Liberia Sinking in Fresh Debts

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Barely three years following completion of HIPC and attaining US$4.9 billion debt relief from foreign creditors, Liberia is sinking into new debts once again.

According to the Central Bank of Liberia (CBL), the country’s total public debt stock in the first quarter of 2014 rose to US$660.6 million, raising grim prospects for sustained economic growth.

This amount, the CBL says, constitutes about 31.2 % of nominal gross domestic product (GDP) and is up from US$630.6 million during the same period in 2013. Compared with the previous and corresponding quarters in 2013, Liberia’s public debt stock grew by US$30.0 million [4.8 percent] and US$95.1 million [16.8 percent], respectively.

Both external and domestic debt stocks at THE end of the first quarter, 2014, stood at US$365.7 million [17.3 % of GDP] and US$294.9 million [13.9 % of nominal GDP], constituting 55.4 percent and 44.6 percent of the country’s total public debt stock at the end of the quarter.

The rise in the country’s external debt stock, the CBL noted, was attributed to new borrowings from the European Investment Bank (EIB), the World Bank’s fund for the world’s poorest countries; the International Development Association (IDA) and the International Monetary Fund (IMF) as well as domestic sources from financial institutions.

In its Financial & Economic Bulleting for the 1st quarter of 2014, the CBL disclosed that external debt stock at the end of the quarter rose by US$27.9 million and US$75.2 million to US$365.7 million [17.5 % of nominal GDP] at end-March, 2014, compared with the debt stock of US$337.8 million recorded at end-December, 2013, and the corresponding period accumulation of US$290.5 million in 2013, respectively.

“Multilateral debt stood at US$243.7 million [11.6 % of nominal GDP] at end-March, 2014, up from US$215.5 million and US$157.2 million stockpiles in the previous and corresponding quarters in 2013, respectively,” the Bank said.

On the bilateral front, the country’s debt stock at the end of March, 2014, stood at US$122.0 million [5.8 % of nominal GDP], decreasing by US$0.4 million when compared to the amount recorded in the previous quarter.

An annual comparison, meanwhile, shows that bilateral debt stock declined by US$11.2 million when matched against the level recorded at end of March, 2013. The CBL has attributed the growth in the country’s external debt stock to increase in credit from multilateral organizations.

Domestic Debt

The domestic debt component of total debt overhang in the first quarter of 2014 rose to US$294.9 million. The increase constitutes about 14.1 percent of nominal GDP, growing by 0.8 percent compared to the stockpile of US$292.7 million recorded at end of December, 2013.

 In its first quarter Financial &Economic Bulletin, the CBL said the growth in the country’s domestic debt stock was primarily attributed to increase in credit from domestic sources, mainly financial institutions.

When matched against its level at end-March, 2013, domestic debt stock increased by US$19.9 million. Meanwhile, domestic debt stock to financial institutions also increased by US$2.2 million [0.8 percent], up from US$285.8 million at end-December, 2013, to US$288.0 million [13.8 percent of nominal GDP] at the end of the quarter.

Compared to the corresponding quarter in 2013, the CBL observed, domestic debt to financial institutions rose by US$20.8 million [7.8 percent] at end-March, 2014, and constituted 97.7 percent and 43.6 percent of domestic debt and public debt stocks, respectively. Domestic debt to suppliers’ credit and salary and allowances at end of March, 2014, stood at US$1.9 million and US$5.0

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