Lawmakers in the House of Representatives were reported by our Legislative Correspondent, Leroy Sonpon, III yesterday as having mandated President George Weah to source more loan agreements in addition to the ones being ratified.
The lawmakers’ mandate to the President follows the signing of a US$536.4 million loan agreement between government and Eton Finance Private Limited and a US$420.8 million loan agreement between government and EBOMAF S.A. These agreements were quickly passed without much debate on the source of the loan or the kind of sovereign guarantee being put up.
Neither was there any substantive debate about the ability of the Government of Liberia to repay the money within the agreed time limits. As of December 31, 2017, according to the World Bank fact book, Liberia has an external debt of 1.049 billion to be paid in internationally accepted currencies to private institutions and nonresidents for goods or services.
Not content with the two loan agreements signed, and apparently without taking into consideration the burden of accruing huge debts, our lawmakers are mandating the President to negotiate yet more loan agreements. The Joint Resolution from the House of Representatives mandating the President to outsource Liberia’s debt has been sent to the Senate for concurrence.
Why are the lawmakers so interested in incurring further debt? As noted, Liberia already has $1.049 billion debt and this administration has already increased its debt portfolio by signing two new loan agreements. Yes, Liberia needs good roads and other basic infrastructure, but what good will it do for our future if the very country and people for whose use the roads are intended, fall into debt servitude?
The loans come with sovereign guarantee requirements that can be exacting and they could potentially have a debilitating effect on the country’s economy. The sovereign guarantee being offered is however shrouded in secrecy. Claims by some officials that the Central Bank is putting up the sovereign guarantee are questionable since it is an open secret that the Central Bank is heavily indebted to local commercial banks and does not have the kind of liquidity which would allow it to guarantee such astronomical sums.
That aside, sources of the loans being sought remain controversial to the point where some global financial institutions including the International Monetary Fund (IMF) have advised government not to go into the agreement with the Eton Finance Company. We had genuinely believed that by now our lawmakers would have been meeting with their people to explain the benefits of the loan agreements they have ratified and how the country will pay the money back.
To the contrary, instead, they are justifying their desire for money by quoting Article 34d (iii) of the Liberian Constitution that gives them the power to enact laws for incurring external loans. In as much as Liberia needs money for development, we have to be careful how to go about borrowing because in the end, we will have to pay back with interest and on terms that could be very steep.
Moreover, Liberia has to make use of its available resources to generate indigenous capital for development instead of relying solely on foreign loans and grants. There are many potential sources in this country from which to generate money including tourism and agriculture just to name a few. Investing in these areas can also raise capital to help construct some of our roads.
To save money, government should also take strong measures to curb corruption and cut down unnecessary waste. This will also realize savings which can be plowed into development. We recall that during the campaign period our lawmakers pledged before man and God to represent the best interests of the people.
This newspaper wonders therefore whether our lawmakers have held adequate consultations with their respective constituencies before arriving at the decision to incur further debt. From the look of things, our lawmakers appear eager to promote infrastructure development.
However, it is troubling to note that our lawmakers are not exercising sufficient due diligence regarding the source of the funds or the kind of sovereign guarantee creditors are requesting in return for the loan.
As the Senate begins its debate on the proposals forwarded to it by the House of Representatives for concurrence, we urge our Senators to consider well before rushing into uncharted territory like the proverbial “fools who rush in where even Angels fear to tread.”