Liberia’s total debt stock has surged to approximately US$2.7 billion as of May 2025, representing 52.2 percent of the country’s Gross Domestic Product (GDP), according to the latest Central Bank of Liberia (CBL) report.
The increase in the debt portfolio is attributed to a modest rise in domestic debt, even as the country’s external debt slightly decreased. The total stock of public debt rose marginally by less than one percent, climbing from US$2,676.6 million to US$2,677.8 million, but still representing the same proportion of GDP.
Domestic Debt Rises, External Debt Falls
The report notes that domestic debt increased by 0.6 percent, reaching US$1,075.8 million or 21.0 percent of GDP, while external debt declined by 0.3 percent to US$1,602.0 million, which accounts for 31.3 percent of GDP.
This shift marks a subtle but concerning trend as the government leans more on domestic borrowing, which could potentially crowd out private investment and increase pressure on the local financial market.
Inflation and Monetary Policy
Inflation remained relatively stable in May 2025, with both headline and core inflation recording a minor increase of 0.1 percentage point from the previous month. This modest uptick reflects rising prices in some categories, which were offset by declines in others.
To combat inflationary pressures, the Central Bank of Liberia maintained a tight monetary policy stance, continuing its focus on price stability and controlling liquidity in the Liberian dollar market.
Key tools such as CBL bills were employed to manage money supply within the banking system.
Money Supply and Private Sector Lending
The broad money supply (M2) grew by 0.6 percent, reaching L$281.36 billion, mainly due to an increase in net domestic assets, despite a drop in net foreign assets.
Additionally, the amount of Liberian dollars in circulation rose by 0.8 percent to L$35.06 billion, largely driven by more currency being held outside the banks.
Meanwhile, commercial bank lending to the private sector saw a noticeable rise. Loans in Liberian dollars increased by 2.9 percent to L$5.89 billion (0.6% of GDP), while US dollar-denominated loans grew by 3.1 percent, reaching US$503.5 million (9.8% of GDP).
