Liberia’s total debt stock has exceeded $2.5 billion, with domestic debt surpassing $1 billion, largely due to excessive borrowing under the current administration. Trust deficits with creditors have arisen, complicating business engagements. Minister Ngafuan is striving to regain trust, focusing on financial integrity and projecting a 6% economic growth rate while highlighting infrastructure and energy initiatives to bolster the economy.
In statement from Finance and Development Planning Minister Augustine Ngafuan, Liberia’s total debt stock has surmounted $2.5 billion, with domestic debt exceeding $1 billion. He attributed this alarming rise to significant borrowing under the Weah-Taylor administration, which heavily relied on loans from commercial banks to fund various government operations. Consequently, unpaid obligations to contractors and service providers have further compounded the domestic debt burden.
Minister Ngafuan expressed concerns regarding the trust deficit that has emerged between the government and its creditors, largely due to defaults on payments by previous administrations. This situation has rendered business engagements with the government increasingly difficult for vendors and contractors. Ngafuan stated, “The debt stock of Liberia is over $2.5 billion—both external and domestic. The Liberian government owes a lot.”
In attempts to rebuild trust and enhance financial credibility, Ngafuan disclosed that the government borrowed $80 million from the Central Bank of Liberia to fulfill civil servants’ salaries. He noted positive steps towards restoring credibility, affirming that commercial banks are beginning to regain trust in the government. “Commercial banks are beginning to trust the government again, and we are making payments on interest owed,” he remarked.
Further, the General Auditing Commission (GAC) has been tasked with verifying debts owed to vendors, where it uncovered fraudulent claims amounting to over $400 million. Ngafuan emphasized the reversal of this situation, stating, “We are reversing the situation, and confidence is returning.”
Despite these challenges, Minister Ngafuan exhibited optimism regarding Liberia’s economic outlook, projecting a growth rate of 6% for the year. He emphasized the government’s commitment to expanding the tax base and improving revenue mobilization as measures to minimize dependency on loans. He articulated, “Our goal is to gradually reduce reliance on aid while enhancing domestic resource mobilization.”
He also highlighted Liberia’s selection by the World Bank and African Development Bank to develop an energy compact, aiming to boost electricity access from 30% to 75%-80% by 2030. He unveiled plans for constructing a new hydroelectric facility and expanding solar energy generation, calling attention to the significant investment required for these projects.
Ngafuan underscored the critical role of infrastructure development in economic advancement, particularly in terms of accessibility via improved roads. “Better roads mean improved connectivity, allowing farmers to transport goods efficiently and reducing losses due to spoilage,” he noted. Additionally, he indicated ongoing consultations with the National Port Authority to eliminate business operation barriers and enhance efficiency.
In summary, Liberia’s financial landscape faces significant challenges due to an escalating debt stock exceeding $2.5 billion, compounded by a deficit of trust among creditors. Minister Ngafuan is actively working to restore this trust and enhance economic conditions through improved financial management, infrastructure development, and renewable energy initiatives. The government’s commitment to fostering economic growth and reducing loan dependency is evident in its strategic plans for revenue mobilization and investment in essential services, such as electricity and transportation.
Original Source: frontpageafricaonline.com
