Warning loan repayment will delay Liberian progress, UN envoy urges debt relief

Warning loan repayment will delay Liberian progress, UN envoy urges debt relief

Repaying its almost $4 billion in loans will impede Liberia’s efforts to consolidate democracy and promote development, the United Nations envoy for the world’s poorest countries said today, calling for all of the impoverished West African nation’s foreign debt to be forgiven immediately.

“Now is the time for multilateral institutions to step up to the plate and commit to assisting one of the world’s poorest countries rid itself of the stranglehold of poverty,” said Anwarul K. Chowdury, High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, in a statement.

While the $700 million of loans cancelled by the United States, Britain and Germany at a Washington, D.C. conference last week of major donors was a “major step towards spurring development,” immediate debt scrapping is essential in order for Liberia to maintain its current course towards stability.

Liberia is seeking to rebuild after a devastating 14-year civil war that killed almost 150,000 people and sent 850,000 more fleeing across its borders.

Since the end of the war in 2003, the country has made numerous gains, including the disarmament of 100,000 combatants and dissolving of former armed factions; the 2005 free and fair elections culminating in a democratic Government lead by President Ellen Johnson-Sirleaf; the return of half a million displaced Liberians to their homes; the commencement of training a new police force and Army; and the lifting of sanctions on Liberian timber.

Most of the country’s staggering debt accumulated during its devastating civil war and resulting poor governance. Of the $4 billion Liberia owes its creditors, a reported $1.6 billion is to be repaid to multilateral financial institutions, over $700 to the International Monetary Fund (IMF), more than $500 million to the World Bank and nearly $300 million to the African Development Bank.

Mr. Chowdury voiced hope that donors would follow the precedent set by the G-8 summit of industrialized countries, which in 2005 forgave more than $21 billion in debt of the world’s 13 least developed countries.

“Undoubtedly, Liberia deserves special consideration given her recent tumultuous history and current post-conflict reconstruction efforts,” the High Representative said. “The efforts of the Government and the people of Liberia would really benefit from a decision to immediately forgive its outstanding multilateral debt.”