‘US$536.4M Loan Could Have Serious Consequences for Liberia’ -CePAR

(From left) Finance Minister Tweah and Public Works Minister Nyenpan signed the The ETON Finance agreement on behalf of the Government of Liberia. Justice Minister Dean added his voice, calling for the agreement to be expedited at the Legislature.

Actual interest cost estimated at 12%, as opposed to 1.46% in loan agreement

The ETON Finance PTE Limited-Government of Liberia Loan Agreement worth US$ 536.4 million and currently before the Legislature for ratification may have serious financial repercussions if the Legislature approved the deal, a 21-page document issued by the Center for Policy Action and Research (CePAR) said in a release yesterday.

The analysis was done by CePAR’s Stephen R. Johnson (lead), Francis Kiazolu, Alieu F. Nyei and M. Boakai Jaleiba, Jr. The release said they analyzed both the loan agreement and the company’s capacity to provide the service to the country as well as the credibility of ETON Finance PTE Limited, who is to provide the funds.

The key findings by the report indicated that the actual interest cost to the government over the duration of the loan is estimated at US$62,651,520 or 12% of the loan. This excludes other charges and default penalties that may accrue. Total repayment is estimated at US$599,051,520.

The report further said that seven years later when this loan is ready for repayment, the Government of Liberia (GoL) will have to make a payment of US$43M. This will include an annual repayment of US$35.6M and interest charge of US$7.8M.

“Considering that most of the loans on Liberia’s books will have to commence repayment of principals in the next decade, we may end up with the budget significantly dedicated to salaries and loan repayments”.

“The borrower’s (GoL) banking detail is absent. GOL certified account should be provided to ensure that the funds are paid directly to the government instead of a private account.

“If approved by the Legislature, the loan will bring the Total Extended Debt Stock to about $1.2 billion, a 98.52% increase. There exists no clear provision over what occurs in the event of a default. Will the interest rate change if the country defaults?

ETON FINANCE PTE LIMITED, with Registration No. 200510984K, was incorporated in Singapore on August 10, 2005, as an exempt private company limited by shares. Its principal activities included other holding companies and ‘general wholesale trade (including general importers and exporters)’.

However, as reported by the Singapore Government through its Accounting and Corporate Regulatory Authority (ACRA), ETON Finance Private Limited applied to strike off (close the company) its name from ACRA registry. The ‘strike off’ application was approved on January 10, 2017, ceasing the operations of the company. Consequently, ETON Finance Private Limited does not presently exist as a legal entity in Singapore,” the report indicated.

It further said “Under Singaporean law, after a company is struck off, it can be restored within 6 years only through a court order. ETON Finance PTE Limited can only do a legitimate business in Singapore where it was incorporated through a court order lodged and filed with Singaporean authority. Until this is done, there are legal repercussions for anyone doing business with ETON Finance Private Limited registered in Singapore.

“In Hong Kong, ETON FINANCE PTE LTD. same as the name used in Singapore was only incorporated on 16 March 2018, probably about the same time negotiations for the current agreement was started. Specifically, every evidence points to the fact that ETON Finance PTE Limited was established purposefully for this loan agreement. Since the Singapore branch is legally dissolved (struck off), the only legal entity of ETON Finance capable of a normal business transaction is ETON Finance-Hong Kong, which is currently about two months old.

“There is no available website and accessible business information for ETON Finance PTE Limited to justify doing business with such a company.

“ETON Finance PTE Limited, the firm that is said to be ‘duly constituted, registered and existing under the laws of Singapore’ has its bank (DBS Bank) in Hong Kong and not Singapore. Besides, the physical location as highlighted in the loan agreement of the lender’s bank (DBS Bank, Hong Kong Limited) is only about 500 meters away from the newly-registered,” the report noted.

ETON Finance Private Ltd., Hong Kong

The four financial experts pointed out in their report that, “More specifically, they are reportedly in the same business center. The agreement insists that a subsidiary of ETON Finance PTE Ltd., MAEIL Liberia Construction Co Ltd, be the primary firm for the implementation of the loan. This is a flagrant violation of the PPCC laws and/or does not support competitive bidding.

“Although the road projects may not be completed until after five years, the Liberian government will have all the funding for the road in its possession. This makes it extremely easy for the amount to be converted to personal use or for overnight lending,” the report noted.

In their conclusion, CePAR recommended the following: “The loan agreement before the Legislature is a bad document. It has severe consequences if ratified by the Legislature. It is a sloppy piece of work that demands a public reprimand of officials who affixed their signatures to the document.

“Whilst the rationale for seeking the loan for investment in capital projects is good, it must be emphasized that the ETON Finance PTE Limited agreement is problematic. It leaves no flexibility for future negotiations. Better options through bilateral and multilateral partners are available and must be sought as opposed to the ETON Finance PTE Limited loan. The ETON loan has no possibility of flexibility or an opportunity for a waiver.

“This is a loan and not a grant. The agreement should not insists that a subsidiary of ETON Finance PTE Ltd., MAEIL Liberia Construction Co Ltd., be the primary firm for the implementation of the loan. This is a flagrant violation of the PPCC laws and/or does not support competitive bidding. Besides, this demonstrates a lack of due diligence from the Government of Liberia. More information is required on the Liberian subsidiary of ETON Finance PTE Limited and its legal status.

“The repayment period is too short for the size of the loan. The use of a CBL Sovereign Guarantee and the stipulation of the clause “ the Sovereign Guarantee should take the form and substance satisfactory to ETON” is a financial black box. The balance sheet of the CBL will be affected and the guarantee will be placed as a contingent liability thus posing a threat to the national reserves. Embassies across the world could be the first casualties in the event of a default.

