Liberia’s total debt stock has reached $2.5 billion, with domestic debt exceeding $1 billion, largely due to excessive borrowing. Finance Minister Augustine Ngafuan emphasized the need to restore financial credibility, reduce dependency on loans, and improve infrastructure. A positive economic outlook projects 6% growth, with plans to enhance electricity access and support local production.
In a recent address, Liberia’s Finance and Development Planning Minister, Augustine Ngafuan, highlighted the nation’s debt crisis, revealing that the total debt stock has exceeded $2.5 billion, with domestic debt alone surpassing $1 billion. This situation has resulted from extensive borrowing during the administration of President Weah and Vice President Taylor, primarily from commercial banks, to finance government operations. Consequently, there has been an accumulation of unpaid obligations, contributing to the rising domestic debt burden.
Minister Ngafuan commented, “The debt stock of Liberia is over $2.5 billion—both external and domestic. Domestic debt alone is above $1 billion. The Liberian government owes a lot.” He noted that historical defaults by previous administrations have fostered a trust deficit with creditors, complicating business engagements between the government and vendors or contractors.
In response to this crisis, Ngafuan mentioned that the government borrowed $80 million from the Central Bank of Liberia to cover civil servants’ salaries. He expressed a firm commitment to restoring financial credibility by fulfilling obligations and improving relationships with commercial banks. The minister stated, “Commercial banks are beginning to trust the government again, and we are making payments on interest owed.”
To combat fraudulent claims, the General Auditing Commission (GAC) verified vendor debts and identified fraudulent claims totaling over $400 million. Ngafuan remarked, “We are reversing the situation, and confidence is returning.” Current policies require that vendors provide services before receiving payment, which is anticipated to enhance accountability.
Despite the debt challenges, Ngafuan expressed a hopeful economic outlook, projecting a growth rate of 6% for the year. He emphasized government plans to broaden the tax base and enhance revenue mobilization to decrease reliance on external loans. “Our goal is to gradually reduce reliance on aid while enhancing domestic resource mobilization,” he remarked, noting the focus on optimizing revenue from the extractive sector.
Additionally, Liberia has been identified alongside eleven other African countries to develop an energy compact with the World Bank and the African Development Bank. This initiative aims to increase electricity access from 30% to 75-80% by 2030, through investments in infrastructure such as the new hydroelectric facility, St. Paul Two, and enhanced solar energy generation, requiring a total investment of approximately $1.3 billion.
Minister Ngafuan emphasized the critical nature of reducing high electricity costs, which hinder economic growth. He stated, “Making power more accessible and affordable will ease financial burdens on businesses, particularly small enterprises struggling with high operational costs.”
Further, he acknowledged the importance of infrastructure development, particularly in road improvements, to stimulate economic activity. “Better roads mean improved connectivity, allowing farmers to transport goods efficiently and reducing losses due to spoilage,” he commented. Furthermore, engagements with various stakeholders aim to refine operations at the National Port Authority to enhance business efficiency and promote job creation through the support of domestic production efforts.
In conclusion, the Liberian government’s financial predicament necessitates urgent action to manage its rising debt stock, currently over $2.5 billion. Minister Augustine Ngafuan’s plans to enhance revenue mobilization, improve infrastructure, and restore trust with creditors signal a commitment to economic stability. By addressing power costs and bureaucratic obstacles, the government aims to foster business growth, ultimately enhancing the country’s economic outlook and sustainability.
Original Source: frontpageafricaonline.com
