While the World Bank Office in Liberia has decided to cut off all disbursements, including IDA financings and PPF advances, to Liberia due to the Liberian Government’s failure to pay its outstanding debt amounting to US$2,452,198.03, the government of Liberia has denied such claim.
Recently, Verity News uncovered and reported a 3-page letter addressed to the Acting Finance Minister of Liberia, Mr. Anthony G. Myers, where the World Bank through its Regional Vice President for Western and Central Africa, Mr. Ousmane Diagana, expressed the Bank’s decision to put off all disbursements, including IDA financings and PPF advances, to Liberia due to the Liberian Government’s failure to pay its outstanding debt amounting to US$2,452,198.03.
The leaked letter in the possession of Verity News shows that the Liberian government defaulted on its IDA loan which was borrowed under nine (9) separate projects including the Liberia Electricity System Enhancement project, the West Africa Agric Production Program, the Road Asset Management project, the Urban and Rural Infrastructure project, the West Africa Regional Energy Trade project among others.
According to its Regional Vice President for Western and Central Africa, the World Bank said it has taken the decision not to continue disbursements of any new IDA financings and PFF advances to Liberia.
“No new IDA financings to or to be guaranteed by the Member Country will be presented to the Bank’s Executive Directors for approval, and no agreements related to approved IDA financings or PPF advances to or to be guaranteed by the Member Country will be signed.
According to the communication, the Bank will not make disbursements to the designated accounts established under any IDA financings or loans/grants financed under trust funds.
“We advise you that unless all payments due under all IDA financings and PPF advances have been received by the Bank by the close of business on or before August 14, 2024, further withdrawals under all effective and not fully withdrawn IDA financings, PPF advances, and IDF grants will be suspended,” Mr. Ousmane Diagana, Regional Vice President of the World Bank, said in his letter to Acting Finance Minister Anthony Myers.
While this information still circulates, the Ministry of Finance and Development Planning (MFDP) revealed that the Government of Liberia did not default on the settlement of its outstanding obligations to the International Development Association (IDA).
The IDA is the leading financing institution of the World Bank Group for low-income countries and, provides low-interest loans and grants to promote sustainable economic growth and reduce poverty.
According to the MFDP, about US$44.3, (forty-four million two hundred sixty thousand US dollars, to be precise) has been paid by the administration under President Joseph Nyuma Boakai since January 2024.
This amount includes US$23M outstanding from 2023 that was not paid by the previous administration and US$21M out of the scheduled external debt repayments due since January 2024.
The payments to the IDA so far stand at US$12.19M.
This announcement from the Ministry of Finance and Development Planning comes in the wake of some response to recent media reports suggesting that Liberia was suspended from the World Bank due to overdue loans.
Recently, Mr. Ousmane Diagana, Vice President, Western and Central Africa, The World Bank IBRD, IDA World Bank Group wrote Mr. Anthony G. Myers, Acting Minister of Finance and Development Planning reminding him of Liberia’s 45 Days overdue notice of Impending Suspension of Disbursements.
Mr. Diagana reminded the Acting Minister of Finance of his previous notices, dated June 24, 2024, July 01, 2024, and July 16, 2024, notifying the Republic of Liberia (“Member Country”) of payments due on June 15, 2024, to the International Development Association (“IDA”) (individually the “Bank”) under IDA financings and/or advances under the Project Preparation Facility (“PPF”) made to or guaranteed by the Member Country.
The World Bank Vice President for Western and Central Africa, IBRD, IDA further reminded Minister Myers about the payments currently outstanding and coming due under said loans, financings, and/or advances.
Copies of the details payment currently outstanding are in the possession of Verity Newspaper.
Diagana said the ability to mobilize resources for the benefit of member countries depends critically on the punctual servicing of debt service made by the Bank.
For this reason, the Bank insisted on the settlement of all payments when they fall due.
“We regret to notify you that until all payments due under IDA financings and PPF advances to or guaranteed by the Member Country are current, the Bank must take certain actions.
Being current on all payments includes not only receipt by the Bank of payment of all amounts 30 days or more overdue, but also all other amounts that have fallen due, regardless of the number of days since they fell due,” the communication emphasized.
According to the World Bank Executive, these actions are as follows:
The communication stated: “No new IDA financings to or to be guaranteed by the Member Country will be presented to the Bank’s Executive Directors for approval, and no agreements related to approved IDA financings or PPF advances to or to be guaranteed by the Member Country will be signed.
The Bank will not make disbursements to the designated accounts established under any IDA financings, or PPF advances, or Institutional Development Fund (“IDF”) grants to or guaranteed by the Member Country.
The Bank will also decline to make disbursements to designated accounts established under the following grants and/or loans financed under trust funds administered by the Bank.”
Aimed these notices, the Ministry of Finance and Development Planning has disclosed that there is a reduction in external transfer dates at the Central Bank of Liberia which poses challenges to the current Administration.
According to the Ministry, the reduction in transfer dates is due to transfer risks resulting from poor management of external payments by the previous administrations at the Central Bank of Liberia.
The Ministry calls on the media to carefully verify information before spreading news that could damage the country’s reputation.
The Ministry highlighted that the Federal Reserve Bank of New York which handles international payments for the CBL reduced the weekly transfer period from five days to two days as a result of irregular transactions through the CBL in the period before the January 2024 transition of power.
This means the due dates for some IDA loan repayments do not fall on the CBL transfer dates leading to what is being wrongly interpreted as defaults by the Government.
The Ministry said it is important to note that the challenges in debt management for the current Government under President Boakai is not limited to the debt portfolio of 2.64 billion, including which US$1.5 billion accumulated under the CDC government in six years compared to, US$881.8M during the entire twelve years of the Unity Party administration.
They highlighted that there is also the challenge of dealing with debt payments that were scheduled in previous years but not paid.
However, the Ministry of Finance and Development Planning assures the people of Liberia and partners of Liberia that the government remains committed to strengthening its relationships with the World Bank and other international partners recognizing critical roles development partners continue to play in advancing the country’s development agenda.
The Ministry said its priority remains the promotion of the government’s agenda through development partnerships for sustainable development, a stronger and stable economy, and improved quality of all Liberians.
By: Blesset D. Kpenkennie
