Liberia in need of debt relief
May 8, 2007.
The Social Justice Committee is concerned with the lack of progress in canceling the debts of Liberia. The country needs to invest in its people and the local economy if it is to recover from the scourge of war, but the IMF and World Bank have yet to put a debt relief program in place.
An immediate moratorium on debt repayments would allow the country to keep scarce funds while it awaits full cancellation. Other countries in the past have been granted suspension of debt service requirements because of crisis, and the situation in Liberia is severe. Years of authoritarian rule and civil war have left Liberia with a huge debt burden, and no capacity to repay them.
Debt relief will give Liberia the financial flexibility it needs to finance poverty reduction. Large donors have already adopted this line. In 1997, the United States relieved Liberia of the debt it owed to the state (391 million US$). China has offered Liberia debt relief, indirectly, by dropping tariffs on Liberian exports.
Liberia incurred its debt under the authoritarian, illegitimate regime of Samuel Doe (1980-1990) and William Tolbert before him. The current generation of Liberians is paying the price for their greed. Liberia owes US$347 million to the IMF - of which more than $200 million is interest charges and arrears - and it owes 263 million to the World Bank, all on debts incurred before 1985.
In Canada, you can express your concern over Liberian debt payments, and the need for an immediate moratorium on these payments while a plan for cancellation is developed, to the World Bank and IMF by writing to James Flaherty, Canada’s Minister of Finance.
The Honourable James M. Flaherty
Finance Minister
House of Commons
Ottawa ON K1A 0A6
(no postage stamp necessary)
Email: jflaherty@fin.gc.ca
Background info:
Social needs in Liberia:
a.. 49% of Liberians are undernourished
b.. life expectancy at birth is very low, at 42.5 years
c.. currently, only 17 US$ per capita is spent on public health care
Liberia’s debt burden:
a.. total debt: 3.7 billion US$
b.. financial institutions have implemented a temporary debt payment schedule, which isn’t enough to pay down the debt, but keeps the situation on hold pending future developments: monthly, 60,000 US$ to the IMF; 25,000 US$ to the World Bank; and 15,000 US$ to the African Development Bank (total per year: $1,200,000)
c.. in addition, Liberia has several other international and bilateral loans to service
d.. the Liberian government currently runs a deficit
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