Questions remain unanswered about GOL loan guarantees
Forty-eight members of the House of Representatives in its 34th day sitting yesterday, Tuesday, June 5, ratified the US$536.4 million Loan Agreement, and forwarded it to the Senate for concurrence, although questions still remain unanswered about what guarantees are being offered by the Government in return for the loan..
It was reported that the loan would be ratified on Thursday, but was unanimously approved in Tuesday’s session instead. The Agreement was signed between Eton Finance PTE Limited and the Government of Liberia (GoL).
The Lower House unanimously approved the US$536.4 million Loan Agreement following a report from the Joint Legislative Committee on Ways, Means, Finance and Development Planning and the Judiciary, which was signed by all 22 members of the Joint Committee.
The Joint Committee said the ministries of Finance and Development Planning (MFDP), Public Works (MoPW), Justice, a Civil Society Movement that includes the general public, who were invited to the public hearing, affirmed their explicit confidence in the Eton Financing Loan Agreement proposed by President George Weah in the amount of US$536.4 million with an interest rate of 1.46 percent per annum.
The committee said the payment of said amount commences after seven years of the Loan Financing Agreement (Operation Date) and for the purpose of the construction of the Buchanan-Cestos City, Greenville-Barclayville, the Barclayville-Sasstown, the Barclayville-Pleebo, the Medina-Robertsport and the Tubmanburg-Bopolu roads.
It added that there will also be the construction of rest stops and roadside service areas; the construction of a vocational training center in Greenville, Sinoe County; the construction of mini soccer (football) stadiums in Harper, Maryland County, Barclayville, Grand Kru County; Greenville, Sinoe County; Cestos City, River Cess County; Zwedru, Grand Gedeh County; Robertsport, Grand Cape Mount County and Bopolu, Gbarpolu County.
“It is expected that construction period will be within 48 months from the day of commencement, which begins three months after the deposit of the first trench of the loan into the Central Bank of Liberia,” the committee said.
“Mr. Speaker and distinguished colleagues, the proposed Coastal Corridor Road Projects submitted to the Legislature by the President in the wisdom of the Joint Legislative Committee on Ways, Means, Finance and Development Planning and Judiciary is timely and from all indications expressed the wishes of the Liberian people in terms of actualizing the GoL’s ‘Pro-poor Agenda’ under its social infrastructure development,” the committee said.
The Plenary of the House of Representatives has already voted to forward the US$420.8 million EBOMAF SA Loan Agreement to the Joint Committee on Ways, Means, Finance and Development Planning and Judiciary. The Joint Committee is expected to hold public hearings on Wednesday, and the loan would be approved Thursday, June 7.
Meanwhile, there are strong concerns that the public still remains virtually in the dark about what kind of collateral (sovereign guarantee) is being offered to the providers of the credit should in case the Liberian government default on the loan. Although there are hints that the Central Bank of Liberia guarantee the loan, many analysts are of the view that the Central Bank of Liberia which is reportedly heavily indebted to local commercial banks on whose reserve requirements the Bank is said to have made draw downs, may not be in the position to guarantee the loan.
Such concerns including the financial viability of the relatively unknown Eton Finance according to a University of Liberia professor, are being downplayed by government officials Especial mention is made of Justice Minister, Musa Dean who has scoffed at the idea that this Eton finance company does not even have a website as is expected of a financial institution offering such a colossal sum of money as loan to the government of Liberia.
Many have also expressed fears that the Wologisi iron ore deposits estimated to be worth over a billion dollars may very well be mortgaged to Eton Finance in similar fashion as done by former President Sirleaf with the Western Cluster ore deposits. Exclusive exploration and mining rights were awarded to the Elenito company which according to some was hitherto a scrap dealership.
Whatever the case, the deal to secure the loan appears sealed apparently with its endorsement by the House of Representatives which has now forwarded it to the Senate for concurrence. Whether the Senate will pass on it as expected remains to be seen. Observers however say unlike former President Sirleaf who usually got her way through coercion and financial inducement with the case of Exxon Mobil payout to NOCAL officials being a case in point, President Weah may not as yet be as adept as his predecessor but may very well master the ropes in a not too faraway time.