Liberia: ​Senate Eyes Statute of Limitations for Domestic Debts

The Senate has approved a report by one of its standing committees to cap the government’s domestic debt payment timeframe, allowing lenders to claim their debts within a specified period.

In a report, the Senate Joint Committee on Ways, Means, Finance & Budget, as well as Public Accounts and Audit, called for a law that will establish a statute of limitations for creditors of the state to claim their debt within a given period. If the Senate’s move is crafted into a bill and becomes law, it would require the Ministry of Finance and Development Planning to service local debt in a specific time frame instead of the current protracted payment period employed by the ministry.

The Senate believes that such a law is needed to avoid a vicious cycle of paying the domestic debt, as it could give the ministry impartial information to plan its debt-servicing routines. According to the Ministry of Finance's fiscal outturn report for January 1 – March 31, 2022, Liberia’s total public debt stock amounts to US$1.803 billion. Of this amount, domestic debt stock accounts for US$744.9 million, while external debt is US$1.058 billion. 

The former represents 41.3 percent of the total debt stock, while external debt accounts for 58.7 percent, and compared to the same period of last fiscal year, debt stock shows an increase of 10.2 percent. 

During this period, debt service amounts to US$23.5 million at the end of March 2022. Of this amount, domestic debt service amounts to US$15.2 million, accounting for 64.5 percent (principal repayment accounts for 79.1 percent, while interest repayment accounts for 20.9 percent). 

Compared to the same period of last fiscal year, debt service shows an increase of 2.8 percent. and if this trend continues, it would take the government almost a decade to clear its present  US$744.9 million domestic debts. The Deputy Finance Minister for Economic Management, Augustus Flomo, said: “It will take the government ten years at least to pay the US$708 million domestic debt.”

According to him, the government has “set aside US$72 million for domestic debt in the 2020-2021 budget and another US$69 million in the 2022 budget to help the country pay its debts.” Some of these debts are owed to the Central Bank of Liberia, in the amount of  US$233 million, the National Social Security and Welfare Corporation, US$50 million, and commercial banks US$55 million and date back more than five years ago.

The Senate committee report came five months after Finance Minister Samuel Tweah had informed the public five state broadcasters ELBC on March 2, that the government does not have a fully comprehensive list of all its domestic debts owed from the era of the country’s first president to now.

Tweah, however, noted that they were working with the General Auditing Commission (GAC) to have the full list of all government domestic debts cataloged — a process that is still ongoing. This had led to members of the Senate demanding that GAC speed up the vetting of all claims of domestic debts to establish legitimacy and authenticity, rather than later.

The Senate believes that by GAC fast-tracking the process, they will have time to review the report that comes from the process — leading to appropriation for servicing domestic debts in the 2023 national budget. 

The Senators also legitimacy is needed to restore public trust and confidence in the domestic debt servicing process and “ensure that state resources are expended in accordance with established laws, regulations and standards.”

The issue of domestic debt has proven to be politically sensitive this year for Senators, with Montserrado County Senator Abraham Darius Dillon arguing for months that domestic debt stock remains high from one fiscal year to the other even though projections for servicing domestic debts in consecutive fiscal years are largely realized. 

And while some Senators have been reluctant to help get the full picture of the country’s domestic debt position — entrusting that task with the Ministry of Finance, few other Senators have insisted the Senate investigate the issue, asking colleagues for support.  This persistence has now led to a Senate joint Committee report, which has been endorsed by the plenary to ensure that a law is crafted to put a cap limit on the time it would take the Ministry of Finance to settle the domestic debt.

While the task of drafting such a bill now falls in the hands of the Senate Judicial Committee, it is yet unclear when such a move will be made and whether the Senate will pass its version before the end of the year.

Meanwhile, the Senate has resolved to grant semi-financial autonomy status to the Liberia National Commission on Small Arms, amending the Act creating the Liberia National Commission on Small Arms to provide for the establishment of the Liberia National Commission on Arms, “thereby expanding the Commission’s mandate to cover small arms, light weapons, and conventional arms.”