The board of directors of the African Export-Import Bank, also known as Afreximbank, last December approved for the Liberian government a US$65 million financial loan facility to solve the serious liquidity problems incurred from unpaid loans allegedly dating from the past government. But as The Analyst has gathered, while commercial banks are still undergoing liquidity constraints, the Government of Liberia, without providing much clarity as to the reasons, abruptly canceled the deal that would have provided commercial banks some financial lifeline amidst the local and global crunch.
The Afreximbank discounted loan facility would have been used for seven commercial banks, including the Liberian Bank for Development and Investment, International Bank, Ecobank, United Bank for Africa, Guaranty Trust Bank, Afriland First Bank and the GN Bank, as a means of restoring confidence in the Liberian government’s ability to pay; and would have been highly crucial for future liquidity injections through the local banks for medium to long term economic growth.
Accordingly, the Government of Liberia would have serviced the bond over the next seven years through the national budget, beginning with US$30 million appropriated from the FY2018/19 budget and US$ 61 million from the FY 2019/20 budget.
But according to a social media-circulated letter from the desk of Finance Minister Samuel Tweah to the President of the African Export-Import Bank President, Dr. Benedict O. Oramah, dated July 3, 2020, “the Government of Liberia will not be able to utilize the US$65 million Bond Discount Facility which was approved by the Board of Directors of the bank due to administrative reasons.”
The decision by the Liberian government to pull out of the Afreximbank deal without providing any tangible reasons even to the lenders, and by the government failing to inform the Liberian people why they decided to cancel the loan facility deal has left many to start developing conspiracy theories.
Pundits and critics have already started speculating on reasons why the Government of Liberia hurriedly pulled out of the Afreximbank loan facility deal in the midst of the mounting liquidity problems exacerbated by government’s inability to service its debt to the commercial banks.
According to some analysts, the government of Liberia withdrew from the deal because it did not have the budgetary cushion to service the loan, as the Weah administration already has other major loan obligations to meet with international financial institutions (IFIs). Liberia is said to currently owe IFIs close to US$1 billion, dating from the past Sirleaf administration to Weah.
Samuel P. Jackson is a respected Liberian economist who worked for many governments, as minister in the administrations of former Presidents Samuel Doe and Charles Taylor, and through consultancies with former President Ellen Johnson-Sirleaf. Having recently tried to wiggle his way with the Weah administration, Mr. Jackson returned to the USA disappointed. Mr. Jackson’s views on contemporary economic issues are always highly sought due to his proximity to past and current administrations. This is his take on the soured Afreximbank deal.
“Good morning Liberian friends. I have some blockbuster news for you all today,” Mr. Jackson started his social media revelations last Monday, stating further that the IMF has blocked the US$ 65 million bond arranged to pay off Government loans to commercial banks.
“As a result, commercial banks face serious liquidity problems,” Mr. Jackson said, and dropped a shocker. “The US$ 65 million was mostly borrowed during the administration of Weah,” he said.