President Ellen Johnson Sirleaf has informed the Liberian Senate that the Government of Liberia owes the Central Bank of Liberia US$259.3 million which represents a long standing capitalization requirement that has not been honored.
President Sirleaf warned that the matter is likely to become a major issue in Fiscal year 2016/2017 when the notes start to mature.
She pointed out that the country’s debt strategy requires that before any new borrowing is undertaken, a debt sustainability analysis is undertaken so that the debt threshold under approved fiscal rules and agreed limits under the International Monetary Fund programs are not breached.
The President’s statement was contained in the master letter that accompanied two letters of loan agreements submitted for ratification, between the Government of Liberia and the International Development Association for the Accelerated Electricity Expansion Project.
She reminded the lawmakers of the September 16, 2010 Liberia external debt cancellation of US$4.9 billion that had accumulated, which was not serviced for over two decades.
However, she pointed out that certain loans on the debt schedule did not qualify for cancellation. Those debts comprised sixteen loans valued at US$415 million of which US$156 million represents reconciled restructured external debt and US$259.3 million accounts for validated restructured domestic debt largely owed to the CBL as GOL capitalization to the Bank.
President Sirleaf disclosed that at the end of December 2015, a total of 38 loans amounting to US$802 million were contracted of which U$26m represents loan sourced from external creditors with a value of US$792m and six sourced from domestic creditors at the value of US$10m.
“To date, a total of US$315 million of external loans have been disbursed leaving an undisturbed balance of US$477 million, while the US$10 million domestic borrowing has been fully disbursed,” she said.
She said the external debts have an average maturity including grace period of 30 years with an average interest rate of 1.5%. She stated that the bulk of the debt is sourced from the country’s partners with bilateral and multilateral institutions.
Regarding domestic debt stock, President Sirleaf said it represents unpaid commercial debts and suppliers’ credit inherited by her government from previous administrations.
“In 2006, this domestic debt totaled US$1.2 billion which was reduced to US$281 million as a result of a verification exercise by an international accounting firm. We continue to reduce this debt as budgetary appropriation allows,” President Sirleaf said.
The letter was sent to the relevant Senate committees.