“It must be emphasized that GoL has not shown a clear statement of opinion from the IMF or the ADB on the viability of the loan and the authenticity of the lending party. Since the IMF is the leading global player in international finance, the Legislature should seek an opinion from the Fund. We do not want a crippling debt crisis like Greece that saw living standards plunge, with Greeks rummaging dumpsites for food and ratcheting suicide rates because of punishing austerity caused by the unsustainable debt burden. This poses an enormous risk of international isolation as the Bank and Fund have started signaling warning signs already about Liberia’s current debt levels.

“Lastly, if the Legislature insists on ratifying the loan agreement, the GoL negotiating team should be required to present a credible forecast of the state of the Liberian economy by the period of commencement of loan repayment. The economic rate of return on the road investment is required to inform policymakers at the Legislature before the ratification. Liberia needs to see the growth trajectory or growth model. The legislature needs to demand that presentation.”

Finally, CePAR assured Liberians that it will always contribute to national policy discussions as to give the public a better understanding about national instruments affecting them directly.


  1. Based on the story above, and prior stories on this loan, the government might be in a legal jam if it was pressed to sue Eton for any breach in actions mandated by the agreement. Could they legally sue in Singapore, considering they knowingly chose to do business with a firm that’s not legally certified to do business has in the country of record on the agreement. Also, I read an earlier article with quotes attributed to the Minister of State, Mr. McGill, in response to concern rightly expressed by a Senator from Bomi. This quote, “There is no collateral, the only thing demanded by the borrowers is that the Central Bank should sign a sovereign guarantee and the Legislature should ratify. It is not where you borrow but who is willing to borrow you money; the options are many” is attributed to the Minister. His use of the term borrower/s appear or suggests lack of understanding of who the borrower is and who the lender is. You don’t borrow someone money, you loan them money, and borrow from. Also, Sovereign Debt Crises, can cause the interest rate on the debt to rise. It may also create burden on future generations of a sovereign country, as the country may be force to print more currency, albeit a devalued currency to meet it’s loan payment obligations. I suggest a thorough analysis should be done on the sources of revenue that will be depended on to repay the loan. It can’t be based on presumptions on what will be generated in revenue from these projects. Were there feasibility studies conducted on the economic potential of these areas (I.e., marketable products, skills, etc) and such documented? How does this impact the credit rating of the nation (e.g., you must consider if the loan agreement conflicts with prior agreements with the World Bank and IMF and their respective policy statements on Liberia debt obligations), and this is serious enough not to be overlooked. Also, has the government provided and documented how it would handle an unexpected crises like Ebola, and how it would sustain loan payment in the midst of such crises? We’re these analysis provided to the Legislature along with the loan agreement for ratification? Does the constitution provide a citizen the right to sue the government to provide transparency on the loan? Is this the most feasible or optimal level in obtaining loan? Why wasn’t a request for Expression of Interest issued by the government to allow various firms to submit bids and allow the government to choose based on proper risk management guidelines that meet and mitigate legal and compliance risk. I’m not sure if all the news articles have covered the facts of the agreement, but from what’s out there in the public square, this loan arrangement appears as a risk minefield and could subject future generations to carry the burdens. This is time for the branches of government to rise to the challenge and demonstrate their independence.

  2. Let make something clear here about this loan, where were these guys in the Ellen’s led administration, when we have perpetual budget shortfalls, some of them were employees of the Ministry Finance and development planning, are they telling us that the payment of their administration debts will soon commence so we must not think about development ?
    Look! we will not listen to these job seekers.

  3. This is a very good analytical report and it should be seen from that perspective. While it is true that Liberia needs infrastructure development, it cannot and should not be done at the detriment of the country’s future generation. Another point is the rush to rectify the loan agreement in absence of educating the Liberian public. It is the Liberian people that will be on the hook long after the president has grab his share of the money and gone. This president must have something under his sleeves for not declaring his assets and thereby pressuring the senate to rectify this agreement. I hope these senators will take their heads from their rear-ends for once and do the right thing for the country.

    • “This president must have something under his sleeves for not declaring his assets and thereby pressuring the senate to rectify this agreement.” That’s a very strong claim. Please clarify for us so we can learn.

  4. Here is my 2 cents. Even at 12% interest rate it’s doable. Provided, there are clear repayment structure in placed, it is not too strenuous on the Liberian People. The terms of the loan has to be transparent. There has to be a thoughtful and coherent plans project(s) lifecycle and revenue creation. The law makers really have to think risk analysis / risk reduction here. Hey, let’s face it… Liberia has to make bold decisions to get ahead. It’s as simple as that. We need those roads badly and me need those jobs creation bigly. Take Rwanda for example sponsoring Arsenal FC; it goes against logic. However, it is absolutely brilliant.

    • Robert, I know we need everything badly, but I think we need to do it right. Our people are not trusted, someone is about to build so many houses. I also believe that the payment of this loan will be important. What is inplace to repay these loans, people in the government are not showing us anything that the government can do to repay some of these many loans that we are getting. Everybody in the country have to be part of what is going on, take for example, we are talking about road building, what has the government done to maintain these road if they are build? Take for example the Monrovia -Ganta or the Buchanan road, what is in place to maintain these road-nothing. Our people are not pro-active, we are passive, we do not think for the future, we all sit around and talk-so we need to be productive after 170 plus years.

  5. Yor bee careful with dis one, says dey wise old owl, I see faryah behind dis one oh, too many IFS AND BUTS insar dis loan yor tryin to get oh. Dey way I see dis ting, it lookin lik dey British Pepo loan, way, way back wen we were not able to pay, den dey took over our Customs office an started collecting our REVENUE oh; now I hear yor talkin about Central Bank; I say, yor take time in life oh, befour awah children dem curse us in our graves oh.

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