World Bank Suspends Liberia’s Access to Loans
…. “We sincerely hope that all such payments will be cleared soon to allow the resumption of withdrawals for the execution of the important operations the Bank has been supporting,” Diagana’s letter to the Minister of Finance, dated November 15, noted.
The World Bank has suspended Liberia from accessing "unwithdrawn loans" due to the failure of President George Weah's administration to service previously disbursed loans.
The Bank's decision, which raises concerns about the country’s economic stability, comes as the outgoing Weah administration is 60 days behind on its debt repayment.
Ousmane Diagana, the World Bank Vice-President of the Western and Central Africa region, noted in a statement that the suspension decision comes after the outgoing Weah administration failed to meet its debt payment obligations, despite Finance Minister Samuel Tweah being notified ahead of time on October 31.
“Effectively from November 15, the right of the respective borrower to make any further withdrawal of unwithdrawn amounts under the disbursing loans and the right to make any further withdrawal of unwithdrawn amounts under the trust fund grants and loans are collectively suspended,” Diagana added.
“We sincerely hope that all such payments will be cleared soon to allow the resumption of withdrawals for the execution of the important operations the Bank has been supporting,” said Diagana's letter to Liberia’s Minister of Finance, Samuel D. Tweah Jr., dated November 15.
According to the letter, the suspension would affect financing from the International Development Association, Project Preparation Facility Advances, and Institutional Development Fund grants.
The suspension, the letter added, is also expected to affect other grants and loans financed under trust funds administered by the Bank, which might be made to or guaranteed by Liberia or other recipients for projects carried out within the country.
Diagana said the World Bank regretted having to take such action but emphasized that the suspension would only be lifted once all outstanding payments are settled, expressing “sincere hopes for a swift resolution to allow the resumption of withdrawals, supporting the crucial operations the Bank has been backing in Liberia.”
When contacted for clarity, the World Bank Liberia office told the Daily Observer that the suspension, would affect the incoming government of President-elect Joseph N. Boakai.
“Liberia has reached 60 days overdue on its debt repayment to the World Bank,” the institution told the Daily Observer in an email response. “The Bank’s ability to mobilize resources for the benefit of the country and its people, depends critically on the punctual servicing of debt to the Bank. We hope that the arrears situation can be resolved promptly so that operations can resume for the benefits of the people of Liberia. The World Bank has been a long-standing partner of Liberia and reiterates its commitment to support it to overcome the development challenges the country is enduring.”
Meanwhile, Diagana's letter noted that during the suspension period, the Bank will continue to withdraw from the loan account of the relevant suspended loan to pay amounts requested by commercial banks and payable under outstanding special commitments issued by the Bank on or before the suspension date.
"Until the suspension is lifted, no disbursement will be made to the designated account(s) of the suspended loans. Nevertheless, applications received by the Bank on or before the date 90 days after the suspension date, covering payments made or due to suppliers and contractors under contracts signed before the suspension, for goods supplied, services provided, and works carried out within 60 days after the suspension date," the letter added.
"However, the suspension will not apply to withdrawals under the suspended loan payment requests from commercial banks holding special commitments issued by the Bank on or before the suspension date," Diagana added. "As is standard Bank practice, the suspension will continue until the member country and all other borrowers are current on all payments owed to the Bank under the suspended loans."
He added that being current on all payments includes not only payments thirty days or more overdue but also all other payments due as of the date the Bank receives payment, regardless of the number of days since they fell due.