Liberia’s debt stock has surpassed $2.5 billion, with domestic debt exceeding $1 billion, mainly due to excessive borrowing under the current administration. Efforts to rebuild trust with creditors are underway, with optimistic projections of 6% economic growth this year and plans to improve energy access and infrastructure. The government is committed to enhancing revenue mobilization and supporting local production to stabilize the economy.
Monrovia’s Finance and Development Planning Minister, Augustine Ngafuan, reported that Liberia’s total debt has now exceeded $2.5 billion, with domestic debt over $1 billion. The increase in debt is primarily attributed to excessive borrowing under the current administration, particularly to fund government operations. This has resulted in significant unpaid debts to various contractors and service providers.
Ngafuan expressed concern that previous administrations often defaulted on payments, creating a trust deficit between the government and its creditors, which hampers business engagement. Efforts are underway to alleviate this issue and rebuild trust, with the government making payments on interest due. He noted that commercial banks have started to regain trust as vendors and contractors are beginning to engage with the government for business.
To resolve payment issues, the General Auditing Commission (GAC) has been verifying debts owed, uncovering fraudulent claims over $400 million. Ngafuan highlighted a shift in policy, stating that vendors must deliver before payments are made, which is restoring confidence in the government’s payment system.
Despite the challenges, Ngafuan remains optimistic about Liberia’s economic prospects, forecasting a growth rate of 6% this year. The government is focused on enhancing tax base and revenue collection, aiming to decrease reliance on financial aid while tapping into new revenue sources, particularly in the extractive sector.
Additionally, Liberia has been designated by the World Bank and African Development Bank as one of 12 African nations to develop an energy compact to improve electricity access significantly. Plans for a new hydroelectric project, St. Paul Two, and expanding solar energy are underway, with an estimated $1.3 billion needed for implementation.
Ngafuan emphasizes that reduced electricity costs would foster business growth by relieving operational burdens. He also highlighted the critical need for improved infrastructure, particularly roads, to enhance logistical efficiency, facilitating farmers in transporting goods and minimizing spoilage.
Engagements are ongoing to streamline business operations at the National Port Authority, with a focus on extending operational hours and implementing online transactions for greater efficiency. These measures aim to boost local production and create job opportunities, significantly impacting the trade balance positively.
The minister reaffirmed the government’s commitment to stabilizing the economy and repairing relationships with creditors and investors, ensuring that various incentives are in place to support domestic production.
The Liberian government, under Minister Augustine Ngafuan, faces significant challenges due to a escalating debt crisis exceeding $2.5 billion. With efforts directed towards rebuilding trust with creditors, enhancing revenue mobilization, and infrastructural development, the government aims for economic growth. Strategic plans in energy and road improvements reflect a commitment to stabilizing the economy and fostering business activity. The focus now lies on reducing dependence on loans while ensuring that financial obligations are met promptly.
Original Source: frontpageafricaonline.com
