May 30, 2007

The Honourable James M. Flaherty
Minister of Finance
Department of Finance Canada
140 O’Connor Street
Ottawa ON K1A 0G5

Dear Minister,

After the election of President Johnson Sirleaf in January of 2006, the international community began to have high hopes for development in Liberia. Unfortunately, these hopes were misplaced. Liberia is burdened by a rapidly growing external debt. The economy is unable to cope, having been decimated by two civil wars. If Liberia is to benefit from this recent political change, it urgently requires debt relief.

The Social Justice Committee believes that Canada can play a significant role in lobbying for immediate multilateral debt relief for Liberia at the World Bank and International Monetary Fund.

IMF and World Bank loans to Liberia date back to the early 1980s. The interest on these loans have quickly compounded, and today Liberia’s external debt approximates $US 3.7 billion, up from $US 1.24 billion that was outstanding in 1985 when the country descended into violence and stopped making payments.

Fifteen years of war cost thousands of lives and crippled the Liberian economy. 85% of Liberians are now unemployed and 80% live below the poverty line. 49% are undernourished, and life expectancy is only 40 years. Economic and social poverty has made meeting debt payments next to impossible; in consequence, the debt burden continues to grow.

Social poverty makes servicing the debt a dangerous compromise. If Liberia’s extreme poverty is not addressed, the economy will remain dependent on international capital, and the current government will be hard pressed to re-stabilize the country.

In the past, Canada has successfully lobbied for debt relief for several countries at the World Bank, such as Guyana. It is time for Canada to respond to the needs of Liberia in a similar fashion. The issue of multilateral debt is of great concern in the Liberian case, and the time required to complete the debt relief process – between six and ten years – is appalling.

The Social Justice Committee asks that Canada lobby for an immediate moratorium on debt payments to the IMF and World Bank from Liberia, pending entry and completion of the Multilateral Debt Relief Initiative. This is consistent with previous Canadian policy to provide a moratorium on HIPC bilateral debt pending completion of international programs.

Mr. Flaherty, Liberia cannot continue to bear the weight of a twenty-year old debt. External debt thwarts Liberia’s potential for development. Canada can be a strong advocate for Liberian debt relief, and The Social Justice Committee asks the Canadian government to consider taking on this issue at the World Bank and IMF. We would be happy to discuss this matter with you further. Thank you for your consideration.

Respectfully,

Derek MacCuish
Director