Ellen’s 4th Letter for Loan: US$144m Needed for Post-epidemic Development Agenda

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Amidst news of steady progress in the containment of the deadly Ebola Virus Disease (EVD) which has killed over 3,000 persons and imposed a severe strain on the economy, President Ellen Johnson Sirleaf has requested the ratification of a 4th Loan Agreement this time to the tone of US$144 million for “the country’s development agenda after the Ebola outbreak”.

Even though the President did not outline the development plans in her letter to House Speaker J. Alex Tyler, dated October 15, 2014 (reference index EJS/MOS/RL/606/2014), she stressed that her action is intended to mitigate the negative impact of the economic slowdown created by the epidemic.

The financing agreement is tagged as the “Dollar Credit Line Agreement between the Government of Liberia and the Export-Import Bank of India.”

The Liberian Chief Executive argued that the agreement would purposely address one of the two economic constraints to sustained growth in Liberia, which is the lack of affordable and reliable power.

“This agreement will finance transmission and distribution of up to 50MW in northern and central Monrovia,” the President noted. “By ratifying this and other such instruments now, we can begin the tendering and other preparatory activities for such public sector investment projects, thereby allowing us to commence immediately after the outbreak.”

According to the President’s letter, the money will be credited from the EXIM Bank in India and not more than US$1.75m is to be earmarked for preparation of feasibility studies for the project.

“Mr. Speaker, I ask for ratification of this instrument for the fiscal space that is needed to continue our development agenda after the outbreak,” the President said.

The EXIM Bank

Established in January 1982, EXIM Bank’s main objective is to boost India’s export promotion drive and to pay for the increased imports. The Bank is responsible for providing refinancing facilities to the commercial banks and other commitments in the areas of exports and imports.  As for Loans to Foreign Governments‚ Companies and Financial Institutions, there are three mandates: Overseas buyers credit directly to foreign importers for import of Indian capital goods and related services; Lines of credit to foreign Governments and financial institutions for import of Indian capital goods and related services and Re-lending facilities to banks overseas to enable them to provide term finance for import of Indian capital goods.

As observed in the Export Import Bank of India Act, 1981: “……the Bank may grant, in or outside India‚ loans and advances by itself or in participation with any bank or financial institution whether in India or outside India‚ for the purpose of export or import and shall also function as the principal institution engaged in financing of the export and import in such manner as it may deem appropriate….”

Recent Loan Ratification Requests total US$227.61 million

This means since the outbreak of the virus, the President has so far written the National Legislature to ratify four (4) separate Loan Agreements, totaling US$227.61 million.

According to the President’s argument, the endorsement of US$62.31 million would be an additional funding to fight the Ebola virus and to support the government’s effort to address the budget deficit, which has resulted from the epidemic.  The financing agreements for this amount are the African Development Fund (ADF) Loan Agreement for Ebola Sector Budget and the Transitional States Facility Loan Agreement for the Ebola Sector Budget Support.

The President also sought the concurrence of the Legislature to ratify a US$21.3 million Loan Agreement to improve the condition of roads in the country and the wellbeing of civil servants.

So far, the House has only approved the US$21.3m.  Of this amount, according to the Loan Agreement, signed between the Liberian Government and the International Development Association (IDA), US$19.2m, dubbed “Second Additional Financing for Urban and Rural Infrastructure Rehabilitation Project”, will be used to improve the condition of access roads from Monrovia to Ganta as well as other rural roads.

The remaining US$2.1 million is to improve pay management of civil servants, which includes upgrading the caliber of Liberia’s civil service, and the classification of civil servants, under the financing agreement, “Public Sector Management Project.”

The remaining three Loan Agreements, totaling US$206.3m including the President’s latest US$144m request, are under scrutiny by the Committees on Ways, Means and Finance and the Judiciary.

The Ways, Means and Finance and the Judiciary, chaired by Representatives Emmanuel Nuquay and Cllr. S. Gayah Karmoh, are to advise the Body on these agreements within a week.

Liberia’s Worst Nightmare

Liberia is in the midst of its worst crisis since fifteen years of brutal civil war came to an end a decade ago. From late June to the end of September, Ebola cases were mounting, the health system is all but broken.  A month ago, security units fired shots at people who were attempting to break a quarantine that had overnight been imposed on West Point, a neighborhood of over 75,000 people. A 15-year-old boy was killed in the tragic incident, sparking outrage and sadness in a country whose society has already been torn by the epidemic.

More than 3,000 persons have died of the Ebola virus, including foreign heath personnel and a diplomat; and nine counties, which have about one million Liberians, were under quarantine.

Of late, developed countries have become more proactive to save lives in West Africa, including Liberia, and the outbreak now appears to be subsiding.  Several nations and international organizations including the UN and the USA; the MSF, the Samaritan’s Purse have greatly assisted in bringing the virus under control.

The long-term effects of the Ebola outbreak in Liberia are impossible to predict, but they are certain to be profound. Economic activity is grinding to a halt and the price of food has begun to climb. In a country where a large majority of the population lives on less than three dollars per day, an increase in food costs is a matter of overwhelming consequence.

To begin, the top-down economic strategy that emphasized economic growth above all and which failed to consider the social context in which that growth was taking place has proved to be deeply flawed. Even if the outbreak had not exposed the social fractures that lay behind the country’s progress, grievances and mistrust bubbling in places like West Point would have eventually erupted. Development partners must do a better job of insisting that issues like corruption, disparate access to justice, land tenure, and housing rights rise to the top of the agenda. In addition, bottom-up accountability mechanisms that give average citizens a greater role in policing officials and determining how and where money is spent are desperately needed.

No amount of GDP growth or foreign investment is likely to produce a functioning, stable society without the perception that all its members are equally valued. While growth is important, the Ebola outbreak has showed that if it does not translate to a sense of inclusion, hard-earned progress can be undone nearly overnight. Nobody could have planned for Ebola, but for years the country’s partners stood mostly mute while frustration rose in the streets and the government became widely resented.

Liberia’s poor believe that the international community “chooses” their leaders, and then shrugs when those leaders treat them callously. In the aftermath of the ongoing Ebola tragedy, it will be necessary to combat that view, and to ensure that development interventions are geared towards building trust between Liberians and their government, even if it means picking a fight with politicians.

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