7 February 2017

Liberian Lawmakers Want U.S.$2.2 Billion Loan for Road Construction

Monrovia — With less than a year remaining for President Ellen Johnson Sirleaf to leave power after two terms, some lawmakers are considering a decision to empower her administration to borrow US$2.2 billion for the pavement of roads across the country.

This latest proposal comes in the wake of government's inability to raise its budget of over US$600 million, with several shortfalls reported by the Ministry of Finance and Development Planning over the past years.

In a communication from one of the lawmakers, Numene Bartekwa, he urged his colleagues to seek a concurrence from the Senate for the legislature to request the President lobby with international financial institutions or friendly governments on the possibility of getting a US$2.2 billion loan on behalf of the country.

The expected resolution must be signed by two thirds of both Houses before it becomes legal framework for Sirleaf to make any borrowing moves.

In his argument, Rep. Bartekwa ((UP-District #2 Grand Kru County) said considering that the country's effective social delivery to the people of Liberia the government is indeed contingent on better or improved roads networks.

He noted that developing the roads in the country will surely lead to national economic stimulation, adding that there's a need for necessary action to be taken.

"It is important that this body takes the appropriate action that will provide lasting solution to the problems of primary roads development in the country," he said.

"Accordingly and in consonance with Article 34 d(iii) which states that no loans shall be raised by the government on behalf of the Republic or guarantees given for any public institution or authority otherwise than by or under the authority of legislative enactment," the lawmaker added.

The Grand Kru County lawmaker said his communication was as a result of a discussion held between he and the Public Works Minister, William Gyude Moore, at which time he was informed that the only solution to the road problems in Liberia was pavement and to pave all the primary roads in the country would cost the government about US$2.2 billion.

Similar proposal was made by Representative George Mulbah of Bong County, but his was in the tone of US$5 billion.

After completion of the Heavily Indebted Poor Country (HIPC), the Government of President Sirleaf in 2010 won from the IMF and the World Bank a US$4.6 billion debt waiver, an amount government's before Sirleaf's regime incurred.

Liberia's economy crumbled due the protracted civil war, causing the country to have the highest debt-to-GDP ratio in the world.

In this context, the authorities agreed to the appointment of external financial controllers in key agencies including the Ministry of Finance, the Central Bank, and important state enterprises under a donor-funded governance and economic management program to support financial management. As domestic capacity improved, the financial controllers were withdrawn.

Following the inauguration of President Johnson Sirleaf in January 2006, Liberia established an encouraging track record of macroeconomic management and structural reform under an IMF staff monitored program, with additional support through intensive technical assistance and policy advice.

In March 2008, the country formally began the debt relief process when it reached the interim stage, or decision point, under the HIPC Initiative and embarked on a three year IMF-supported financial program.

During that visit, President Ellen Johnson Sirleaf said she was confident that Liberia would have met the HIPC completion point despite challenges.

"We concentrated on building the institutions, getting the laws, getting our public financial management law passed, making sure we got a general auditing commission that's functioning, making anti-corruption effective," she said.

Comprehensive debt relief was linked to demonstrating a commitment to poverty reduction, sound macroeconomic policy, strong public financial and resource management, and governance reform.

It was expected that debt relief would allow Liberia secure additional financing, in initially modest amounts, to help deliver critically needed services and infrastructure necessary for the country's development.

IMF first Deputy Managing Director John Lipsky said during a visit to Liberia, "Liberia's own economy and social policies, political stability, and above all continued peace and security could have been of paramount importance to delivering the better Liberia that all hoped for".

With Sirleaf government already piling up more debt, and a significant decline in the prices of Liberia's major exports - iron ore and rubber, critics will begin to weigh in on the economic sanity of this US$2.2 debate proposal.

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