secretary General, Samora Wolokollie, as not only reckless and irresponsible, but a vicious design to paint the Liberian government in a negative light.

The CDC Deputy Secretary General Wollokolie further stated that despite huge financial assistance from friendly nations, the Government of Liberia is leading the country to a serious problem that future government would have to face.

"The attention of the Ministry of Finance has been drawn to the front banner story of the NewDawn Newspaper of Friday May 3rd, "Ellen's Gov't Sinks In Debts", in which, the paper, quoting the Deputy Secretary General of the Congress for Democratic Change as saying the Government was operating on credit as it has borrowed about US$579.2 million to run the affairs of state", the ministry noted.

The authorities of the Ministry of Finance wish to categorical deny these claims that the Sirleaf administration has borrowed any such amount, a press release issued here by the Finance Ministry over the weekend said.

It clarified that while Liberia has been entitled to concessional loans since passing the completion point of the Heavily Indebted Poor Countries Initiative (HIPC), the Sirelaf administration has no more than $50 million in concessional loans with over half of this amount used to finance the ACE High-speed Internet Cable project through a concessional loan from the World Bank that is poised to make Liberia competitive as a knowledge economy.

The ministry said the fact that Government continues to pursue sound macroeconomic policies and operate within the confines of international fiscal guidelines has also significantly helped to open up opportunities for Liberia to receive loans and grants to support priority infrastructure development programs, following the meeting of the HIPC benchmarks in 2010.

"The Government however does not view such opportunity as carte blanche to spuriously in debt the country with reckless borrowing. The authorities of the Ministry of Finance, therefore, wish to categorically deny the CDC Deputy Secretary General's falsehood that Liberia is sinking in debt."

The release said to the contrary, Government has continued to exercise maximum fiscal restraint by ensuring it does not commit to high interest commercial loans in undertaking development projects, noting that from the Ace Cable to the massive road networks rehabilitation and construction, as well as the countless sprawling health outposts erected around the country, Government has always sought financial assistance in the form of grants from its international partners to undertake these projects as the first option, bearing in mind the need to negotiate low interest rate as a last resort.

Saying that while it is true that Government has the legal and moral responsibility to underwrite such debt, it must be noted for the most part that the said US$130 million debt was inherited from past administrations, and that the Finance Ministry, in this regard, wishes to reassure the Liberian public that Government is working with its international development partners to ensure settlement through financial arrangements that will not mortgage the future of Liberians.

The Ministry further clarified that most of what is even considered as Government's domestic debt is in reality a US$261.16 million recapitalization commitment for the Central Bank of Liberia, formerly the National Bank, while the balance of government's domestic debt amounts to US$13.94 million, comprising pre-NTGL salary arrears, salary and allowances, as well as payments due a few commercial banks.

"It is highly worthy to note that Government, fully cognizant of its obligation to settling its domestic arrears, continues to clear these arrears inherited even for pre-NTGL era.

For instance, pre-NTGL salary arrears which stood at a whopping US$32.2 million in 2006 now amount to US$1.3 million", according to the government.

Meanwhile, the Finance Ministry has reaffirmed Government's unflinching commitment to ensuring fiscal probity in its undertakings, and that the interest of the country would always be protected.

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